RIABiz

News, Vision & Voice for the Advisory Community

RIABiz

10 essential steps that 401(k) plan sponsors need to take in 2013 to put clients on the right road to retirement

Developing white-label and spend-down strategies for all DC plans is important and carefully explained here

Admin:
no description available
Amy Reynolds: Handing retirees a lump sum check and wishing them 'good luck' doesn't cut it.

Related Moves

The exclusive deal SMArtX cinched with Black Diamond is yielding Tiffany results, and now SmartX is hiring to keep up

Growth is not an option for the tiny West Palm Beach concern after its SS&C alliance after AUM all but doubles in recent months requiring more inventory, expertise and staff

April 10, 2019 at 11:05 PM


Mentioned in this article:


Elmer Rich III

Elmer Rich III

January 16, 2013 — 11:04 PM

These are some good standard steps. More concerning is some research we have been studying suggesting the serious problems in administrator and participant fund selection – precisely the problem advisors can help plan sponsors and participants with. In brief, here is some of what we learned with more coming as we go thru the research papers:

“....It is interesting to note why these differences in return occurred. The bulk of the differences in Sharpe ratios occurred because the plans had much more risk than a portfolio comprised of the 8 RB indexes. The problem lies not in plans selecting individual mutual funds that perform badly, but rather: in plans offering too few investment choices, choices with high risk, choices that are too highly correlated.

This means that, for 62% of the plans, the plan participants would be better off with additional investment choices. In fact, if these plans spanned the 8 RB indexes, participants’ average return would improve by 3.2% per year, which is 42% of the return on an 8-index portfolio with the same level of risk. While significant on a 1-year basis, over a 20-year period (a reasonable investment horizon for a plan participant), the cost of not offering sufficient choices makes a difference in terminal wealth of over 300%...”

More is posted on our blog – http://wp.me/pXvvI-k2. We are glad to share the papers and citations and will be writing a full review.

RIABiz Directory

The Industry Sourcebook for RIAs

   |    LISTING


RIABiz Directory sponsored by:

Directory Sponsor Logo