Despite the better intentions of finance professors a generation ago, the market regularly fails the efficiency test. The scary reality is not a question of what degree of market inefficiency exists, it’s that market inefficiency exists at all. And that can harm investors.
Due Diligence
Plan sponsors – or, more specifically, the companies plan participants work for – may be placing employees in a far greater cyber-vulnerable position than they realize.
401k plan sponsors can’t afford to fall victim to the lure of heuristics. Index funds can generate just as much fiduciary headaches as actively managed funds.
Once 401k plan sponsors become aware of the differences between the types of service offerings, the ideal strategy is then to explicit solicit proposals for each type of offering to determine which kind of offering best serves their unique situation.
But is that a chance a fiduciary should take with someone else’s money? The answer is so obvious the question should not have to be asked.
A good fiduciary must keep a level head and know when emotions drive investors. After all, if they’re not careful, emotion will drive investors right off the cliff.