If you think the web of fiduciary duties is complex in a 401k plan that focuses on getting employees to save for retirement, imagine how much more intricate it becomes if the plan also has to cater to retired employees.
Basic Members
It’s not a simple matter of flipping a switch and allowing cryptocurrencies in plans. Because these are alternative investments, the plan sponsor will need to learn enough about them to make an informed decision.
Fad topics come and go be a certain set of 401k concerns remain the same. What are they and why do they motivate plan sponsors?
“Perhaps the continued confusion can be expected given that the term ‘best interest’ is not defined in Reg BI and the word ‘fiduciary’ is not used in defining the new standard. It makes it harder to understand.”
In a nutshell, what was initially considered a “pick me because you like me” decision on the part of the prospect has been reframed as a “pick me because I sold you investments” decision. It’s a subtle distinction, but it drives the difference between a fiduciary act and a non-fiduciary act.
While diligence is to be applauded, that’s not to say you can’t carry it to an extreme. If fact, some folks are so hung up on fees, they sometimes fail to see the bigger picture.
Clearly, you wouldn’t pay more for 2 apples if you could get 3 for the same price, but would you pay more to get 2 oranges instead?
The problem with Sequence of Return Risk is that there’s no way of knowing if you’ll experience it. It’s a roll of the dice. The best way to avoid this risk is to prepare as if it were going to happen.
For all the talk of risk in the academic world, it’s the real world that provides the best answer to what risk really is and how to avoid it. How do your thoughts on this compare with others?
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Interested to know why small plans are different? What the dumbest retirement idea in the past 10 years was? What the most successful concept was? Read all about it in this article.