Itâs clear that 401k plan sponsors ought to educate themselves when it comes to managing their investment provider relationship. This is the broadest fiduciary liability risk area. If plan sponsors donât pay close attention, they may find themselves gasping for air.
Basic Members
Nobodyâs perfect. Itâs unfair to expect recordkeepers to be. Everyone makes mistakesâeven recordkeepers. The problem is what happens when a mistake occurs.
How do you solve, for example, the problem of integration between the payroll software and the 401k recordkeeperâs website?
“I was [once] a major skeptic of the use of annuities, I have subsequently changed my mind regarding the efficacy of low-cost fixed and variable annuities in both personal and retirement accounts.”
A few years ago, this might have been classified as a common âmistake.â Again, âmistakeâ is in quotes because this is less an issue for certain plans (usually small firms or particular industries) than others.
Common mistakes. Non-believing 401k plan sponsors. How many of these have you seen? What have you done to address the dilemma of what to do when the client isnât always right?
But this rookie mistake doesnât bypass veteran plan sponsors. If theyâve grown too complacent with their plan, they may wake up one day to find out theyâve got a dinosaur on their hands.
Among the tactics introduced by behavioral finance is the notion of âframing.â For individuals, however, itâs much easier to understand things if they are reframed into âbucketsâ representing specific individual goals.
Retirees should think for themselves and what alternatives they have regarding their retirement assets. These arenât the same as they were when they were working.
As with many things, hands-on instruction is generally the best way to achieve this, especially if you make it into an engaging workshop thatâs all about the employee and the employeeâs dreams, not about the plan.
