In the end, this all comes down to one final concern, and it’s one that is typically not even considered.
Tag "401k"
Here’s something you don’t always see, but maybe you should.
This has long been demanded of fiduciaries. Nearly two centuries ago in Harvard College v. Amory, the Massachusetts court promulgated what has become known as the “prudent man rule.”
Before you start to panic, take a deep breath and relax. The retirement savings industry is an aircraft carrier. It can’t turn on a dime.
Sometimes when you try your best, you still miss something important. And that could be the most dangerous miss you make.
Today, the understanding of conflict-of-interest fees goes well beyond plan sponsors. Individual investors also understand how they can act as a better fiduciary for their own personal investments.
If you are responsible for 401k participant education or in any form of employee-based financial literacy program, you may want to adopt methods used by others who teach adults.
All these strategies can be employed today and have proven themselves effective. It’s unclear that disclosing projected retirement income will provide the kind of incentive that will work.
It’s fun to talk about “risk” and “return” because these are measurables and people are comfortable with the tangible world. But none of that touches upon what really matters. Worse, it can distract you from achieving what you want most.
Most 401k investment menus retain the “style box” mentality of the 1990s. Who doesn’t have a kitchen from the 1990s that they don’t want to remodel? Your 401k investment menu is no different.
