Among the tactics introduced by behavioral finance is the notion of “framing.” For individuals, however, it’s much easier to understand things if they are reframed into “buckets” representing specific individual goals.
Tag "Asset Allocation"
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.
The proliferation of investment options promised participants a plug-and-play plan. In the process, it created a 401k Frankenstein monster of a mess.
Would you rather have the nuts and bolts practical guide for what to ask or the theoretical questions that tend towards the philosophical? Most 401k plan sponsors are too busy for theory, that’s why they’ll prefer to focus on these questions.
The GOT system offers a viable and practical alternative to relying on outdated MPT tools. Although still widely in use, MPT-based calculators and analyzers can sometimes lead retirement savers to make decisions that aren’t in their best interest. That statement alone should trigger concerns from the mindful fiduciary.
The real retirement crisis, dumbing down fiduciary, and solving wrong problems.
Many professionals and most of the current generation of finance professors have long ago removed “risk” from their investment decision-making algorithms. These forward-thinking folks recognize the greater importance of managing retirement saver behavior over managing irrelevant investment risk as it pertains to meeting or exceeding the goal of retiring in comfort.
Quite the opposite from being “over the hill,” those in their forties may find they’re still slogging up hill in terms of saving for retirement.
With the pain of the Target Date Fund 2008/09 market crash debacle still lingering in the mind, to best assess the potential fiduciary liability inherent in TDFs – no matter what safes harbors were promised by the PPA – it’s critical that 401k plan sponsors understand what’s good about them, what’s bad about them, and just why they’re so popular.
FiduciaryNews.com Trending Topics for ERISA Plan Sponsors: Week Ending 8/18/17
Marketing fiduciary, yes, conflicted fees matter, and exposing Index Funds