In the end, this all comes down to one final concern, and it’s one that is typically not even considered.
Tag "plan participant"
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.
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.
Perhaps the first option to focus on is that one that involves “paying back” or “not paying back.” The rules, while straightforward to financial professionals, may be less apparent to retirement savers.
If plan sponsors want to alleviate retirement angst among plan participants, they need to ensure they provide full transparency regarding factors that extend beyond the plan. Plan sponsors have an obligation to explain their retirement benefits within the context of these outside factors.
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.
The good news is 401k plan sponsors don’t need to treat this as a solo act. They’ve already got a team of hired hands to help them.
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.
Now is the time for 401k plan sponsors to seize their fiduciary mantle and provide the guidance and tools plan participants need to dodge emotional decisions that could ruin their chance for a comfortable retirement.
