For all the good intentions, however, what will happen when the rubber finally meets the road? Will the new DOL Fiduciary Rule really level the playing field?
Tag "target date fund"
So what if a few very high net savers end up with bigger retirement plans? Good for them. The point is to make it easier for more people to save more.
Not only do you need to watch the place that holds all the money, you need to watch the pipeline that feeds the money there.
It might suit 401k plan sponsors and fiduciaries to tell this story of the generations to help the next generation avoid the mistakes of past generations. This tale provides many good tips about the dangers of investing in extremes, be they too conservative or too aggressive.
There might be a there, there. It could be that TDFs have an Achilles’ Heel that leaves them vulnerable.
Nobody’s perfect. It’s unfair to expect recordkeepers to be. Everyone makes mistakes—even recordkeepers. The problem is what happens when a mistake occurs.
The conflicts-of-interest inherent in selecting proprietary funds are apparent. Less so are the criteria used to determine what a suitable process might be.
But that idea contained a flaw. In the early years, limited choices made it easy for employees. The proliferation of the number of options in later years, however, exposed the lack of sophistication within the employee cohort. That can lead to bad decision-making. Alternative solutions were needed.
It’s not just plan sponsors and plan participants that need convincing. The entire retirement plan infrastructure must also get on board. That doesn’t mean the hurdles can’t be overcome.
Will These Be The Biggest 401k Fiduciary Stories In 2024?
If you have any experience in the retirement plan business, some predictions just write themselves. As in “an incredible feeling of déjà vu.”