Education should be fun

I always believe that education is really important. My parents instilled that value in me, they went a little off the reservation when they thought my GPA was a barometer on their value as parents. That being said, I do believe that participants need education to help them make informed investment decisions. The problem is that I don’t believe the current set-up is working.

Mary Poppins sang that a “spoonful of sugar” made the medicine go down. I think education for 401(k) self-direction would be more successful if it was actually fun and interesting. Maybe an advisor could offer a triviai contest with prizes or funny videos or something that just isn’t dry.

For the free time I have (very little), I bought a lifetime subscription to Rosetta Stone, to brush up on my Hebrew that has gone rusty. The program is easy to use and the interaction is fun and the fun gets me to use it and help me out to remember what I forgot. Something dry and boring wouldn’t have helped. So that’s why I think advisors need to look at their educational component and see how they could make it more interesting.

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FTX points as another reason why Crypto in 401(k) plans is a bad idea

Every day, brings out different bad news about FTX. Based on what I know, I think the principals over there, should seek criminal law attorneys. I’m dying to see how it will play out, as I like to read about huge business failures such as Blockbuster Video or Theranos.

That being said, I think the failure of FTX could mean a lot of things. I believe other exchanges may fail as well. What I do know, is that an exchange failure like this is proof again that without regulation, crypto is a bad idea for 401(k) plans, no ifs, ands, or buts.

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When times are bad, they’re bad

As someone serving as a plan fiduciary and pooled plan provider, I know the market is not doing too well when I get paid. Of course, I don’t conduct surveys on how bad people are feeling about things. Count on a big plan provider to conduct a survey.

According to Fidelity, the percentage of individuals feeling negative about finances has increased to 32% in the past year and is greater than the 30% who have positive feelings.

The average 401(k) balance dropped below the six-figure mark to $97,200 this quarter, down 22.9% from a year ago, and a 28% increase from ten years ago.

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401(k) and 403(b) are a lot alike, but the two shall not merge

Thanks to regulations, 403(b) plans are becoming more and more like 401(k) plans. It’s to the point were many advisors and third-party administrators get the idea they can merge or convert the plans, especially trying to morph a 403(b) into a 401(k) plan, but they can’t.

A 403(b) plan of a 501(c)(3) tax-exempt organization can’t be merged with a 401(k) plan; the only exception involves churches, which, subject to certain restrictions, were permitted to merge 401(k) and 403(b) plans that they sponsor.

The only way to move 403(b)money into a 401(k) plan is a plan termination where participants would elect the right to rollover their plan assets to a new 401(k) plan or an IRA. Until we get legislation that will allow a merger, we will still have this workaround.

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Participants will continue to make bad decisions

As the stock market remains choppy and we trying to figure out whether we are in a recession, it’s important to remember that participants will continue to make bad investment decisions.

Surveys will indicate that participants will withdraw from equity and put past contributions and new contributions into fixed income. Why? Because that’s what they do. They panic and they lock in their losses. They forget that retirement savings are a marathon, not a sprint.

Again, this would be a great time for a plan sponsor to contact their advisor and make sure that participants aren’t locking in their losses.

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Do your job

One of my worst habits is not being over-infusive in my compliments, except in my restaurant tipping. I think people who do a good job are supposed to do a good job. It’s why I don’t understand when people clap when their airplane lands, it’s not like the pilot was Sully and landed a plane after a double bird strike.

You’re in the business as a plan provider, so you have one job to do:  a good job. You’re not in it for the compliments. What’s worse than no compliments? A lot of complaints.

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Ideas To Increase 401(k) Event Attendance

My latest article on JDSupra.com can be found here.

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Law Firm Review

My latest newsletter can be found here.

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Education should be fun

I always believe that education is really important. My parents instilled that value in me, they went a little off the reservation when they thought my GPA was a barometer on their value as parents. That being said, I do believe that participants need education to help them make informed investment decisions. The problem is that I don’t believe the current set-up is working.

Mary Poppins sang that a “spoonful of sugar” made the medicine go down. I think education for 401(k) self-direction would be more successful if it was actually fun and interesting. Maybe an advisor could offer a triviai contest with prizes or funny videos or something that just isn’t dry.

For the free time I have (very little), I bought a lifetime subscription to Rosetta Stone, to brush up on my Hebrew that has gone rusty. The program is easy to use and the interaction is fun and the fun gets me to use it and help me out to remember what I forgot. Something dry and boring wouldn’t have helped. So that’s why I think advisors need to look at their educational component and see how they could make it more interesting.

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Even when offered, ESG funds aren’t that popular

Research shows that 401(k) plan participants who direct their investment, rarely allocate to environmental, social, and governance (ESG) investments.

The research, by PGIM and the Employee Benefit Research Institute, examined the allocation decisions of 9,324 defined contribution plan participants, across more than 100 participant-directed Defined Contribution plans, where there is at least one ESG fund available in the core menu.

The average allocation to ESG funds among the participants in the analysis was 1.7% of the total assets and or balances for invested participants. 8.9% of participants had some allocation to an ESG fund and the average allocation to ESG strategies among those investing in any ESG funds is 18.7% of their total balance, the research shows.

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