For 401(k) plans, the best of time is now

I always tell this story because it’s funny: I went to a Jewish day school that didn’t provide lunch, so I had to brown bag it everyday. On one day, my mother forgot to put in my can of Coca Cola in the bag and instead put in a can of Schaeffer beer. Let’s just say as a 9-year-old teetotaler, I threw it right in the trash. As a parent now, I can understand how mistakes like this can be made, but I guess it helps I only drink bottled beer and my kids don’t drink soda. So I won’t make this mistake.

Everyone talk about how things were so much better way back when and I think people are wrong. They mistake the good old days not because they were better, but just because they were younger.

Look at beer. Was the time of Schaeffer, Schlitz, Lowenbrau, and Stroh’s better than the microbrewery revolution that was started by Boston Beer Company? Was having only broadcast TV better than the hundreds of channels and streaming services we have now?  Was the movie theaters riddled with poor seating and the smoking section in the last 3 rows better than the multiplexes today?

When people talk about how great 401(k) plans were back in the day when I started in the business in 1998, those people are usually retirement plan providers who has much better margins in business in the days before increased competition and fee disclosure.

Except for the inflated returns of the late 1990’stock market, which was nothing but a bubble, everything about 401(k) plans is better for plan sponsors and participants. While litigation has increased against plan sponsors, companies that sponsor retirement plans are now smarter for that and know more about fiduciary responsibility than companies did in the go-go 1990s.

Technology is better. I remember the first participant website I had to use when I enrolled in a 401(k) plan for the first time. It was using a platform called SmartPlan and there was nothing smart about it because the interface was awful. Everything is so much easier for plan participants on the web.

Education and enrollment materials are better. Investment options are better; investment options are also less expensive. Investment advisors are more knowledgeable. Third parry administrators are better in their customer service. Communication is better and information is easier to obtain thanks to the web.

The only people who think 401(k) pans are better back then are probably those that made a lot more on an industry that was cloaked in secrecy and hiding the balls from plan sponsors and participants.

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