In Star Wars Episode 3: Revenge of the Sith, Obi-Wan Kenobi tells Anakin Skywalker who is on the path to become Darth Vader that “Only the Sith deals in absolutes.” While I haven’t bumped into Emperor Palpatine or any Sith Lord, you run into people who make blanket statements about absolutes in the retirement plan industry.
The fact is that when it comes to the retirement plan industry, there are no absolutes. You hear financial advisors and unbundled providers chafe at the thought of an insurance company provider and how their fees are hidden, but the fact is that insurance company providers can be a terrific proposition for the 401(k) plan on the micro-level. Even the payroll provider TPAs that I ripped for their shoddy work can be a great fit for some clients on the administration and cost level.
Automatic enrollment is a great feature for most plans, but based on the demographics on a specific employer, it might not be a great fit for some. I love automatic eligibility for salary deferral portion of a 401(k) plan, but it can be a problem for plans that are top heavy.
ERISA §3(38) fiduciaries are an excellent development in the retirement plan industry, but may too cost prohibitive for smaller plans.
So the lesson to be learned is that there are no absolutes in the retirement plan business because what may work most of the time may not work all of the time.