Wednesday, April 16, 2014

The "Retirement Plan Industry" (chuckling) is Against Fee Clarity???!!!

Many times over the years in the course of writing this blog, speaking on this topic or consulting clients around it, we've taken the position (to us obvious) that certain sectors of the retirement plan industry are very much against fee clarity and in favor of fee opaqueness.  In general, we've assumed that those players are from the insurance side of the business or the investment side having long standing distribution relationships where fee clarity has not been an overarching priority. 

In this context it is not surprising that when the DOL calls the industry out for not adhering to the spirit of the fee disclosure rules, i.e. not promoting fee clarity, that these sections of the market react aggressively to it. Several months back, the DOL specifically has called for comments on future proposed rule making calling for a necessary "Fee Disclosure Guide".  We wrote about it a few months back, linked here;

In general, for a change, we actually agreed with the DOL's position that a large number of the 408(b)-2 disclosures that we've reviewed are not clear, they are difficult to understand and in many cases misleading.  While we'd never accuse a specific provider of being intentionally deceitful, we are skeptical and wouldn't be surprised if that was the intent.

In the below article, certain members of the retirement plan industry, namely The American Banker's Association (ABA), The American Council of Life Insurers (ACLI), the Investment Company Institute (ICI), the Securities Industry and Financial Markets Association (SIFMA) and the SPARK Institute Inc., all sent in a letter (Link to Letter Here) to the OMB Desk Officer for DOL essentially crying "unfair".  I want to be clear that while this article linked below on is titled

"Industry Criticizes DOL’s Call for Fee Guides"

this group is really more representative of the business interests of the Banking, Insurance and Investment industry and not the retirement plan industry as a whole. As a vocal member of the retirement plan and pension industry, I want to go on record (again) and say that I think that the DOL Guide is a good idea, but one that shouldn't have been necessary if the industry would simply be transparent about the true revenue streams, despite how complex they make it or think it is. 

Thursday, April 10, 2014

The In's and Out's of Retirement Readiness - An Interview w. Joe Reese

Earlier today, Chuck Hammond of The 401(k) Study Group interviewed Joe Reese, QPFC, AIF.  The discussion surrounded the industry trends away from funds, fees and fiduciary and into retirement readiness. Has the market tired of hearing about expenses and invetstments?  What is the determining factor of a succesful and effective 401k plan?

Great work Joe and Chuck!
- Jason

Friday, April 4, 2014

Advisor and Carrier Capacity- Does Size Matter

Last week I was interviewed by Chuck Hammond of The 401(k) Study Group on his weekly podcast.  We discussed a variety of topics including Advisor and Carrier Capacity, business models and new services.  We discussed the challenges Advisors face when working with carriers in the DC Space.  Here is the write up and a link to the podcast.

"Can you differentiate yourself by not taking on all comers?  Is choosing the right client and right partner more important than how large either of them may be?
Listen in to find out!"

- Jason

Wednesday, April 2, 2014

Lifetime Cap on Retirement Savings - Bad Idea explained Here put out a good "Case of the Week" explanation of the "$3.2m Lifetime Savings Cap", as proposed by the president in his last couple of budgets. 

The explanation is very good and within the article it explains the thinking and mechanics of it.  I agree with the conclusion that this would be administratively impossible to enforce and due to bipartisan opposition is a non-starter. However, it does illustrate that the current political regime is looking at tax-advantaged retirement programs as a potential place to help them ease their irresponsible overspending.  This is only one of many different attacks on the current privatized retirement system.  Article linked here -->

- Jason