Using Behavioral Finance to Shape Participant Investment Decisions
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In This Issue
General Items Using Behavioral Finance to Shape Participant Investment Decisions Summary: The field of behavioral finance is not new, but employing its core tenets is gaining favor among investors, advisors, and plan sponsors who recognize its value in influencing sound financial decisions. Plan sponsors can help retirement plan participants take steps to improve their likelihood of a comfortable retirement by designing plans that not only make it easy to save for retirement, but help them avoid costly behavioral errors. Source: 401khelpcenter.com The 401k Mutual Fund Alternative That's Coming on Strong Summary: The mutual fund's ugly sibling is starting to look pretty good. Collective investment trusts are on a roll, driven by greater plan sponsor and recordkeeper acceptance, as well as a greater awareness of low-fee alternatives by the general public. Source: 401kspecialistmag.com
Fiduciary and Plan Governance Material GAO Says Clearer QDIA Guidelines Would Help Ease Sponsors' Fiduciary Concerns Summary: Although federal policymakers still maintain that QDIAs have been a huge success in drawing more employees into defined contribution plans, the independent auditing arm of the government says more could be done to improve plan fiduciaries' understanding of the criteria used to select investment options. Source: Fi360.com How to Prevent Audit Quality From Declining Summary: A recent study by the DOL found that audit quality is declining. What does this mean for plan sponsors and fiduciaries? Four-minute video. Source: Erisasunscreen.com
Insight: Studies, Research and White Papers Small Plan Participants Are Missing Out on Fund Options Summary: Guardian released new findings from its comprehensive national survey revealing that small plan participants are missing out on available investment options in their 401ks compared to their larger counterparts. Source: 401khelpcenter.com 2015 DC Plan and Fee Survey: What a Difference a Decade Makes Summary: NEPC's Defined Contribution practice group conducts an annual defined contribution plan and fee survey to help plan sponsors understand the fees, pricing, and structure of their defined contribution plans. This 2015 survey includes data from 116 plans, encompassing over 1.4 million plan participants. Source: Nepc.com The Auto Savings Generation: Steering Millennials to Better Retirement Outcomes Summary: Automatic enrollment and the rise of target-date funds are reshaping retirement plan outcomes for all generations. However, these innovations are having the greatest impact on millennials' retirement savings. This 16-page paper highlights some of the generational differences as a result of these changes. Source: Vanguard.com Summary: Robo-advisors have been touted by the DOL as a source of invest. advice that can benefit retirement investors by minimizing costs and avoiding conflicts of interest. This paper examines whether robo-advisors in fact provide personal invest. advice, minimize costs, and are free from conflicts of interest. Based on a detailed review of user agreements for three leading robo-advisors, this paper concludes that robo-advisors do not live up to the DOL's acclaim. Source: Ssrn.com 2015 MassMutual Employee Benefits Security Study Summary: This research explores the disconnect between the value employees place on their employer-provided benefits and other aspects of their lives, to understand employees' perceptions of their benefits, and to determine the level of interest in employee benefits and personal finance guidance tools. Source: Massmutual.com
Items of Special Interest to Service Providers Schwab Edges Closer to Letting RIAs in As 401k Middlemen Summary: Schwab is a company with a retail soul, but is also dependence on servicing third parties for more than half its profits. An effort by Schwab to use a 'retailish' approach to a very third party business like 401ks seems to bring out the inner conflict between the two parts of their business. Source: Riabiz.com Advisers Must Go Beyond the Three Fs to Compete for Retirement-Plan Business Summary: Specialist defined-contribution advisers are raising the stakes for more generalist DC advisers by being proactive with clients around retirement plan health and design, a dialogue that's played well with employers looking to increase plan efficiency and beef up their balance sheets. Source: Investmentnews.com (registration may be required)
Target-Date Funds A Bracing Year for Target-Date Funds Summary: With all the turmoil in stock markets this year, how well are target-date funds performing? Not very well, particularly for investors who are retiring this year. And that has fueled the debate over how these funds should adjust the balance between stocks and other investments in their portfolios as they approach their target date -- a balance many fund providers have tinkered with in the past couple of years. Source: Wsj.com
Court and Legal Recent Developments in U.S. "Excessive Fee" Litigation Summary: The U.S. mutual fund industry is poised to see significant developments in the ongoing wave of Section 36(b) "excessive fee" litigation. The recent uptick in the number of cases being brought to challenge fees charged by mutual fund advisers, this area of law merits careful attention by investment advisers, mutual fund boards, and their counsel. Source: Edechert.com
Compliance and Regulatory A Plan for Retirement Plan Compliance Summary: In order to properly prepare for a government audit or investigation, it is important to understand what the auditor or investigator is looking for which, when reduced to a single word, is compliance. Article reviews how a plan sponsor can readily demonstrate compliance. Source: Legacyrsllc.com 401k Document Retention Rules Made Simple Summary: A retirement plan, by its very nature, generates large amounts of documentation and preserving much of it is required by ERSIA. Developing a filing system can make it easy for 401k sponsors to review, update, preserve, and dispose of documents. Source: Employeefiduciary.com SEC Proposes Sweeping New Liquidity Risk Management Rules for Mutual Funds and ETFs Summary: The SEC proposed a set of broad and sweeping rules mandating that open-end mutual funds and exchange-traded funds develop and implement formalized and written liquidity risk management programs. In proposing this new program, the SEC stated that its goal was to enhance effective liquidity risk management practices by Funds and thereby reduce the risk that Funds will be unable to meet redemptions under reasonably foreseeable stressed market conditions. Source: Paulhastings.com
Marketplace News Morningstar to Acquire Portfolio Rebalancing Firm Total Rebalance Expert Navera Announces New Employer-Sponsored Retirement Planning Module ERISApedia Appoints National Sales Manager TRA Adds Minnesota and Wisconsin Area Rep T. Rowe Price Expands Retirement Plan Offerings With New I Share Class Stadion Introduces Small-Plan Market Product
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