Critics of the DOL’s proposed fiduciary rule, also known as the "conflict of interest rule for investment advice," argue that the rule will make investment advice too costly for many 401k plans. If the critics are right, this issue would be a compelling reason to scuttle the rule – studies have shown that professional advice can help 401k participants increase investment returns. An Aon Hewitt study found that median investment returns for 401k participants using target-date funds, managed accounts and other investment advice were 3.32% greater than returns earned by participants that picked investments themselves.
Service intended to help small businesses take current DOL fee disclosure regulations a step further.
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401k plans are designed to help workers save for retirement. Unfortunately, 401k accounts often reduced prior to retirement by loans that are not repaid, hardship withdrawals, and cash-outs resulting from a job change. Experts call these reductions “leakage.” 401k leakage can greatly reduce a worker’s
Last week I discussed how the trend toward index investments among our clients is accelerating – even for the smallest 401k plans. This week some thoughts on how our clients are using index investments for long term asset allocation strategies.
Smaller 401k plans pay more in fees and have a harder time implementing best practices – right? Not our clients.
Yale law professor Ian Ayres got hammered last year when he co-authored a paper attacking high cost 401k plans. Professor Ayres and Professor Curtis of UVA are back with a new article on 401k fees and practices. While I don’t agree with every point made in the paper, I do endorse their focus on fees and transparency.