Self -directed Accounts

Vanguard Reshapes the Annuity Evaluation Process
Excerpt:"Those who want to purchase an annuity can face some perplexing challenges. They may find it hard to compare offers among different companies because they can't tell how various features affect payouts. They also may find it difficult to determine overall costs. And their ability to make a decision may be further complicated by annuity providers who aren't using up-to-date technology."(The Vanguard Group, Inc.)

Target Date Funds to SEC: Yes on More Disclosure, No on Changing Names
Excerpt:"Fund managers and other experts say that target-date funds need to increase the amount of information they provide investors to understand their investment risk. But they don't want the Securities and Exchange Commission to change the way the funds are named."(Financial Planning)

A Conversation on 401(k) Advice vs. Guidance: PPA Fiduciary Adviser v. The DOL 96-1 Opinion
Excerpt:"Since guidance versus advice has been easily confused, the following is a mock conversation designed to clarify what is and isn't, should and shouldn't, be taking place with participants so to protect the plan sponsor from fiduciary liability . . . ."(BeManaged)

Experts'Strong Comments on Target Date Funds
Excerpt:"A call for comments by the Securities and Exchange Commission on proposed regulatory changes netted fewer than 50 responses . . . . The exchanges on TDFs, also known as Life Cycle Funds, were mainly by experts in the field. But they were biting."(TheStreet.com, Inc.)

Pension Buy-Ins Are a Good Deal
Excerpt:"Q: Is it a good investment to purchase'permissive time'in a government pension plan? . . . . A: Unless you have no other savings, decisions like this are good decisions. It provides you with a 9.4 percent income rate from your $116,000 investment."(The Seattle Times)

Know Your Annuity Options for Retirement Income
Excerpt:"Assuming that more and more people will choose some form of a life contingency annuity for their retirement portfolios, the question arises: what form of retirement income option should be selected?"(Morningstar)

401(k) Investment Education and Advice Provided by Organizations to Plan Participants
Excerpt:"Eighty-seven percent of organizations that offer 401(k) plans make investment education available to their plan participants. The top three formats for investment education are brochures, computer modeling or call centers through with employees can have their questions answered. In addition, 51% of organizations provide or make available some form of investment advice to plan participants."(Society for Human Resource Management)

A Simple Investment Design
Excerpt:"According to [the keep it simple, saver] principle, all you need are three diversified index-tracking mutual funds or exchange-traded funds -- one for U.S. stocks, one for international stocks and one for bonds. The portfolio must be rebalanced at least once a year to ensure that half of the money stays in stocks and half in bonds."(The Wall Street Journal)

The Obama Administration Wants to Nudge Retirees Toward Annuities: Here's What Is Available Now
Excerpt:"[M]any financial pros say annuities and related products can help reduce the risk you'll outlive your savings. For people interested in securing an income stream for life, here's a look at some available offerings . . . ."(The Wall Street Journal)

Washington Mutual to Settle Stock Drop Suits for $49M
Excerpt:"[L]aw firm Keller Rohrback said the proposed settlement provides for a payment of $49 million, minus expenses including court-approved attorneys'fees and expenses and service awards to the plaintiffs who brought the lawsuit, taxes and other costs, to be allocated to class members whose 401(k) accounts suffered losses as a result of investing in Washington Mutual common stock."(PLANSPONSOR.com)

[Opinion] Vanguard CEO Comments on Target-Date Fund Proposals on Fund Names and Marketing (PDF)
7 pages. Excerpt:"In particular, we support the use of charts and graphs to help investors better understand a fund's current target asset allocation, a fund's projected asset allocation upon reaching the target date, and a fund's projected final asset allocation. At the same time, we believe that the SEC could achieve its objectives more effectively by taking a more streamlined and tailored approach to improving disclosure in TDF marketing materials."(The Vanguard Group, Inc.)

[Opinion] NAIRPA Comments on Target Date Funds: Focused Disclosure Key for Investor Understanding
4 pages. Excerpt:"Essentially one size does not fit all when it comes to disclosure of the risk, volatility, age horizon, asset allocation or glide path of TDFs. Specifically this disclosure is relevant to three types of investors who constitute roughly two-thirds of the TDFs market -- (1) the plan sponsor or fiduciary, (2) the active participant, and (3) the default participant. Each of these investors has different concerns and needs . . . ."(National Association of Independent Retirement Plan Advisors via American Society of Pension Professionals&Actuaries)

The Top Ten Major Misconceptions Plan Sponsors Have About Retirement Plans
2 pages. Excerpt:"[T]his list of major misconceptions about retirement plans is just a portion of the wrong advice that plan sponsors rely on, [but represents many misconceptions held by employers]."(The Rosenbaum Law Firm P.C. via JD Supra, LLC)

Women Want Retirement Education Improvement, According to Survey
Excerpt:"According to the news release, 57% want more information and advice from their employer on how to reach their retirement goals, and 40% cited'a good starting point that is easy to understand'as something that would motivate them to learn more about retirement savings."(PLANSPONSOR.com)

[Guidance Overview] Overview for Plan Sponsors and Fiduciaries of New Requirements for Service Provider Arrangements
Excerpt:"The regulations impose information disclosure requirements on providers of certain types of services to certain types of ERISA plans. The regulations also explain what are reasonable termination provisions for services contracts."(McGuireWoods LLP)

Text of Agenda for September 14-15 Joint Hearing on Lifetime Income Options for Retirement Plans (PDF)
2 pages. Excerpt:"A live webcast of the hearing is available on EBSA's Web site at www.dol.gov/ebsa[.]"(U.S. Employee Benefits Security Administration)

Lifetime Income Options for Retirement Plans Hearing Agenda Unveiled
Excerpt:"The hearing was designed to hear testimony regarding: certain participant concerns affecting the choice of lifetime income relative to other options; information to help participants make choices on the management and spend down of retirement benefits; disclosure of account balances as monthly income streams; the fiduciary safe harbor for selection of lifetime income issuers or products; and alternative designs of in-plan and distribution lifetime income options."(PLANSPONSOR.com)

Experts from Biggest Financial Companies Discuss Current Retirement Hurdles
Excerpt:"[The Roundtable experts] discussed issues including the harsh realities facing baby boomers, the financial needs of Gen X and Gen Y with their longer lead-in time to retirement, and the reason that distribution is still so hard after all these years. What matters most-lifestyle in retirement or meaningful community involvement? What's the measurement of a need versus a want? And is it really cool to be boring these days? (At least one panelist hopes so.)"(On Wall Street)

Retirement Investor Risk Tolerance in Tranquil and Crisis Periods: Experimental Survey Evidence
Excerpt:"We conduct a choice experiment to investigate the impact of the financial crisis of 2008 on retirement saver investment choice and risk aversion. Analysis of estimated individual risk parameters shows a small increase in mean risk aversion between the relatively tranquil period of early 2007 and the crisis conditions of late 2008."(Social Science Research Network)

The IRA Investor Profile Series
Excerpt:"The series draws from information collected in The IRA Investor Database? -- a joint project by the Investment Company Institute [and the Securities Industry and Financial Markets Association]. The new database is designed to shed light on key determinants of IRA contributions, rollover and withdrawal activity, and the types of assets that investors hold in these accounts."(Investment Company Institute)

Asset Allocation, Diversification and Correlation (PDF)
33 pages. Excerpt:"The rational investor understands that there is a point where dollar wealth can increase more by risk control activities than by seeking higher investment returns. This insight is invaluable and lies at the heart of the rational investing approach."(Schultz Collins Lawson Chambers, Inc.)

New Tax Laws May Increase the Popularity of Life Insurance and Annuities with Long-Term-Care Riders
Excerpt:"[The] so-called combo LTC products, including annuity/LTC as well as life insurance/LTC blends, are likely to become even more popular as some deferred tax breaks take effect and pricing benefits become clearer."(Employee Benefit Adviser; free registration required)

[Opinion] Debating Target-Date Funds'Tricky Labels
Excerpt:"In an effort to improve the way the funds are labeled, the Securities and Exchange Commission has proposed a number of changes, such as requiring a table that illustrates how funds shift from risky investments to more conservative ones and disclosing information about how the funds will look on the target-date in a prominent in marketing materials, adjacent to the name of the fund."(The Wall Street Journal)

[Opinion] PSCA Comments on SEC's Proposed Rule on Advertising and Marketing Target-Date Funds
2 pages. (Profit Sharing / 401k Council of America)

[Opinion] BrightScope Comments on SEC Target-Date Fund Naming / Marketing Proposal (PDF)
4 pages. (BrightScope)

Lawmakers Respond to SEC Proposed Rules for Target-Date Funds
Excerpt:"In the letter, [the three Senators] recommended that the SEC both broaden the application of the rule to non-mutual funds and require the inclusion of additional disclosures in marketing materials [and] they urged the SEC, together with the Department of Labor, to remind plan fiduciaries of their duty to prudently select and monitor target-date funds offered to participants in defined contribution pension plans."(PLANSPONSOR.com)

Charts and Graphs Are Good, but Don't Change Target-Date Fund Names, Says Industry
Excerpt:"[It was also] suggested that text accompanying the chart would state explicitly that the asset allocation could change from what the chart illustrates based on changes in the managers'assumptions as to retirement readiness, longevity and market risk."(PLANSPONSOR.com)

Advisors Look to Guaranteed Income Annuities to Help Fund Clients'Retirement
Excerpt:"According to the nation's leading branch managers, employee-sponsored plans and Individual Retirement Accounts are overwhelmingly the two largest sources of income for baby boomers at, or nearing, retirement."(On Wall Street)

How to Tell if You Have a Good 401(k) Plan
Excerpt:"A generous employer contribution and low-cost investment options coupled with the tax deferral will help your savings grow. Conversely, an expensive 401(k) plan with poor investment choices will make it more difficult to save for retirement. Here's how to tell if your company has a competitive 401(k) plan . . . ."(U.S. News&World Report)

How to Research Your Retirement Plan Investment Choices
Excerpt:"First, you need to find out the names and ticker symbols of the funds in your plan. Even if your plan administrator masks this information, giving funds generic names like Large Company Stock, you can get the name of the mutual fund if you dig."(USA TODAY)

[Opinion] How Fidelity Could Reform the 401(k) Plan System, But Won't
Excerpt:"As the'nation's No. 1 provider of workplace retirement savings plans,'there's a lot Fidelity could do to improve this system. If it wanted to be not only the'No. 1 provider,'but also the best provider, it could assume full 3(38) ERISA status and agree to act as a fiduciary to plan participants. This would turn the industry on its head."(AOL, Inc.)

Should Annuities Be an Option in 401(k)s?
Excerpt:"'There are fundamental problems with putting these kinds of products into an employer-sponsored plan, not least because they are very complex and difficult to understand, and many people think that the guarantee they offer is for their principal,'. . . ."(Investment Advisor)

Can Target-Date Funds Protect You Against Loss, But Give You the Growth You Need in Retirement?
Excerpt:"Robert Isbitts, chief investment advisers for Emerald Asset Advisors in Weston, Fla., also objects to putting retirement savings on autopilot.'Target-date funds don't have the ability to adapt to changes in the broad financial market environment,'he says.'In retirement investing, like life, hurdles and surprises come at you, and you have to adapt.'"(AARP)

Mobile Applications Provide Participants Daily 401(k) Balance Updates
Excerpt:"Fidelity Investments, which administers 401(k) accounts with 14 million participants, launched a mobile app earlier this summer. Although users can view their 401(k) account balance, year-to-date performance and several other measures, they cannot make changes to their account."(CNBC, Inc.)

[Opinion] Why You Should Avoid Company Stock in Your (401)k
Excerpt:"I think it's missing the point to say that investing in your company is a matter of trust. After all, the workers at BP may have trusted their managers, but that didn't stop the Deepwater Horizon accident from happening."(Forbes.com)

Labor and Treasury Departments to Hold Joint Hearing on Lifetime Income Options
Excerpt:"After reviewing [requested] comments, the Departments distilled five specific areas in which they would like to receive further input. In a notice issued on August 10, they announced that a joint hearing will be held on September 14, and, if necessary, September 15 . . . ."(Deloitte via BenefitsLink.com)

It's Not Just 12(b)-1 Fees, Say Critics of SEC's Approach to Mutual Fund Cost Disclosures
Excerpt:"As it attempts to crack down on 12(b)-1 fees, the Securities and Exchange Commission is ignoring a raft of mutual fund charges that investors are paying indirectly, critics contend."(Investment News)

[Guidance Overview] Summary of Four Different Proposed or Final Rules Relating to 401(k) Fee Disclosure or Investment Advice Guidance (PDF)
6 pages. (Charles C. Shulman, Esq.)

Law Firm Probes Drugmaker for 401(k) Missteps
Excerpt:"A news release from the Stull, Stull&Brody firm said it is looking into whether the company ran afoul of ERISA by not disclosing its true operating condition to participants and beneficiaries. Those disclosures included information about the safety of Avandia, a diabetes drug."(PLANSPONSOR.com)

How America Saves 2010: A Report on Vanguard 2009 DC Plan Data (PDF)
Excerpt:"This report . . . . found that many participants in 2009 experienced higher account balances, traded minimally in response to market volatility, increasingly diversified their assets through automatic investment programs, and protected their retirement nest egg when they left their employer."(The Vanguard Group, Inc.)

Target-Date Funds Questioned
Excerpt:"New academic research finds that managers of target-date funds tend to invest in their own'family'of funds, which can result in higher fees and lower performance. What can HR do to ensure its workers who use such funds are properly saving for their retirement?"(Human Resource Executive Online)

The 401(k) Gospel according to Matthew Hutcheson
Excerpt:"The 40-year-old leader of the'independent fiduciary movement'is passionate about making retirement plans more responsive to the needs of participants."(Retirement Income Journal)

The U.S. Retirement Market, First Quarter 2010 (PDF)
33 pages. Excerpt:"A separate report . . . shows that between December 2009 and March 2010, retirement assets rose 2.6 percent, from $16.1 trillion to $16.5 trillion. The report includes assets held in private-sector defined benefit (DB) plans, government pension plans, DC plans -- including 401(k), 403(b), and 457 plans -- annuities, and individual retirement accounts (IRAs)."(Investment Company Institute)

A Primer on Tactical Asset Allocation Strategy Evaluation
Excerpt:"Our results show that while some TAA strategies have added value, on average TAA strategies have not produced statistically significant excess returns over all time periods. This paper examines the necessary tools and processes needed to make optimal decisions regarding TAA strategies."(The Vanguard Group, Inc.)

Does a Custom Target-Date Fund Really Add Value?
Excerpt:"One commonly held belief is that a custom-built series of target-date funds is inherently superior to the proprietary strategies that are more widely available. But two Vanguard experts consider this belief -- along with several other concepts associated with target-date funds -- a myth."(The Vanguard Group, Inc.)

[Official Guidance] Text of Notice of Hearing on Certain Issues Relating to Lifetime Income Options for Participants and Beneficiaries in Retirement Plans (PDF)
11 pages. Joint IRS/EBSA hearing to be held Sept. 14, 2010. (U.S. Employee Benefits Security Administration)

[Opinion] Retirement Income Adequacy: How Big Is the Gap and How Might the Market Respond?'(PDF)
Pages. 9-18 of 20 pages. Excerpt:"This article provides highlights of new EBRI research and experts'reactions to it."(Employee Benefit Research Institute)

More Retirement Plans Offering Self-Directed Brokerage Accounts
Excerpt:"Defined contribution plans are adding self-directed brokerage accounts as a way of giving participants more choices even as some plans reduce the number of core investment options."(Investment News; free registration required)

[Guidance Overview] Brief of Successful Defendant Employer in Paychex Retirement Plans Fees Case
Excerpt:"On August 2, the United States District Court for the Western District of New York dismissed the complaint filed in Zang v. Paychex, Inc., one of several putative class actions challenging 401(k) fees, revenue sharing and float. As discussed in the attached memo, the court concluded that Paychex could not be considered an ERISA fiduciary, which was a prerequisite to plaintiff's ERISA-based claims against the company."(Groom Law Group)

[Guidance Overview] Paychex Cleared in Revenue Sharing Dispute Over Mutual Fund Choices Offered to Retirement Plan Participants
Excerpt:"[A federal district court judge] for the Western District of New York ruled that Paychex cannot be tagged with [ERISA] violations for accepting revenue sharing money from mutual funds Paychex chose for its [retirement] plans."(PLANSPONSOR.com)

[Guidance Overview] A Conversation on 401(k) Advice vs. Guidance
Excerpt:"[T]he word advice has been used liberally by brokers, advisors, and service providers. Unfortunately, that will sometimes lead to companies assuming their participants are receiving the advice they need, rather than knowing what is actually taking place . . . . Since guidance versus advice has been easily confused, the following is a mock conversation designed to clarify what is and isn't . . . ."(BeManaged)

Immediate Annuities Fit Well in Retirement Income Plans
Excerpt:"A fixed immediate annuity is a contract with an insurance company. Policyholders invest a lump sum in return for insurance company-guaranteed income, generally monthly, for as long as they live."(Financial Advisor Magazine)

Retirement Income Solutions Discussed at Conference
Excerpt:"As [one speaker pointed out], retirement plan participants really like the concept of contributing to the plan and having that immediately translate to an income stream. However, there is confusion on how retirement income products work and how to translate their value."(PLANSPONSOR.com)

[Opinion] ETFs and 401(k)s
Excerpt:"ETFs are beneficial to those actively trading their accounts as they provide for greater pricing precision and their value is continually recalculated throughout the trading day. Companies who wish to provide this level of flexibility to participants provide brokerage accounts in their plans . . . and it would not surprise me if participants using their brokerage option were trading using ETFs."(Profit Sharing / 401k Council of America)

When to Second Guess Your Target-Date Fund
Excerpt:"Target-date fund investments could lull an investor into a false sense of safety and security. This hands-off approach to investing encourages buying and holding for long-term success but it also opens the door to complacency. With your retirement investments on auto-pilot, you might not notice future changes such as a new investment strategy or an introduction of new fees."(U.S. News&World Report)

Some Retirement Plans Are Replacing Mutual Funds with Lower-Cost'Collective Trusts'
Excerpt:"These alternatives are instruments from banks that are known as collective investment trusts or collective trust funds. They typically have lower expenses than funds, making them attractive to plan overseers and cost-conscious investors, who can see their returns enhanced."(The Wall Street Journal)

[Official Guidance] Text of SEC Request for Public Comment on Proposed Study of Effectiveness of Current Regulation of Advice to Individuals by Brokers, Dealers and Investment Advisers (PDF)
3 pages. Excerpt:"The [SEC] is requesting public comment [by August 30] for a study to evaluate: The effectiveness of existing legal or regulatory standards of care for brokers, dealers, investment advisers, and persons associated with them when providing personalized investment advice and recommendations about securities to retail investors; and whether there are gaps, shortcomings, or overlaps in legal or regulatory standards in the protection of retail customers relating to the standards of care for these intermediaries."(U.S. Securities and Exchange Commission)

Study Shows Costs Do Have an Impact on Investor Selections
Excerpt:"Funds in the lowest expense ratio quartile attracted nearly $395 billion of the cumulative cash flow into all equity funds for the ten years ended December 31, 2009, representing 86% of the net assets that went into the two quartiles reporting positive flows."(The Vanguard Group, Inc.)

Traditional IRA Investors'Contribution Activity, 2007 and 2008 (PDF)
70 pages. Excerpt:"The IRA Investor Database contains account-level information from a wide range of mutual fund and insurance companies, which provided data for more than 10 million IRA investors in 2007 and 2008."(Investment Company Institute)

Lawmakers Clarify Benefit Plan Relief from Swaps Restrictions in Financial Reform
Excerpt:"On the chamber floor, senators said a temporary exemption from swaps restrictions for stable-value contracts covers plans with trustee-directed investments and participant-directed plans. Senators also confirmed that swap dealers may engage in a plan transaction if the plan's in-house asset manager is independently evaluating the deal."(Mercer LLC)