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Beware the 'We're Number One' Trap

"All advisers want favorable publicity, but these so-called 'best of the best' lists raise a number of potential problems.... 'Barron's' disclosure that only those advisors who pay a fee are eligible for inclusion on their lists raises a number of issues for advisors named to such lists.... The [Investment Advisers] Act and the rules created thereunder all stress one point -- full disclosure of all material facts to clients. An advisor simply cannot say that they are a 'Barron's Advisor' of that they are a 'Top 100 Advisor' without making the disclosures required by the [SEC's 1998] DALBAR no-action letter."

Retirement Plan Providers Are Missing the Digital Mark

"[D]uring the past year, the percentage of retirement investors classified as financially healthy has dropped to 47% from 60%.... At the same time, overall satisfaction with their retirement plan's digital experience declined.... Just over a third of investors say they can manage their accounts digitally without contacting customer service. And only 22% say retirement plan websites and apps offer proactive guidance and help[.]"

Target-Date 2020 Funds Did Well in 2020. Here's Why.

"For anyone who had been contemplating retiring in 2020, the first quarter couldn't have been easy. Stocks fell 34% in 23 days ... As of Dec. 31, 2020, the average return of a vintage 2020 target-date fund was 10.8%, one percentage point lower than the 11.7% return for a balanced fund with a 50% to 70% equity allocation ... In the first quarter, 2020 target-date funds overall fell 10%, on average."

'Bridges' to Maximize Social Security Benefits Should Be Built Into 401(k)s, Researchers Say

"Retirement researchers recently have been touting the benefits of a so-called bridge strategy, whereby retirees front-load withdrawals from 401(k) plans and individual retirement accounts to delay claiming Social Security. For each year that a person delays claiming up to age 70, his monthly Social Security check goes up 7% to 8%.... This new idea ... calls on 401(k) plan sponsors to introduce a default 'bridge fund' into 401(k) plans that would use fund assets to deliver automatic monthly payments to anyone who retires in their 60s at a level equivalent to the monthly Social Security benefits that seniors would receive at full retirement age."

Retirement Plans Need to Keep Their Promises. We Make Sure They Do.

"We are committed to working for America's workers every day. By insisting that fiduciaries comply with ERISA, [EBSA] has achieved big results -- recovering more than $2.5 billion in direct payments to plans and workers last year. That amounts to more than $30,500 per investigator per day."

The DOL Is Tearing Down a Landmark of Investor Protection

"Corporate governance and shareholder rights have seldom witnessed an assault on investor protection like the current federal government's onslaught. Whether weakened rules on broker accountability, rules designed to eliminate shareholder proposals, or those taking direct aim at neutering proxy voting, the feds' decisions are to the great detriment of Mr. and Mrs. 401(k)."

Private Equity Could Be Coming to Your 401(k): Here Are a Few Things to Know

"The greatest risk with incorporating private equity into 401(k) plans is that savers will be exposed to risks they don't recognize, understand, or anticipate in funds that they expect to be conservative and stable ... If the investments are incorporated as planned into target-date and target-risk funds -- the default investment option for many 401(k) participants -- they'll land in the portfolios of the least engaged investors."

Your 401(k) Will Soon Show Monthly Retirement Income -- Beware the Math

"Retirement plan providers, consultants, and researchers applaud the idea of focusing 401(k) participants' attention on retirement income, but they're starting to sweat the details that will feed into the lifetime income projections. A simplistic calculation that omits key details, critics say, may mislead participants or serve mainly as an annuity sales tool."

Annuities in 401(k)s Won't Solve the Retirement Crisis

"Employers have shied away from including annuities in retirement plans over liability issues -- participants might sue if an insurance company in the plan goes belly up or fails to pay claims. The [SECURE Act] gives employers a 'safe harbor'' that limits their liability.... The advantage of annuities is that they offer investors guaranteed retirement income not exposed to market fluctuations or vulnerable to poor investment choices.... The rap on annuities is that, yes, while some are low cost, others come with high commissions and high fees that eat into the benefits."

Have Multiple Retirement Accounts? Use Them in This Order

"Where you hold different kinds of investments -- whether in a taxable, tax-deferred, or tax-free account -- and which assets you tap first for retirement income are significant factors that can impact after-tax returns over the long term."

Fund Companies Sued by Their Own Employees Over Pricey 401(k) Plans

"Corporate 'self-dealing' isn't allowed when setting up and running employee pension plans. But a wave of lawsuits accuse fund companies (and others) of filling employees' pool of 401(k) retirement investments with their own funds and charging excessive fees for them, using the pension plans as corporate cash cows and putting the firms' financial interests ahead of those of their employees."

Use of Managed Accounts Rising in 401(k)s

"Though the space is dominated by target-date funds, a number of employers seemingly feel that managed accounts that pair algorithm-driven advice with human helpers are superior for workers who are nearer to retirement. Participants in managed accounts have been found to save .5% a year more than those in target-date funds, while earning, on average, .24% more, after fees, each year."

Insurers Will Benefit From Pension Risk Transfer Demand

"[C]orporate pension shortfalls totaled $369 billion among companies in the S&P 500 in 2015 ... This corporate shortfall -- combined with an estimated $3.4 trillion shortfall in U.S. public pension plans and a rise in the use of pension risk transfer mechanisms in the U.K. and Canada -- should keep demand for pension risk transfer services brisk.... About 15 insurers control 90% of the group annuities market, given high barriers to entry, which put them in an good position going forward."

Yes, Millennials, Please Invest in Your 401(k)

"James Altucher, in a short video on Business Insider, is telling young people not to invest in a 401(k). This is terrible counsel on many levels. The disappearance of pensions and underfunding of Social Security have made the 401(k) our de-facto national savings plan. Altucher's recklessness is exacerbated by an implication that 401(k) accounts are some sort of black box -- 'you have no idea what's happening to that money,' he says darkly. His timing couldn't be worse, as new graduates who soon land in the workforce will pay dearly if they do as he says."

Can Asset Returns Carry Their Weight in Your DB Plan? (PDF)

"One of the biggest issues facing trustees of multiemployer [DB] plans is the concern that these plans will no longer produce the financial returns they were able to generate in the past.... While the unusually high returns of the 1980s and 1990s were probably an anomaly, the same can be said of the unusually low returns of the first decade of the 2000s. Looking at the long run, the results -- both past and projected -- are surprisingly constant."

Bond Yields May Fall Short of Corporate Pension Fund Needs

"As corporate pension plans and other investors keep piling into longer-dated corporate bonds, seeking better-than-Treasury yields to match their future liabilities, those corporate bond yields keep falling. That's setting up a longer-term problem for pension plans[.]"

Record $355 Billion Pension Underfunding for S&P 500 Companies

"Turning [our] attention from public pension funds -- which are suffering from underfunding and paltry rates of return -- to corporate pension funds, we find, well, a lot of the exact same problems. Defined-benefit pensions at S&P 500 companies reached a record underfunding level of $354.7 billion at the end of 2011, an increase of more than $100 billion from 2010 and surpassing the $308.4 billion record underfunding level set in 2008, according to a new study by S&P Dow Jones Indices. Underfunding for other post-employment benefits [such as retiree health care], or OPEBs, increased to $223.4 billion in 2011 from $210.1 billion in 2010."

3.5 Billion Reasons Why Your 401(k) Plan Is a Loser

A recent Barron's article discussed the estimated $3.5 billion paid by mutual funds to brokers, insurance companies and other advisers to 401(k) plans. These payments are euphemistically called 'revenue-sharing.' In reality, they are legal bribes paid to plan advisers, who extract them as the cost of letting these funds gain admission to the investment options in the 401(k) plan.

Promised Pension Benefits for Public-Sector Employees Represent a Threat to Financial Future of Many Cities and States

Excerpt: Most public employees, if they hang around to retirement, can count on pensions equal to 75% to 90% of their pay in their highest-earning years. And many public employees earn even more in retirement than their best year's base compensation as a result of 'spiking' their last year's income by working ferocious amounts of overtime and rolling in years of unused sick and vacation days into their final-year pay computation.

Special Report on Retirement: Retirement Portfolio Growth - Set a Course for Higher-Yielding Stocks and Bonds

Excerpt: 'People have to ask themselves, 'Is my retirement plan still moving me toward my goal?' Chances are, after what we've been through, the answer is no, ' says Mark Cortazzo, an investment adviser at Macro Consulting of Parsippany, N.J. 'If you were going somewhere and got lost, you would create a new route to get to your destination and forget about your old route. That's what investors have to do.' Adopting a repair strategy now, rather than waiting until the markets have rebounded, could well reduce the sacrifices you will have to make in coming years to compensate for recent market declines.