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-- An attorney subscriber
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Search the News Archive
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33 Matching News Items |
| 1. |
John Rekenthaler in Morningstar
Apr. 29, 2022
"Assets that can't generate cash should not be in 401(k) plans.... Also inappropriate are investments that don't price daily.... Perhaps bitcoin will provide extra diversification, and private-equity funds extra returns. Perhaps. That is for the professionals to decide -- the portfolio managers who run the 401(k) industry's target-date funds. They, not employees, should be deciding what role that bitcoin might play in a portfolio[.]"
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| 2. |
John Rekenthaler in Morningstar
June 22, 2020
"This ruling, to be generous, was peculiar. Why only private equity? Why not hedge funds, or managed futures? The answer is because the [DOL] did not make its announcement after researching all unregistered securities and deciding that only private equity funds deserved to make the grade, but instead because private equity executives got in front of them. Request made, reviewed, granted."
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| 3. |
John Rekenthaler in Morningstar
Apr. 12, 2016
"The fiduciary responsibility that is mandated by [ERISA], spurred by the threat of class-action lawsuits, has motivated large plan sponsors like no mutual fund investors have ever been motivated before. They want their funds to cost less. They need their funds to cost less. They have the buying power to make that happen. And it is. Target-date expense ratios are plunging -- From 1.03% to 0.73%, in just six years!"
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| 4. |
John Rekenthaler in Morningstar; registration may be required
Feb. 16, 2021
"During TSP's history (the plan was founded in 1986), the investment markets have been extraordinarily generous.... If the board is to be criticized for anything, it is that one third of TSP assets rest in the short-government fund, its equivalent of a cash account."
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| 5. |
John Rekenthaler in Morningstar
Nov. 29, 2016
"In 1980, adding a plan helped companies distinguish themselves when bidding for higher-salaried talent. The 401(k) was a fringe benefit, no more and no less. Nobody viewed 401(k)s as vehicles for the masses.... Burdening the company sponsor with fiduciary duties made sense back in the day, when 401(k)s were supplemental features and when there were relatively few such plans.... Today, things are very different. What was an option has now become a virtual requirement. That changes the equation."
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| 6. |
John Rekenthaler in Morningstar; registration may be required
Dec. 23, 2022
"Congress earlier this month introduced the Retirement Savings for Americans Act of 2022 [HR 9462], which advances the idea of a national 401(k) plan.... Rather than replace the existing system, it would supplement it, by installing the 'American Worker Retirement Plan' in all companies that lack acceptable 401(k) plans.... [Its] contribution limit is a modest $6,000; it cannot be used by higher-income employees; and it does not provide an immediate tax benefit, as it is structured like a Roth IRA."
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| 7. |
John Rekenthaler in Morningstar
Aug. 26, 2022
"Formal financial plans are more complex than the model presented in this article, but they are not more prescient. Inevitably, a retiree's portfolio will not match the forecast's performance, often dramatically.... Nevertheless, making the effort provides the groundwork for future decisions. Critically important is understanding and appreciating the effects of sequence risk. The order of a portfolio's returns matters greatly -- sometimes, even more than their level."
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| 8. |
John Rekenthaler in Morningstar; registration may be required
June 10, 2022
"It is easy to make allocation choices look silly in hindsight, particularly by compounding the results ... What matters are the answers to the following queries: [1] Can the investment's strategy be justified? [2] Was the investment competitive with the realistic alternatives? ... [3] Did the investment succeed by its own measures?"
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| 9. |
John Rekenthaler in Morningstar; registration may be required
Aug. 31, 2021
"[S]ubstituting [single premium immediate annuities] for investment-grade bonds appears to be almost unambiguously sound. However, the competition tightens considerably when using bonds to generate total return rather than for income alone. That is, instead of clipping bond coupons while retaining principal, our retiree in effect creates her own annuity by dipping into capital. Doing so would sharply increase her sustainable withdrawal rate."
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| 10. |
John Rekenthaler in Morningstar
Dec. 5, 2017
"[S]mall-company plans face a structural handicap, one which the invisible hand has not grasped. To be sure, some providers, Vanguard most notably, now offer significantly cheaper small-company plans. But most small 401(k)s remain pricey. In addition, cost improvements do not help those employees who work at the 50% of small firms that lack a plan. Two simple legislative changes would lead to great improvement."
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