Comments for Mutualfundreform.com http://mutualfundreform.com Educating investors to be better investors Sun, 12 Feb 2012 21:05:16 +0000 hourly 1 http://wordpress.org/?v=3.3.1 Comment on Are Target-Date Funds the Ideal Default Investment Choice? by Chuck Epstein http://mutualfundreform.com/2012/02/11/are-target-date-funds-the-ideal-default-investment-choice/#comment-61 Chuck Epstein Sun, 12 Feb 2012 21:05:16 +0000 http://mutualfundreform.com/?p=661#comment-61 Thanks for the note. I believe the first target-date fund which used ETFs was offered by Seligman a few years ago The biog question is why the ETF target-date funds are not available in 401(k) plans. The answer to that involves revenue sharing deals, but basically it is because fund companies make more money offering actively-managed mutual funds than cheaper funds which are better for investors. Thanks for the note. I believe the first target-date fund which used ETFs was offered by Seligman a few years ago The biog question is why the ETF target-date funds are not available in 401(k) plans. The answer to that involves revenue sharing deals, but basically it is because fund companies make more money offering actively-managed mutual funds than cheaper funds which are better for investors.

]]> Comment on Are Target-Date Funds the Ideal Default Investment Choice? by Eric http://mutualfundreform.com/2012/02/11/are-target-date-funds-the-ideal-default-investment-choice/#comment-60 Eric Sun, 12 Feb 2012 16:48:03 +0000 http://mutualfundreform.com/?p=661#comment-60 Interesting article. Multi-manager TDFs do exist. One example is the John Hancock LifeCycle series. Also, the J.P. Morgan TargetDate CompassSM is a constructive tool to help retirement plan sponsors navigate the universe of target-date funds (number of asset classes and glidepath). Interesting article. Multi-manager TDFs do exist. One example is the John Hancock LifeCycle series. Also, the J.P. Morgan TargetDate CompassSM is a constructive tool to help retirement plan sponsors navigate the universe of target-date funds (number of asset classes and glidepath).

]]> Comment on New 401(k) Revenue Sharing and Fee Disclosures Could Re-Shape DC Plans by Chuck Epstein http://mutualfundreform.com/2011/12/23/new-401k-revenue-sharing-and-fee-disclosures-could-re-shape-dc-plans/#comment-52 Chuck Epstein Fri, 13 Jan 2012 00:38:14 +0000 http://mutualfundreform.com/?p=564#comment-52 Here is a response from a respected industry consultant: "All Covered Service Providers must disclose all fees and that would include annuity providers who may actually be CSPs under several umbrellas (fiduciary, recordkeeper, receiver of offsets) so will need to disclose each. That said two things that will make it challenging is the fact they can use formulas to disclose and they do not need to disclose fixed annuity product fees which we recognize may be where large percentage of fees are hidden. Good news is the FBi benchmarking report does disclose every fee clearly in both dollars and basis points so run a benchmarking report and make it clear to you plan sponsors." Here is a response from a respected industry consultant:

“All Covered Service Providers must disclose all fees and that would include annuity providers who may actually be CSPs under several umbrellas (fiduciary, recordkeeper, receiver of offsets) so will need to disclose each. That said two things that will make it challenging is the fact they can use formulas to disclose and they do not need to disclose fixed annuity product fees which we recognize may be where large percentage of fees are hidden. Good news is the FBi benchmarking report does disclose every fee clearly in both dollars and basis points so run a benchmarking report and make it clear to you plan sponsors.”

]]> Comment on New 401(k) Revenue Sharing and Fee Disclosures Could Re-Shape DC Plans by Chuck Epstein http://mutualfundreform.com/2011/12/23/new-401k-revenue-sharing-and-fee-disclosures-could-re-shape-dc-plans/#comment-51 Chuck Epstein Thu, 12 Jan 2012 21:41:43 +0000 http://mutualfundreform.com/?p=564#comment-51 I believe the new DOL regs cover annuities in 401(k)s, but I will ask an expert to get a definitive answer. This is an important question since annuities have traditionally been the source of more criticism for their high fees than mutual funds. Watch this space for a response. I believe the new DOL regs cover annuities in 401(k)s, but I will ask an expert to get a definitive answer. This is an important question since annuities have traditionally been the source of more criticism for their high fees than mutual funds. Watch this space for a response.

]]> Comment on New 401(k) Revenue Sharing and Fee Disclosures Could Re-Shape DC Plans by TemMiller http://mutualfundreform.com/2011/12/23/new-401k-revenue-sharing-and-fee-disclosures-could-re-shape-dc-plans/#comment-50 TemMiller Thu, 12 Jan 2012 16:50:54 +0000 http://mutualfundreform.com/?p=564#comment-50 Chuck, you mention the funding vehicle as "mutual funds". In my experience, many plans are funded with Group Annuity contracts issued by insurance companies. In fact, most micro and small plans are funded this way. Do they have to disclose all fees or will the insurance companies be able to "hide" fees in the wrapper as they have in the past? Chuck, you mention the funding vehicle as “mutual funds”. In my experience, many plans are funded with Group Annuity contracts issued by insurance companies. In fact, most micro and small plans are funded this way. Do they have to disclose all fees or will the insurance companies be able to “hide” fees in the wrapper as they have in the past?

]]> Comment on New 401(k) Revenue Sharing and Fee Disclosures Could Re-Shape DC Plans by New 401(k) Revenue Sharing and Fee Disclosures Could Re-Shape DC Plans http://mutualfundreform.com/2011/12/23/new-401k-revenue-sharing-and-fee-disclosures-could-re-shape-dc-plans/#comment-49 New 401(k) Revenue Sharing and Fee Disclosures Could Re-Shape DC Plans Mon, 02 Jan 2012 14:12:12 +0000 http://mutualfundreform.com/?p=564#comment-49 [...] “Plan sponsors are openly asking whether a participant with a $400,000 401(k) balance should pay ten times more in administrative fees than another participant with a $40,000 balance in the same plan,” he said.  This does not make sense since it costs the same to administer both accounts, regardless of their account balances. via mutualfundreform.com [...] [...] “Plan sponsors are openly asking whether a participant with a $400,000 401(k) balance should pay ten times more in administrative fees than another participant with a $40,000 balance in the same plan,” he said.  This does not make sense since it costs the same to administer both accounts, regardless of their account balances. via mutualfundreform.com [...]

]]> Comment on New 401(k) Revenue Sharing and Fee Disclosures Could Re-Shape DC Plans by Chuck Epstein http://mutualfundreform.com/2011/12/23/new-401k-revenue-sharing-and-fee-disclosures-could-re-shape-dc-plans/#comment-48 Chuck Epstein Sun, 25 Dec 2011 02:49:56 +0000 http://mutualfundreform.com/?p=564#comment-48 I agree that 408(b)(2) and 404(a)(5) will re-shape plans and that an increase in lawsuits is a distinct possibility with the inequality of revenue sharing per investment and perhaps with the larger burden on larger account balances. Although in regards to the burden on larger balances, it could be argued that charging a flat fee may overly burden the small accounts. What to do? First understand that these new regulations according to the DOL are to help fiduciaries meet their duty under ERISA to document "reasonableness". So help them do this, benchmark the plan and document the process and results including steps taken if not reasonable. Consider levelizing revenue sharing across all investments and discuss changing a plan sponsors' budget away from employer contributions to the plan participant accounts and toward paying the plan administration costs. This will still benefit the participants. Posted by Dorann I agree that 408(b)(2) and 404(a)(5) will re-shape plans and that an increase in lawsuits is a distinct possibility with the inequality of revenue sharing per investment and perhaps with the larger burden on larger account balances. Although in regards to the burden on larger balances, it could be argued that charging a flat fee may overly burden the small accounts. What to do? First understand that these new regulations according to the DOL are to help fiduciaries meet their duty under ERISA to document “reasonableness”. So help them do this, benchmark the plan and document the process and results including steps taken if not reasonable. Consider levelizing revenue sharing across all investments and discuss changing a plan sponsors’ budget away from employer contributions to the plan participant accounts and toward paying the plan administration costs. This will still benefit the participants.

Posted by Dorann

]]> Comment on Revenue Sharing Taints 401(k) Plans by New 401(k) Revenue Sharing and Fee Disclosures Could Re-Shape DC Plans | Mutualfundreform.com http://mutualfundreform.com/2011/10/29/revenue-sharing-taints-401k-plans/#comment-47 New 401(k) Revenue Sharing and Fee Disclosures Could Re-Shape DC Plans | Mutualfundreform.com Fri, 23 Dec 2011 22:27:42 +0000 http://mutualfundreform.com/?p=133#comment-47 [...] related story, “Revenue Sharing Taints 401(k) Plans” on this Web [...] [...] related story, “Revenue Sharing Taints 401(k) Plans” on this Web [...]

]]> Comment on Now It’s Europe’s “Lost Decade” by Al Bennett http://mutualfundreform.com/2011/11/18/now-its-europes-lost-decade/#comment-40 Al Bennett Sat, 19 Nov 2011 02:42:36 +0000 http://mutualfundreform.com/?p=373#comment-40 The European banks and IMF just want to protect their large member banks, so individual country sovereignty is not even an issue. The same is true with the Fed's "too big to fail" policy unless the bank is not a member or is too customer friendly. The European banks and IMF just want to protect their large member banks, so individual country sovereignty is not even an issue. The same is true with the Fed’s “too big to fail” policy unless the bank is not a member or is too customer friendly.

]]> Comment on Citi and Deutsche to Pay $165 Million in Mortgage Penalties by Frank Gerthen http://mutualfundreform.com/2011/11/14/citi-and-deutsche-to-pay-165-million-in-mortgage-penalties/#comment-39 Frank Gerthen Sat, 19 Nov 2011 02:39:38 +0000 http://mutualfundreform.com/?p=335#comment-39 These bailouts make a mockery of the free markets. These banks would never have taken these risks if they were not sure the Fed would bail them out. Great post! These bailouts make a mockery of the free markets. These banks would never have taken these risks if they were not sure the Fed would bail them out. Great post!

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