Hope for Your 401k Account Producing Higher *Relative* Returns

Most 401(k) account holders are not aware that they could be achieving higher relative returns. This is especially true in a positive stock market environment.  There’s the famous saying, “A rising tide lifts all boats.”  The problem is your boat may not be not rising as fast as it could and also falling faster than it should when markets shift to a “falling tide”. In other words, your return, relative to benchmarks, or compared to a prudently designed portfolio, might actually be quite low! We suggest thinking in terms of two steps. By the way – both steps are equally important and neither step is done very well. Step 1 is under your control. Step 2 requires you to step outside of your comfort zone. Remember, though, it is YOUR money. Step 1: Grab the highest returns within the limitations of your 401(k) plan. Back to the “Rising Tide” idea. In investing you want to get full participation in the global market – in all the “rising tides” that are occurring. You also want to “fall less” when the rising tide turns to a falling tide. Diversification and low fees are the keys to both desires. Your victories that lead to winning the investment battle are small and numerous. An extra 0.5% gain here, and only dropping 0.5% when others dropped 0.8%. Day in, day out, those little victories put you in the winners circle. Be sure to get help from a registered investment advisor (RIA), if your plan has one. You want to get the deepest stock exposure possible around the world. Highest diversification, lowest fund fees. Sometimes “do it for...

401(k) Social Media Posts November 2017

Dear Readers, Enjoy all of our social media postings in one place for those of you not following us on LinkedIn, Facebook or Twitter. Useful to all especially 401(k) plan sponsors. Not a plan sponsor? Share with your favorite 401(k) account holder or plan sponsor. 11/6/2017 (retweet) Evaluating a fund? Never mind its star rating; go straight to the total expense ratio, says @John_Stepek ow.ly/qIUS30gnhh8 11/7/2017 #401k #fiduciary #EvidenceBased investing small 401(k) plan high fees NOT necessary & get higher quality too ow.ly/u1gs30gn2dZ 11/8/2017 Plan Sponsors: excellent recorded webinar #401k “#fiduciary& fees” by ERISA attorney at partner’s site #SHRM credit http://ow.ly/SYJk50f2aZX 11/14/2017 #Cybersecurity & #401(k) Plans: team up with advisor/providers, create & document procedures, demonstrate prudent #fiduciaryprocess. no surprise there. ow.ly/ebHb30gvRy8 11/15/2017 #SHRM #HR #401(k) Research: employers have green light to push the envelope on default savings rates…. https://goo.gl/mCESYX 11/16/2017: #SHRM #HR #401(k) #plansponsor one tax proposal streamlines some DB and DC rules http://ow.ly/LbBp30gvSJU 11/20/2017:#millenials doing OK, two-thirds saving for 401k #retirement #SHRM #HR ow.ly/C6Sv30gGoHm fb.me/BFlJVaIU 11/28/2017 #SHRM #HR #Fiduciary Most Common #401kFund Lineup Mistakes ow.ly/R5oK30gyPJJ 11/29/2017 #401k account holders want more #investingfee info #hiddenfees #Fiduciary #SHRM #HR#PlanSponsor #retirement ow.ly/yFSh30gG0fw 11/30/2017 #401k #planponsors must address & educate for #retirement #RMD req min distributions. ow.ly/qz3130gG2qY 12/5/2017 Senate passes tax reform bill that impacts #HRbenefits. But which ones? A #SHRM article explores the just-passed bill’s impact on benefits. #401k #retirementplan #403b#Fiduciary ow.ly/OHDf30h0TiM Other dates: A new paradigm for small 401(k). It’s NOT a foregone conclusion that small 401(k) plans must be overburdened with fees – in fact – they can even have competitive fees and improved in quality at the same time.https://goo.gl/fqC9Dr Is Voya your 401(k) record-keeper? – see article on law suit https://goo.gl/EJxcr8 or any insurance/brokerage company? – see us and we’ll show you exactly what you are paying for each 401(k) plan element. We’ll give you our opinion on the fund lineup. The story of attorney of Jerry Schlichter fighting 401k abuse by insurance...

Most Common 401(k) Fund Lineup Mistakes

The most obvious mistake – this is not your field of expertise! The mistake: Not hiring a registered investment advisor fiduciary (RIA), that is a retirement plan specialist, that takes full responsibility for selecting the funds including avoiding all the mistakes I am about to list. Sometimes Brokers (registered reps) and RIAs can make these mistakes – we seem them on plans we’re analyzing regularly. When the funds are selected by the RIA with discretion, it’s described under ERISA section 3(38). Delegating to an expert is a very smart fiduciary move! Not providing the lowest cost share class possible. Related: When the lower cost share class is not able to be accessed, not documenting why. Providing individual funds that are high volatility. They should be provided only inside of a “do it for me” option that is overseen by an RIA. Not providing enough passive low cost funds to construct a diversified portfolio. Too many funds. You want diversification. If a participant allocates across funds that overlap, they achieve concentration, the opposite of diversification. Much of the angst in 2000-2009, the “Lost Decade”, was due to investors placing their assets in overlapping large US cap funds which follow the S&P500 which was down over the ten year period of the “Lost Decade”. Removing actively managed funds from the lineup based solely on recent poor performance or adding actively managed funds to the lineup based solely on recent excellent performance. This points out the fundamental problem that active funds pose for plan fiduciaries. Their selection is very difficult to justify. Quite often when an active manager performs poorly relative to others, their performance turns...

What Plan Sponsors Learned at our Oct 17 2017 Workshop

Couldn’t make our 401(k) Workshop on October 17? No problem – here’s an executive summary for you. We are willing to bring the case studies to your site including the CPA and SHRM CEUs. Just let us know! Remember when “paradigm” was very popular in our business vocabulary? Well, we’re bringing it back! New paradigm: Leading Registered Investment Advisory (RIA) firm O’Reilly Wealth Advisors (OWA) is bringing large 401(k) retirement plan expertise to the small 401(k) plan market.  401(k) plans of total assets of $2M to $20M were studied. Compared to a competitive fee structure OWA RIA-led plan, unfortunately current big box provider plan costs are high and fee growth rate significantly higher. However, the typical big box providers (insurance and brokerage companies), and the brokers or registered representatives, some of whom may accept commissions from the big box providers, in our opinion, have failed to drive costs lower. Overall, the big box providers are many years behind the curve. Why rush? Business is profitable and plan sponsors have a lot of fires to fight everyday. We all know that we have a retirement crisis in the USA. People are not saving enough, early enough, to support a comfortable retirement. Millions of Americans working in small to medium size companies are experiencing lower growth in their 401(k) accounts than is necessary. It’s time the problem is fixed. It’s the not sole cause of the retirement crisis – but it is easily fixed, and will contribute toward improving this nationwide serious problem. Just as important as current cost in a 401(k) plan is the rate at which the plan costs grow as the...

Your Q3 2017 Report is Here

We’re having a great year. Of course, that will change and the markets will inevitably go down. Our models are up about 6 to 13% for the year.  The world outside USA is strong at 21%. This asset class is overdue – it’s been depressed for quite some time. For the quarter, our models were up from about 2% to 5%. The rest of the world and small stocks were the winning asset classes at 6.2% and 5.7% for the quarter.  Specifically under the heading of rest of the world, Emerging Markets was up around 8%. See our Model summary and trends here. See our detailed Q3 Global Report here. Call us with...

401(k) Workshop Oct. 17 – Open for Flyer

We’re very excited to bring a very high quality 401(k) workshop to North County. Click here for the flyer. A 401(k) plan where a plan sponsor hires a registered investment advisor with specialized 401(k) knowledge is completely different than the typical 401(k) with a broker. Registered investment advisors have loyalty only to the plan and the plan sponsor. They do not accept commissions. Brokers have conflicts of interest  (commissions) with the record-keeper and/or mutual fund company. This makes it impossible for brokers to take on any fiduciary liability. It makes it impractical for them to lead efforts for more transparency and lower fees. Their investment knowledge is often misguided. Please RSVP to roadmap@oreillywa.com or call 760-504-6040. See you at Vista Chamber on Tuesday, Oct. 17, 11:30 for lunch & networking and session starts at 12:00 to 1:30...