Retirement plan advisers know that sponsors are carrying heavy burdens from multiple directions. As an event panelist once surmised, 401(k) changes that aren’t well received may trigger litigation. Another issue involves understanding plan performance, which often requires plodding through diagrams or dashboards, benchmarking results and re-expressing insights. Given all these moving parts, rethinking comparative performance analytics is the first step toward removing the weight of necessary evaluations.
A simple way to unburden sponsors as they examine their 401(k) plan is to offer a single numeric score. This occurs generally in ratings, often presented as integers from 1 to 5 stars, freeing sponsors from worrying about what lies beneath, say, a 78.9 rating. Such an approach works sometimes, but not when sponsors desire, or can benefit from, more specific insights.
