Richard Stolz

Apparently some plan sponsors and even advisers overlook a basic resource when conducting 401(k) enrollment and education sessions: The TPA. “Advisers are sometimes surprised to see a TPA at the meeting,” says Beth Harrington, president of Benefit Resources Inc. in Sacramento. “That shocks me.”

If plan sponsors are serious about getting stellar 401(k) participation rates, the evidence is stronger than ever that auto-enrollment is a powerful way to achieve it. More hold-outs are getting the message and considering taking the plunge, although only a slim majority already do.

The ability to provide a balance of risk between sponsor and participant through a hybrid design is drawing interest--even among small employers.

Stable value funds require careful scrutiny in the initial selection phase and on an ongoing basis. A new report offers a comprehensive look at the latest trends, and a helpful due-diligence list to use when you are looking at funds for clients.

Prohibitions against dual compensation for fiduciary advisers haven’t been fully grasped, suggests prominent ERISA attorney Fred Reish.

The Labor Department provides more rationale to guide clients to best-in-class asset managers. But consider the case for “quasi-customization.”

A recent academic study examined whether mutual fund companies that act as trustees for 401(k) plans “display favoritism towards their own funds.” Although its conclusions will not shock many advisers, the research can be useful as a source of independent evidence on this important issue, and reinforce the vital role that an independent adviser can play in overseeing plan investments.

The experts all seem to agree: 401(k) plans should be set up to automatically distribute small ($5K or less) balances of former employees into IRAs using well established safe harbor procedures.

In most surveys, average defined benefit portfolios are found to outperform the average defined contribution plan account. And while that was true in Callan Associates latest “Callan DC Index” report, one category of target date fund -- 2030 funds -- performed markedly better last year than both overall DC plan assets and DB plans, presumably due to a higher average equity allocation.

Plan fiduciaries are more vulnerable than ever on a lot of legal and regulatory fronts, including the financial statements included with their 5500 filings. In an era when 5500 forms and their attachments quickly enter the public domain online via E-fast 2, available to anyone -- including an enlarged army of DOL inspectors hunting for anomalies, “fiduciaries need to be on the top of their game,” warns Dave Dacey, CPA, a partner with the WithumSmith+Brown and leader of the firm’s Employee Benefit & Pension Plans Group.

Advisers are familiar with the general challenge of getting people to take advantage of sound financial advice and do more to achieve retirement goals. A recent survey by PNC Financial Services Group quantifies that challenge, and points to some ways to overcome it.

Defined contribution plan sponsors who have yet to get on board with auto-enrollment -- a trend that began more than a decade ago -- are now in the minority. One study published last week in Science magazine found that 56% auto-enroll participants -- up sharply from 19% back in 2005. The study by behavioral economists Shlomo Benartzi and Richard Thayler also found that a slim majority (51%) of sponsors has embraced auto-escalation of deferral amounts.

Participant guidance, advisor relationships and regulatory environment drive success in the below $50M market

What do plan participants say they need to make better use of their retirement? Some answers, from a recent State Street Global Advisors survey, offer insights that can help advisers work with their clients on member education efforts.

Try a little “brain-based sales and marketing,” suggests ASSPA’s Lisa Allen. Speaking about building a loyal client base this week at the ASSPA/NAPA 401(k) Summit, Allen offered the view that plan sponsors typically choose to work with an adviser because they find a “good personal fit,” then retroactively confirm that all of the objective and numbers-based reasons for that decision are in line.”

There is a general belief that advisers acting as fiduciaries to a 401(k) plan would violate ERISA if they advise participants on IRA rollover opportunities and wind up managing those rolled over funds. That opinion is not surprising, according to ERISA attorney Marcia S. Wagner of the Wagner Law Group. But it is not necessarily correct.

“Make an Impact,” the theme for the 2013 NAPA/ASPPA 401(k) summit that began yesterday in Las Vegas, may have sounded more like an exhortation to the nearly 1,400 pension professionals attending the event -- but an appeal that many appear to have every intention of acting upon. Threats to the 401(k) from Washington were chronicled in the opening session by ASPPA CEO Brian Graff and others.

Odds are strong that many of your clients’ 401(k) plans could have significantly greater assets even without spectacular investment performance or a dramatic increase in salary deferral rates.

Sometimes the Service is explicit about its enforcement priorities. Other times officials drop hints in public speeches. And sometimes they just keep quiet in hopes plan sponsors will not let their guard down thinking they are out of the danger zone.

Looking at the Department of Labor’s 408b2 rules six months later.