What are Ayres/Curtis thinking?

Most agree there are problems in the 401(k) world. Certain types of plans (mostly small ones) don’t have the clout to negotiate fees as favorable as their larger brethren. Certain types of investment options (notably those involving annuities and collective trust funds) do not disclose vital information as vigorously as their mutual fund counterparts (mostly because the latter are required by law to report while the former are not). Certain types of mutual funds charge certain fees (namely 12b-1 and revenue sharing fees), that have a directly negative impact on fund performance versus those that don’t. Certain types of service providers (namely non-fiduciaries) can legally place a plan into investments against that plan’s best interests.

These problems are well documented and their corresponding solutions, while controversial, possess the key attribute of being obvious and easy to implement. There are more problems, mostly dealing with participant’s lack of participation, naïve diversification strategies and lack of long-term thinking. We are seeing plan sponsors more successfully address these problems as behavioral finance techniques slowly (and not so slowly) seep into plan design.