TMG Reflections

The purpose of our blog is to make you feel included and informed on a more personal level. We want to keep you up-to-date on industry and company news while giving you a glimpse inside The Meltzer Group. Our blog posts may range from helpful tips, to breaking industry news, important information and reminders, random musings, expert opinions, and even some gratuitous employee shout-outs. From time to time we’ll have various employees writing blog posts as a way for you to become familiar with them. We promise to check the industry jargon at the door.

Apr, 01 2014

401(k) Players


After reading the recent Washington Post article – There’s nothing wrong with 401(k)s, except the players involved – I can understand there is some confusion among participants and plan sponsors on how to make their retirement plans a success.

Let’s first talk about the most important item the article ignores: Fees within a retirement plan, although important, are one of the least of the issues. With the 408(b)(2) and 404(a)(5) rules out, fees have become a part of any fiduciary conversation and are being addressed (or should be).

News flash!  News flash! In my experience, the #1 reason participants fail is they do not save enough!!

In my opinion, the issues are not fees, funds, or allocations, it’s SAVINGS RATES!!

The plans we consult on all have:

1) Addressed fees (please remember folks, there are reasons for these fees)  – compliance, call centers, mailing statements, testing, plan documents, etc., etc. Oh and by the way, the most important piece, plan consulting.

2) Addressed investment menus – small menu of active funds, low cost index funds and asset allocation funds (either custom or target date).

If you were to ask me, my opinion would be that the best way for Americans to achieve their goals are:

– Automatic enrollment
– Automatic annual increased savings
– Automatic default into asset allocation models with glide path to lower volatility
– A robust participant communication plan

Let’s face it, people don’t manage their portfolios with heavy trading, some Americans haven’t looked at their allocations in years.

We like to keep it simple in our business, and by helping employees save more this will in fact close the gap for people being able to retire with dignity.