Fixing the 401(k)

I was pleased to be quoted along with Mike Alfred from Brightscope in November's issue of SmartMoney Magazine.   Janet Paskin interviewed Mike and I for her article entitled "Meet the People Who Run Your 401(k)". Interestingly, there were some plan fiduciaries who were actually quoted in the article as well (although I'm not so sure their employees will take comfort in their comments.) 

For better or worse, I thought the article did a very good job of taking a ground-level look at how plans are generally operated and perceived by the fiduciaries and participants.  To me, the article highlighted several common (though usually faulty) perspectives from the plan fiduciaries who were quoted:

1. Some viewed the plan and their fiduciary duties as an afterthought.

2. Some seemed to think they were really "smart" and, therefore, doing a much better job at making decisions than they actually were.

3. None seemed to understand or grasp which decisions really matter (and which ones don't) in terms of designing their plan to be most effective and helping their employees use the plan wisely in order to accumulate more money.

Unfortunately, my experience has been that these misconceptions or errors in thinking are usually the rule out in the marketplace, rather than being the exception.  It's no wonder that most employees don't value their 401(k) plan or view it as a "benefit", especially when the prevailing attitude of some plan fiduciaries (as highlighted in the article) is "The 401(k)? That’s the least of my problems.”

Even so, with only a little bit of understanding and effort, the companies named in the article could go from having a poor/mediocre 401(k) plan to a great one like this.