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Your 401(k) Resource
October 2009 
Andrew Sweeny
Andrew Sweeny, Jr.
Vice President
                                        
In This Issue
Lost in Translation
New Retirement Rules
Brokers Advise 401(k) Plans
401(k) Day Program
 
Quick Links
 
For more information about these topics, please contact
Andy Sweeny
at 513.745.0707.
 
Greetings!: 
Thank you for your continued business. If you know of anyone that could benefit from my services, please forward this newsletter on to them.
Lost in Translation
So, how's that 401(k) investment education working out?  Not very well, if you consider recent survey data.
 
Higher education doesn't translate to absorbing investment education. A String Financial survey in the third quarter of 2008 found that more than one-third of respondents with a four-year college degree were not familiar with dollar-cost averaging, nearly one-quarter were not familiar with asset allocation and 12% were unfamiliar with the concept of compound interest.
 
A relatively new component is being added to many 401(k) plans - independent investment advice by a registered investment advisor. "Independent" in this new 401(k) service environment means no ties to the fund provider.
 
There usually are two options in a managed account service:

The first option is one in which the investment advisor provides personalized one-time investment recommendations. After that, participants are responsible for ongoing account monitoring, rebalancing and management. This appeals to participants who like to take an active role in managing their retirement account, and there is usually no cost.

The second option is for participants who don't have the "3 Ts" - time, talent or temperament - to actively manage their account. The investment advisor provides ongoing discretionary investment management for a fee, paid for by the individual participant.
 
With both options, an independent investment advisor generally assumes fiduciary responsibility for managing participant accounts - not a bad arrangement for the plan fiduciary from a risk-management standpoint. Of course, the fiduciary still retains the responsibility for monitoring the service provider.

See full story, located at Employee Benefit News.
New Retirement Rules: Six ways to ease plan costs
Many small-business owners are making considerable sacrifices to keep their doors open, including working a second job and forgoing their own paychecks. So cutting retirement benefits may seem like a relatively simple and direct way to eke out extra cost savings, but there are palpable consequences to that move, which could be felt long after the downturn.

Here are ways to help you mitigate rising retirement costs without bailing on benefits.
 
Give your plan a check up.  Figure out how much you're paying now. What are the administrative and management fees? Are they going up? How do they stack up relative to what the competition pays? An outside advisor or benefits consultant can be instrumental during this process.
 
Switch to small, business-friendly providers.  If you can't wrangle a better deal, consider going elsewhere. It's a competitive market; many providers will be interested in offering investment services.
 
Bundle services under one provider.  You might find a better deal by looking at your other service providers. Bundling services also adds convenience.

Shut off matching contribution.  If you already have a 401(k), you could stop contributing to employees' plans altogether. Of course, ending matching contributions may not sit well with your employees.

See full story, located at The Wall Street Journal, to read about the other two ways to help mitigate plan costs. 
Labor Department Nixes Bush OK to Let Brokers Advise 401(k) Plans
The Department of Labor is killing a regulatory change issued in the last days of the Bush administration that would have allowed brokers affiliated with mutual funds, brokerage firms and other companies that sell investments to provide investment advice to 401(k) participants.

The Obama administration and House Education and Labor Committee Chairman George Miller, D-Calif., had objected to the rules issued by the Bush administration on the grounds they would allow advisers who have a conflict of interest to provide advice. Because of its opposition, the Obama administration had delayed the effective date of the Bush rules. It is not known when the administration will propose new rules.
 
The Pension Protection Act of 2006 included a provision aimed at making it easier for investment advisers to provide advice to 401(k) participants as long as fees earned by advisers are no different for investment options that are recommended, and as long as disclosures are provided. The mutual fund industry has fought for allowing advisers affiliated with fund companies to give advice, arguing that the provision would make advice more accessible for 401(k) account holders.

See full story, located at Investment News. (free registration may be required)
 
Great-West Retirement Plan Services Rolls Out "401(k) Day" Program
Great-West Retirement Services announced today that it has developed a communications campaign to support "401k Day," an event that encourages employers to set aside some time to remind their workforce of the importance of saving for retirement through their 401k plans. Just as retirement follows work, 401k Day, which marks its 14th year, is held on the first Friday after Labor Day.

The Great-West Retirement Services campaign revolves around a special Web site, www.save4retirement.net, which includes the following helpful tools:

  • Presentations
  • Calculators
  • Quizzes
  • Posters
  • Fliers
  • E-mails
  • Links to additional information  

See full story, located at 401khelpcenter.com.

Questions or Comments?
 
Do you have a question or topic you would like addressed in our next issue?
Please email Kristin Solomon at [email protected] or call (513) 745-0707.
Horan Securities, Inc., doing business since 1996.  
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