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Welcome to Ok401k.com. and our August 2008 Issue!
Greetings!
A well run 401k plan can be a great benefit for employers or a big liability. And a well trained 401k fiduciary advisor can help you achieve your goals and make the difference between success and disaster. This issue covers some great thought provoking ideas for you on what your 401k advisor should be doing for you.
The US Government is now seeking comments on a proposal issued July 22, 2008 designed to provide the nation's 65 million 401k participants with a clear and complete disclosure of the fees and expenses associated with their retirement plans. The proposed changes would go into effect for plan years beginning after 1/01/09 (source: Dept. of Labor). And.....with the Olympics this week...
This Friday (08/08/08) at 8:08 pm in Beijing, China the Olympics begin. The number "8" is considered lucky in China since the pronunciation of the number "8" in Mandarin and Cantonese sounds similar to the word used for "wealth." (source: Beijing 2008 offical web site).
Cheer on our Olympians and enjoy this informative newsletter for employers that desire a great 401k plan!
Terrence Morgan, AIf
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| The Oklahoma Employers 401k Bill of Rights. (What your agent and 401k vendor owe you.)
The Employee Retirement Income Security Act (ERISA) requires that fiduciaries of employee benefit plans (that is you the employer) administer and manage your 401k plan prudently and in the interest of the participants and beneficiaries. In carrying out these responsibilities, plan fiduciaries often rely heavily on professionally trained 401k advisors like Ok401k for help. A recent report by the staff of the U.S. Securities and Exchange Commission (SEC) released in May 2005, however, raise serious questions concerning whether some insurance agents, stockbrokers and consultants are fully disclosing potential conflicts of interest that may affect the objectivity of the advice they are providing to their pension plan clients. For example, a stockbroker or insurance agent and bank representative may have their own proprietary funds they want to sell inside your 401k plan. Obviously these 401k vendors selling agents may be able to make more money selling their own proprietary funds inside your plan.
The gold standard in the future used by quality employers when screening 401k advisors is to hire an Investment Advisor Representative (IAR) who will sign an agreement stating they will be a co-fiduciary on your 401k plan. Under the Investment Advisers Act of 1940 (Advisers Act), an investment adviser representative providing consulting services has a fiduciary duty to provide dis-interested advice and disclose any material conflicts of interest to their clients.
Ok401k meets regularly with potential clients. We are always amazed about the many groups we meet who seem unaware of what their basic fundamental fiduciary responsibilities are. Your 401k mutual fund, insurance company and/or bank is a vendor. Vendor's always need supervision. If you don't have the professional training to supervise your 401k, smart employers hire a fiduciary advisor to make sure their 401k vendor is giving you and your employees the best bang for your buck. Therefore, Ok401k came up with the following "Employer 401k Bill of Rights."
Your Employer 401k Bill of Rights
Article 1. The Right To Real 401k Investment Advice. As my consultant, please provide my employees with real investment advice and investment help not investment education which is as simple as handing out enrollment kits and wishing my employees good luck. My secretary and I can do that. (Investment Advisors are able to provide dis-interested investment advice to participants. We do not sell proprietary investments. There is no incentive to sell one product over another. Registered Representatives, insurance agents and stockbrokers may have another agenda. Only an Investment Advisor Representative can sign an agreement with an employer accepting co-fiduciary responsibility. Ask your advisor if they are registered with the SEC or a state securities regulator as an Investment Advisor Representative and will sign a co-fiduciary agreement. If so, they must provided you with all the disclosures required under those laws (including Part II of Form ADV))
Article 2. Please be unbiased in recommending 401k vendors. We don't want plans that you can make more money on certain funds or vendors. (This is a common problem in the 401k business. Agents, bank representatives and stockbrokers can make more money recommending certain investments or 401k providers).
Article 3. As my advisor, please review my 401k investments quarterly and report to me annually to satisfy my fiduciary responsibilities. Our investments must be in the top 25th percentile as compared to their peers. (Some "lazy" advisors rely upon the investment data from the 401k vendor and do not 2nd guess the 401k vendors. Good 401k advisors compile their own data and perform their own research on the 401k investments in your plan. Allowing your 401k vendor to provide you with the annual review data may result in mediocre or poor performing funds being left in your plan rather then being replaced.
Article 4. As my advisor, please provide me with an Investment Policy Statement (IPS). This IPS will enable me to have important written criteria in place that guides me and my 401k committee when reviewing our 401k plan. Not having a customized IPS is like trying to build a new sky scraper without a blue print. Don't you deserve a custom designed IPS instead of a "cookie cutter" IPS?
Article 5. The right to fair disclosure of the total cost of participation. As my advisor please provide me with a complete disclosure of all investment fees my employees incur in the 401k plan. You have a fiduciary responsibility to know exactly all fees in your 401k plan. Some advisors can get paid more in commissions by having a wrap fee on top of your investments . Insurance companies either put this fee on top of your funds or slip you in a higher share class. You have a duty to know those fees and your advisor should be forthcoming. Typically these extra wrap fees are negotiable.
Article 6. Do not allow my company and employees to be put into a 401k contract with a vendor that has surrender fees. This "a-sleep at the wheel" consulting is soooo 20th century. We at Ok401k usually see unprofessional advisors allowing their client to sign silly 401k contracts like this. If you are in a 401k vendor contract like this, fire your 401k advisor and hire a real one. Ok401k has a way to help you get out of these contracts.
The six articles up above are your basic 401k Employer Bill of rights. We have more. Call us and ask us what the other four (4) Bill of Rights are. |
| Does Your 401k Plan Have An Investment Policy Statement?
If you don't have an investment policy statement (IPS) for your 401k, or don't know what one is, fire your 401k advisor. Plan sponsors (that is you), should be concerned with two primary investment activities when reviewing your 401k plan. One is the fund selection and the other is evaluation of fund performance. An IPS will help clearly define a plan's investment objectives and provide the basis for building a sound fiduciary process, allowing you to: A. Evaluate and monitor the plan's investments using well-defined criteria. B. Provide documentation of the decision making process with respect to selecting and monitoring the plan's investments. Ok401k's clients have an IPS and the monitoring is not done by the 401k vendor. Quarterly we review the investments and once per year we meet with our clients to review investments and document the process. If you are ever audited by the DOL, the IPS is one of the first documents they will ask from you. Get a real 401k advisor and a custom designed IPS.
Call me at (405) 603 4986 for a free no cost no obligation comparison of your 401k plan with up to five (5) other quality 401k vendors. We are independent. We don't care what 401k vendor you are with as long as your employees have great performing investments at the lowest possible costs.
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| Try Ok401k's Outstanding 401k Investment Education Out For Free!
The market has dropped a lot in 2008 and I am sure your employees have let you know how they feel about their 401k portfolios? A toll free phone number or internet web site sometimes is not enough to reassure them about their long term 401k investing goals. Ok401k will provide complimentary education meetings for your employees in your break room before, during or after work. Think of it as a trial run and see just how good we are at getting employees motivated to save and invest properly.
At these fun and informative meetings, we discuss market conditions and how these short term gyrations in the market are a natural occurence. We also emphasize that your employees need to be diversified and invest for the long term. Modern Portfolio Theory, a generally accepted investment tool is Ok401k's bedrock investment philosophy.
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Terrence Morgan, AIF
Ok401k, Inc.
(405) 603 4986
Terrence Morgan, AIF is a Registered Representative of and offers securities though Wilbanks Securities, Inc. Member FINRA & SIPC. Securities activities supervised from Wilbanks Securities, Inc. at 4334 Northwest Expressway, Suite 222, Oklahoma City, Ok. 73116. (405) 842 0202. Fee based through Wilbanks Securities Advisory. Fiduciary status requires employer being given WSA ADV form Part II and a fee agreement must be established. |
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