401(k) Specialist Issue 2 - 2016 - 6
EDITOR'S LETTER
Stuck on Stupid
I ALWAYS SHAKE MY HEAD AND SIGH at the sexual harassment antics that still,
in this day and age, periodically come to light. With all the headlines, corporate
training, legal implications, politics, high-profile horror stories and the fact that it's
just plain wrong, how could someone do it? Why would someone do it?
I reacted with the same disbelief when reading of a new study in The Journal
of Finance titled " Are 401(k) Investment Menus Set Solely for Plan Participants? "
Here's why:
In the wake of the dot-com bust, Henry Blodget was rightly raked over the coals
for his famous " POS " emails. They detailed his glowing analyst assessments of
less-than-stellar companies that just happened to be investment banking clients
of Merrill Lynch, his employer at the time. He became the face of collusion and corruption
that epitomized the screw-the-little-guy image (justified or not) projected
by Wall Street, an image kicked into high gear with the economic collapse of 2008.
It eventually carried through to the advisor space, exposing a common wirehouse
practice of pressuring their reps to put clients' money in proprietary products.
The importance of open architecture thus became more prevalent among
consumers, and led to a wirehouse rep exodus to the independent advisor channel
that continues to this day.
We thought it was behind us. We were wrong, and this time it directly involves
the 401(k) space. Here are the JoF study highlights (or lowlights, depending on
one's point of view):
* Fund companies that are also 401(k) trustees have a serious conflict of interest.
* They tend to favor their own funds, especially their " POS " funds.
* Participants do not fully make up for poor performance by shifting to funds
offered outside those of the trustee.
* Fund companies serving as trustees make decisions that hurt participants'
retirement security.
With high-profile 401(k) headlines involving lawsuits like Tibble v. Edison, Lockheed,
Ameriprise Financial and more recently Boeing, I'll ask again; how could they
do it? Why would they do it?
The good news is that with tort lawyers circling-and I have never written a
statement like that before-it will be cleaned up; either by them in the form of
proactive measures, or for them in the form of litigation. The choice is theirs.
Either way, I'm sure we'll read all about it in Business Insider.
John Sullivan
Editor-in-Chief, 401(k) Specialist
6 ISSUE 2 2015 | 401kSpecialistmag.com
http://www.401kSpecialistmag.com
401(k) Specialist Issue 2 - 2016
Table of Contents for the Digital Edition of 401(k) Specialist Issue 2 - 2016
Table of Contents
401(k) Specialist Issue 2 - 2016 - Cover1
401(k) Specialist Issue 2 - 2016 - Table of Contents
401(k) Specialist Issue 2 - 2016 - 1
401(k) Specialist Issue 2 - 2016 - 2
401(k) Specialist Issue 2 - 2016 - 3
401(k) Specialist Issue 2 - 2016 - 4
401(k) Specialist Issue 2 - 2016 - 5
401(k) Specialist Issue 2 - 2016 - 6
401(k) Specialist Issue 2 - 2016 - 7
401(k) Specialist Issue 2 - 2016 - 8
401(k) Specialist Issue 2 - 2016 - 9
401(k) Specialist Issue 2 - 2016 - 10
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401(k) Specialist Issue 2 - 2016 - 40
401(k) Specialist Issue 2 - 2016 - 41
401(k) Specialist Issue 2 - 2016 - 42
401(k) Specialist Issue 2 - 2016 - 43
401(k) Specialist Issue 2 - 2016 - 44
401(k) Specialist Issue 2 - 2016 - Cover3
401(k) Specialist Issue 2 - 2016 - Cover4
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