More Is Not Necessarily Better
March 29, 2013
There is a TV commercial where a host asks kids if more is better. The kids all holler yes, of course. In 401(k), 403(b) and 457(b) Plans, the opposite might be true. Oftentimes, we see too many investment options that make a plan unwieldy. Participants have too many choices and the average investor gets confused and will likely use the default options, which can be the best course for them, if a well-crafted approach. Many plans are designed with options for an astute few, not for the significant majority of the audience. So, the cost to administer the plan rises for the employer and participants and the prize is not worth the chase. Yet, in addition to the added cost and confusion, the plan sponsor has unduly added risk where it is not needed – communication risk, administration risk and participation risk.
What should a plan sponsor do? Take a hard look at your options, the performance and fees, and most importantly, their use. Why should you continue options where so few dollars are invested? If you want an independent look from someone who will approach this from a Participant Outcomes and Plan Sponsor perspective, Hubbell Consulting can help.
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