Offering 401k Advice to my coworkers?

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iceddante
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Offering 401k Advice to my coworkers?

Post by iceddante » Thu Aug 09, 2018 2:11 pm

Our company recently switched 401ks from a big-box high-fee provider to Vanguard (guess who suggested the change :mrgreen: ).

Upon enrollment, you're asked to choose between tradition and roth 401ks, and to select among the dozen or so offerings that Vanguard provides. I figure most people in our company are not going to really know how to decipher this information and opt to go with the high(er) fee Target Date Retirement Fund Index that V provides (which costs more than double what you would pay just buying the individual fees themselves). To that end I wrote up an email and sent it to HR for dissemination to the company discussing:

1) How to choose between Roth and Traditional
2) What the different funds are and how to decide between them

I got a very terse reply shortly thereafter that "Due to corporate fiduciary responsibilities any investment advice should only be given by a licensed financial planner," and that any advice given should only come from Vanguard themselves. As an employee, I don't think corporate fiduciary would apply here as our company is not offering stock and I'm just giving information about different index funds and allocations. I tried to keep the advice generic, but I suppose I can see where HR is coming from on this. I could reword it so that it is all factual information with no suggestions, but I get the feeling they would kill that as well.

Still though, I don't know if it's illegal/unethical/wrong to give this advice as it's obviously the sort of thing I would talk to my coworkers about at lunch on any given day. Am I crossing a line here?

runner3081
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Re: Offering 401k Advice to my coworkers?

Post by runner3081 » Thu Aug 09, 2018 3:53 pm

iceddante wrote:
Thu Aug 09, 2018 2:11 pm
Still though, I don't know if it's illegal/unethical/wrong to give this advice as it's obviously the sort of thing I would talk to my coworkers about at lunch on any given day. Am I crossing a line here?
If they do not specifically ask you, do not do it.

MichCPA
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Re: Offering 401k Advice to my coworkers?

Post by MichCPA » Thu Aug 09, 2018 3:55 pm

iceddante wrote:
Thu Aug 09, 2018 2:11 pm
Our company recently switched 401ks from a big-box high-fee provider to Vanguard (guess who suggested the change :mrgreen: ).

Upon enrollment, you're asked to choose between tradition and roth 401ks, and to select among the dozen or so offerings that Vanguard provides. I figure most people in our company are not going to really know how to decipher this information and opt to go with the high(er) fee Target Date Retirement Fund Index that V provides (which costs more than double what you would pay just buying the individual fees themselves). To that end I wrote up an email and sent it to HR for dissemination to the company discussing:

1) How to choose between Roth and Traditional
2) What the different funds are and how to decide between them

I got a very terse reply shortly thereafter that "Due to corporate fiduciary responsibilities any investment advice should only be given by a licensed financial planner," and that any advice given should only come from Vanguard themselves. As an employee, I don't think corporate fiduciary would apply here as our company is not offering stock and I'm just giving information about different index funds and allocations. I tried to keep the advice generic, but I suppose I can see where HR is coming from on this. I could reword it so that it is all factual information with no suggestions, but I get the feeling they would kill that as well.

Still though, I don't know if it's illegal/unethical/wrong to give this advice as it's obviously the sort of thing I would talk to my coworkers about at lunch on any given day. Am I crossing a line here?
The company won't (and shouldn't) sanction your advice or associate themselves with it because you aren't licensed. If you feel it would be useful to someone, you can offer advice personally. The fiduciary standard always applies to a 401k in any situation I can think of.

livesoft
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Re: Offering 401k Advice to my coworkers?

Post by livesoft » Thu Aug 09, 2018 3:56 pm

I was a Fiduciary for our corporate 401(k) plan. There is a fine line that the company cannot cross. I probably crossed the line often. If I was asked, I would say that I was contributing the maximum possible to the 401(k) plan myself and I that I chose to invest in the index funds according to my asset allocation. I also said that if they wanted more information that I could provide them books to read.
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HornedToad
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Re: Offering 401k Advice to my coworkers?

Post by HornedToad » Thu Aug 09, 2018 4:34 pm

You were providing advice and asking the company to send it to the employees.

You can do the same thing as what you want with an off-the-clock lunch and learn or something of that effect where its not a sponsored event.

Rupert
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Re: Offering 401k Advice to my coworkers?

Post by Rupert » Thu Aug 09, 2018 4:39 pm

Yes, crossing a line and placing yourself and the company at risk. There's a reason why retirement plan decision-makers are covered by ERISA liability insurance. I'm on my company's retirement plan committee and am covered by our insurance policy, but I still am careful to couch my answers to employee questions as "Here's what I do for myself and why," as opposed to "Here's what you should do."

retiredjg
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Re: Offering 401k Advice to my coworkers?

Post by retiredjg » Thu Aug 09, 2018 5:19 pm

The company has a fiduciary duty to the employees. They will not pass along any information from someone who does not have some kind certification. Doing so would place them in a position of liability. It's like practicing medicine without a license. Their answer to you, disappointing as it was, was correct.

I do not believe this prevents you from giving advice on a personal level as long as the people who receive it know you do not have any certifications. I would not seek out opportunities to give advice. Let people come to you if they want.

And I agree you should be careful with your wording. "This is what I do...." should not cause you any problems. "You should do this..." could cause you problems. I suppose in general, saying things like "you should try to keep costs low" is generic enough to be OK though.

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Raymond
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Re: Offering 401k Advice to my coworkers?

Post by Raymond » Thu Aug 09, 2018 5:31 pm

It's great that you were able to get the 401(k) plan switched to Vanguard.

However, as mentioned previously, that's about as far as you can legally carry the ball - HR was right to send you that email.

Let Vanguard's people take it from here.

Even on a personal level, I would not tell co-workers what they should invest in, I would only tell them what I would do myself.

That way they don't blame me if their investments go south, even temporarily.
"Ritter, Tod und Teufel"

Nate79
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Re: Offering 401k Advice to my coworkers?

Post by Nate79 » Thu Aug 09, 2018 5:37 pm

The company is correct. This is well beyond the line that should not be crossed.

bayview
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Re: Offering 401k Advice to my coworkers?

Post by bayview » Thu Aug 09, 2018 5:41 pm

+1

I might extend the non-advice part to say something like “Well, here’s what I do. I chose this path only after extensive reading which showed me the advantages of simple index fund-based investing. I’ve also learned a lot from the incredibly knowledgeable and helpful posters on a site called bogleheads.com. But this is such an important AND personal area that I’d recommend that you do your own research, and be very skeptical of advice from financial people who would make money off of you if you worked with them, as well as from everyday people who get awfully excited about the Latest Thing.”

It’s a scary world out there, and I think that giving a heads-up about sharks and financial porn is doing a service. But I sure wouldn’t give anyone specific advice about what to do, other than learning to fish with the help of BH.
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

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Makaveli
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Re: Offering 401k Advice to my coworkers?

Post by Makaveli » Thu Aug 09, 2018 6:51 pm

I would highly recommend backing off this. Potentially even apologize with the comment that you’re passionate about the topic. I did something similar a few years back. Held seminars. Lunch and learns. People from HR even attended once they heard about it & joined in. It blossomed from 5 close friends to 50 people in a few short months. Despite being ranked in the top quintile for 3 of my 4 years with the company I was caught up in the layoff pool. Perhaps it’s not connected but I always suspected that I may have rubbed someone wrong in HR. “He thinks he’s better at our job” or “he’s a liability”.

Enjoy your passion. Share it with your friends. Avoid workplace dissemination.

iceddante
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Re: Offering 401k Advice to my coworkers?

Post by iceddante » Fri Aug 10, 2018 7:32 am

thanks for the feedback everyone. After your replies and some time to reflect I see that, even though I felt I was offering valuable advice that could save people a lot of money, at the end of the day there is risk in any investment decision and it's not really my place to get involved.

As an example, my email contained a disclaimer about the default allocation setting Vanguard offers: they pre-select a Target Retirement Fund (TRF) Index in which they determine the year you are most likely to retire and automatically enroll you in a target fund for that year that contains a certain stock/bond ratio which auto adjusts closer to retirement. The fees for said fund are more than double what you would pay if you auto-enrolled in this fund yourself and adjusted your allocation manually. While the cost savings would be huge, it isn't unreasonable to imagine that an employee may quickly forget about his annual auto-balancing responsibility and decide that my bad advice led them to an unbalanced portfolio.

Their response was that any advice must come from Vanguard. In that context, I wonder if said Vanguard rep is acting in the context of a Fiduciary. My skepticism comes from the TRF being pitched as the default option. The screen for selecting alternatives does not have a lot of detail. For example, I had to Google the individual funds to find out information about them, and the expense ratios are not visible. In fact, you have to open a popup window and then know to scroll to the side to see them (it's almost as if they are hidden). I feel like having an impartial 3rd party Fiduciary attend the office to give advice would be best, but I'll let others make that recommendation if they want.

Similar to another poster, I feel my attempts to "help out" have not made me popular with some people in HR :happy

PFInterest
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Re: Offering 401k Advice to my coworkers?

Post by PFInterest » Fri Aug 10, 2018 7:45 am

iceddante wrote:
Thu Aug 09, 2018 2:11 pm
Our company recently switched 401ks from a big-box high-fee provider to Vanguard (guess who suggested the change :mrgreen: ).

Upon enrollment, you're asked to choose between tradition and roth 401ks, and to select among the dozen or so offerings that Vanguard provides. I figure most people in our company are not going to really know how to decipher this information and opt to go with the high(er) fee Target Date Retirement Fund Index that V provides (which costs more than double what you would pay just buying the individual fees themselves). To that end I wrote up an email and sent it to HR for dissemination to the company discussing:

1) How to choose between Roth and Traditional
2) What the different funds are and how to decide between them

I got a very terse reply shortly thereafter that "Due to corporate fiduciary responsibilities any investment advice should only be given by a licensed financial planner," and that any advice given should only come from Vanguard themselves. As an employee, I don't think corporate fiduciary would apply here as our company is not offering stock and I'm just giving information about different index funds and allocations. I tried to keep the advice generic, but I suppose I can see where HR is coming from on this. I could reword it so that it is all factual information with no suggestions, but I get the feeling they would kill that as well.

Still though, I don't know if it's illegal/unethical/wrong to give this advice as it's obviously the sort of thing I would talk to my coworkers about at lunch on any given day. Am I crossing a line here?
TDF are a great baseline for the majority of the population. The DOUBLE fees which you point out are still microscopic compared to many other retirement plans posted here and are not going to be the reason someones retirement gets railroaded.
You are welcome to talk to those that listen at lunch time.
I would not put anything in writing being sent to the entire company. Suddenly it looks like you are giving binding advice and leaving a paper trail. I also wonder how correct your information was, feel free to post it here and see if it flies.

smitcat
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Re: Offering 401k Advice to my coworkers?

Post by smitcat » Fri Aug 10, 2018 7:56 am

iceddante wrote:
Fri Aug 10, 2018 7:32 am
thanks for the feedback everyone. After your replies and some time to reflect I see that, even though I felt I was offering valuable advice that could save people a lot of money, at the end of the day there is risk in any investment decision and it's not really my place to get involved.

As an example, my email contained a disclaimer about the default allocation setting Vanguard offers: they pre-select a Target Retirement Fund (TRF) Index in which they determine the year you are most likely to retire and automatically enroll you in a target fund for that year that contains a certain stock/bond ratio which auto adjusts closer to retirement. The fees for said fund are more than double what you would pay if you auto-enrolled in this fund yourself and adjusted your allocation manually. While the cost savings would be huge, it isn't unreasonable to imagine that an employee may quickly forget about his annual auto-balancing responsibility and decide that my bad advice led them to an unbalanced portfolio.

Their response was that any advice must come from Vanguard. In that context, I wonder if said Vanguard rep is acting in the context of a Fiduciary. My skepticism comes from the TRF being pitched as the default option. The screen for selecting alternatives does not have a lot of detail. For example, I had to Google the individual funds to find out information about them, and the expense ratios are not visible. In fact, you have to open a popup window and then know to scroll to the side to see them (it's almost as if they are hidden). I feel like having an impartial 3rd party Fiduciary attend the office to give advice would be best, but I'll let others make that recommendation if they want.

Similar to another poster, I feel my attempts to "help out" have not made me popular with some people in HR :happy
IMO you really want to stay out of this completely.
By any chance do you have a company handbook and have you read it sufficiently to know you are not going afoul of that agreement?
How long have you been with this company? How long have they had this 401K plan? Why did this suddenly come up?

Rupert
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Re: Offering 401k Advice to my coworkers?

Post by Rupert » Fri Aug 10, 2018 8:03 am

iceddante wrote:
Fri Aug 10, 2018 7:32 am

Their response was that any advice must come from Vanguard. In that context, I wonder if said Vanguard rep is acting in the context of a Fiduciary.
Vanguard is almost certainly acting as a 3(21) fiduciary. They may or may not have contractually assumed 3(38) fiduciary responsibility as well.

Just a reminder: Retirement plan decision-makers face potential personal liability under ERISA. That's why it's so important for firms to purchase ERISA fiduciary liability insurance for its decision-makers. You place your own personal assets at risk by doling out investment advice at work especially when it appears you are speaking for the company. While HR may indeed be annoyed with you, they are also protecting you.

Cop51
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Re: Offering 401k Advice to my coworkers?

Post by Cop51 » Fri Aug 10, 2018 8:19 am

I suggest a few things to co-works. I say select a target date fund and put 100% of your contributions into it. Every year when you get a raise add 1% to your contributions. I say leave it here until you know what your are doing, or someone you know is willing to help you (friend, family member). Avoid anyone trying to sell you a product (whole life, UIL and so on). I also suggest them to read a few books if they are interested in learning themselves. Once they take the time to learn, and they ask me questions for feedback and my thoughts we have friendly conversations about it. Im not blasting out emails, or holding lunch and learn style meetings.

EvelynTroy
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Re: Offering 401k Advice to my coworkers?

Post by EvelynTroy » Fri Aug 10, 2018 8:30 am

I figure most people in our company are not going to really know how to decipher this information and opt to go with the high(er) fee Target Date Retirement Fund Index that V provides (which costs more than double what you would pay just buying the individual fees themselves). T
IMO the company was absolutely correct in their response to you.
From what you've provided here, you seemed to be biased against Target Date Retirement Fund - there are many reasons why this option would be a very good choice for many. There is absolutely nothing wrong that I know of to have your entire portfolio in a Vanguard one fund option. It might not be right for you, but there are definite advantages.

You are to be commended for stepping up and encouraging your company to provide very good low cost 401K options - when it comes to recommending specific choices I believe the company is protecting you and its employees.

As an aside, well followed Boglehead, Mike Piper @ obliviousinvestor.com only holds one fund in his portfolio - can't recall if its target or life strategy.
Mike's book "Investing Made Simple" would be an excellent choice to pass around among your co-workers. Its index investing made simple in 100 pages or less. Please let folks make their own choices - you really do not necessarily know whats best.
Evelyn

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goingup
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Re: Offering 401k Advice to my coworkers?

Post by goingup » Fri Aug 10, 2018 8:44 am

iceddante wrote:
Fri Aug 10, 2018 7:32 am
As an example, my email contained a disclaimer about the default allocation setting Vanguard offers: they pre-select a Target Retirement Fund (TRF) Index in which they determine the year you are most likely to retire and automatically enroll you in a target fund for that year that contains a certain stock/bond ratio which auto adjusts closer to retirement. The fees for said fund are more than double what you would pay if you auto-enrolled in this fund yourself and adjusted your allocation manually. While the cost savings would be huge, it isn't unreasonable to imagine that an employee may quickly forget about his annual auto-balancing responsibility and decide that my bad advice led them to an unbalanced portfolio.
Great job getting your company to offer Vanguard funds. That's a big win! :thumbsup

Target Funds are the default for good reason. They're usually low-cost and broadly diversified. You describe the cost savings as "huge" if employees would use the component funds rather than the TDF. That assumption may or may not be correct. For example, if the TDF has an ER of .20 and the SP500 fund is .10 the yearly cost difference on a $10,000 balance is $10.

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Raymond
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Re: Offering 401k Advice to my coworkers?

Post by Raymond » Fri Aug 10, 2018 11:24 am

iceddante wrote:
Fri Aug 10, 2018 7:32 am
...I feel like having an impartial 3rd party Fiduciary attend the office to give advice would be best, but I'll let others make that recommendation if they want...
Are you serious?

Please do not do this.
"Ritter, Tod und Teufel"

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Stinky
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Re: Offering 401k Advice to my coworkers?

Post by Stinky » Fri Aug 10, 2018 1:01 pm

Rupert wrote:
Thu Aug 09, 2018 4:39 pm
Yes, crossing a line and placing yourself and the company at risk. There's a reason why retirement plan decision-makers are covered by ERISA liability insurance. I'm on my company's retirement plan committee and am covered by our insurance policy, but I still am careful to couch my answers to employee questions as "Here's what I do for myself and why," as opposed to "Here's what you should do."
+1

Exactly the same advice from me. I'm also on my company's retirement committee. Fidelity, our 401(k) provider, gives employees a lot of educational information and opportunities, and our HR team pumps it out to the employees, but neither Fidelity nor the company gives any kind of advice.

That's the litigious world that we live in. If we gave advice, we would be wrong in someone's situation and end up getting sued. Life's too short for that.
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Taz
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Re: Offering 401k Advice to my coworkers?

Post by Taz » Sun Aug 12, 2018 3:41 pm

I help administer our small company 401k which is held/run through ADP. (I am still trying to get it moved to VG or Fidelity). If asked, I tell them that I cannot speak for the company, but that I use low cost broad market index funds to approximate my tolerance for risk and that target date funds may be one way to do that since that is what the government provides for its workers.

There is also an adviser on the account who oversaw the old Ameriprise SIMPLE IRA (before my time). He had folks in private REITs and life insurance annuities with surrender fees, etc., so I specifically tell new employees not to waste their time talking to him.
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whodidntante
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Re: Offering 401k Advice to my coworkers?

Post by whodidntante » Sun Aug 12, 2018 4:55 pm

I sometimes talk about what I do or about investing in general. I might make a statement like "costs matter" or "I usually pick funds with low expenses" to plant a seed. I'm really not interested in offering someone specific advice, even if I believe they are far wrong. And while the Vanguard target date funds are not something I want to own, you could do a lot worse.

lifeisinmirrors
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Re: Offering 401k Advice to my coworkers?

Post by lifeisinmirrors » Sun Aug 12, 2018 8:55 pm

A Vanguard target date fund is a fine choice for your co-workers. It is better than the majority of allocations people come up with on their own. I don't see any reason to persuade people to change from the target date fund.

livesoft
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Re: Offering 401k Advice to my coworkers?

Post by livesoft » Sun Aug 12, 2018 9:03 pm

Is anybody aware of a 401(k) committee member being sued by a plan participant for giving out advice? I am unaware of that happening. I think the risk of such a lawsuit is grossly exaggerated in this forum.
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Re: Offering 401k Advice to my coworkers?

Post by Grt2bOutdoors » Sun Aug 12, 2018 9:16 pm

livesoft wrote:
Sun Aug 12, 2018 9:03 pm
Is anybody aware of a 401(k) committee member being sued by a plan participant for giving out advice? I am unaware of that happening. I think the risk of such a lawsuit is grossly exaggerated in this forum.
Not yet, but give Schilecter (spelling?) time, I'm sure this will be next on the agenda. His firm is the one that has been suing various employers for not acting as fiduciary for plan participants, especially as it relates to fees and expense ratios.
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Re: Offering 401k Advice to my coworkers?

Post by smitcat » Mon Aug 13, 2018 8:15 am

livesoft wrote:
Sun Aug 12, 2018 9:03 pm
Is anybody aware of a 401(k) committee member being sued by a plan participant for giving out advice? I am unaware of that happening. I think the risk of such a lawsuit is grossly exaggerated in this forum.
No -- but I am aware of an employee being fired for giving for providing direct investing opinions and information to other staff utilizing the company email list and sending it over the company computer system. That was well over 10 years back now ….

michaeljc70
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Re: Offering 401k Advice to my coworkers?

Post by michaeljc70 » Mon Aug 13, 2018 8:25 am

A Vanguard Target Retirement fund is only "expensive" when comparing it to it to very low cost individual funds. It is probably cheaper than 90%+ of funds out there. As other have said, your company (for obvious reasons) is not going to hand out financial advice from a random employee.

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Re: Offering 401k Advice to my coworkers?

Post by snailderby » Mon Aug 13, 2018 10:19 am

Grt2bOutdoors wrote:
Sun Aug 12, 2018 9:16 pm
livesoft wrote:
Sun Aug 12, 2018 9:03 pm
Is anybody aware of a 401(k) committee member being sued by a plan participant for giving out advice? I am unaware of that happening. I think the risk of such a lawsuit is grossly exaggerated in this forum.
Not yet, but give Schilecter (spelling?) time, I'm sure this will be next on the agenda. His firm is the one that has been suing various employers for not acting as fiduciary for plan participants, especially as it relates to fees and expense ratios.
It happens. See, e.g., https://en.m.wikipedia.org/wiki/Tibble_ ... ernational. Not sure how frequently fiduciaries get sued, but being a fiduciary can be a tough job.

livesoft
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Re: Offering 401k Advice to my coworkers?

Post by livesoft » Mon Aug 13, 2018 10:24 am

^That case has little or nothing to do with giving out advice. Instead it is about fees which is not what was asked about.

And @smitcat, thanks for the note.
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snailderby
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Re: Offering 401k Advice to my coworkers?

Post by snailderby » Mon Aug 13, 2018 10:48 am

livesoft wrote:
Mon Aug 13, 2018 10:24 am
^That case has little or nothing to do with giving out advice. Instead it is about fees which is not what was asked about.

And @smitcat, thanks for the note.
1. Tibble v. Edison involved a situation where the fiduciaries were sued for acting "imprudently by offering six higher priced retail-class mutual funds as Plan investments when materially identical lower priced institutional-class mutual funds were available."

2. 29 C.F.R. § 2510.3–21 provides that a person shall be "deemed to be rendering investment advice" if
(1) Such person provides to a plan, plan fiduciary, plan participant or beneficiary, IRA, or IRA owner the following types of advice for a fee or other compensation, direct or indirect:

(i) A recommendation as to the advisability of acquiring, holding, disposing of, or exchanging, securities or other investment property, or a recommendation as to how securities or other investment property should be invested after the securities or other investment property are rolled over, transferred, or distributed from the plan or IRA;

(ii) A recommendation as to the management of securities or other investment property, including, among other things, recommendations on investment policies or strategies, portfolio composition, selection of other persons to provide investment advice or investment management services, selection of investment account arrangements (e.g., brokerage versus advisory); or recommendations with respect to rollovers, transfers, or distributions from a plan or IRA, including whether, in what amount, in what form, and to what destination such a rollover, transfer, or distribution should be made; and

(2) With respect to the investment advice described in paragraph (a)(1) of this section, the recommendation is made either directly or indirectly (e.g., through or together with any affiliate) by a person who:

(i) Represents or acknowledges that it is acting as a fiduciary within the meaning of the Act or the Code;

(ii) Renders the advice pursuant to a written or verbal agreement, arrangement, or understanding that the advice is based on the particular investment needs of the advice recipient; or

(iii) Directs the advice to a specific advice recipient or recipients regarding the advisability of a particular investment or management decision with respect to securities or other investment property of the plan or IRA.
The regulation goes on to state that a "recommendation" is a
communication that, based on its content, context, and presentation, would reasonably be viewed as a suggestion that the advice recipient engage in or refrain from taking a particular course of action. The determination of whether a “recommendation” has been made is an objective rather than subjective inquiry. In addition, the more individually tailored the communication is to a specific advice recipient or recipients about, for example, a security, investment property, or investment strategy, the more likely the communication will be viewed as a recommendation.
But it also states that the mere provision of general financial education generally should not be considered as a "recommendation," including information about:
(1) General financial and investment concepts, such as risk and return, diversification, dollar cost averaging, compounded return, and tax deferred investment;
(2) Historic differences in rates of return between different asset classes (e.g., equities, bonds, or cash) based on standard market indices;
(3) Effects of fees and expenses on rates of return;
(4) Effects of inflation;
(5) Estimating future retirement income needs;
(6) Determining investment time horizons;
(7) Assessing risk tolerance;
(8) Retirement-related risks (e.g., longevity risks, market/interest rates, inflation, health care and other expenses); and
(9) General methods and strategies for managing assets in retirement (e.g., systematic withdrawal payments, annuitization, guaranteed minimum withdrawal benefits), including those offered outside the plan or IRA.
But what do I know? Surely, on a board like this, we should have some lawyers who know something about ERISA?

augryphon
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Re: Offering 401k Advice to my coworkers?

Post by augryphon » Mon Aug 13, 2018 10:57 am

I would never expect HR to give 401k direction, they poorly take care of HR business.

On my first day of work, I didn't know what a mutual fund was, but I worked with some older guys who opened my eyes to saving and investing. I was an eager student and those two men changed the trajectory of my family's life, and I try to pass it on.

Here's how I offer advice to my coworkers:
1. On one corner of my whiteboard, I list my each fund in my portfolio and the allocation to each. This is not what I say you should do, this is what I do. Spoiler...it's three funds.
2. If they're interested, they'll stop and ask, and the opportunity for conversation opens up. No huge discussion, just seeds for thought.
3. I give them a copy of Bogle's Red Book
4. I understand I can't teach the world, but I can teach a few, who can teach a few, who can....

Rupert
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Re: Offering 401k Advice to my coworkers?

Post by Rupert » Mon Aug 13, 2018 11:15 am

augryphon wrote:
Mon Aug 13, 2018 10:57 am
I would never expect HR to give 401k direction, they poorly take care of HR business.

On my first day of work, I didn't know what a mutual fund was, but I worked with some older guys who opened my eyes to saving and investing. I was an eager student and those two men changed the trajectory of my family's life, and I try to pass it on.

Here's how I offer advice to my coworkers:
1. On one corner of my whiteboard, I list my each fund in my portfolio and the allocation to each. This is not what I say you should do, this is what I do. Spoiler...it's three funds.
2. If they're interested, they'll stop and ask, and the opportunity for conversation opens up. No huge discussion, just seeds for thought.
3. I give them a copy of Bogle's Red Book
4. I understand I can't teach the world, but I can teach a few, who can teach a few, who can....
Nothing wrong with this from an ERISA standpoint so long as you aren't holding yourself out as a representative of the employer or holding out your advice as advice sanctioned by the employer. Contrast what you are doing with what OP wanted to do. OP wanted to disseminate financial advice to his fellow employees through his employer. This placed the employer at risk because OP does not have the credentials to be hired by the employer as as an advisor, etc., and it placed OP at risk because, as someone now speaking for the company, he becomes a functional fiduciary under ERISA and faces the same potential personal liability under ERISA as the retirement plan's official decision makers. Those official decision makers likely have insurance coverage for that exposure, whereas OP, because he isn't an official decision maker, would not.

texasdiver
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Re: Offering 401k Advice to my coworkers?

Post by texasdiver » Mon Aug 13, 2018 7:05 pm

As others have emphatically said, not your place to do this.

If you do want to get mixed up with investing at the workplace, do something like form your own investing club on facebook or some other setting outside the company's electronic or physical walls and invite people to join you. My co-workers have organized various outside groups and clubs on facebook. There's a vegan group that shares recipies and restaurant finds. There are several professional development-related groups. There are book clubs and so forth.

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Jazztonight
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Re: Offering 401k Advice to my coworkers?

Post by Jazztonight » Mon Aug 13, 2018 7:16 pm

"No good deed goes unpunished."

At least you introduced Vanguard into your company.

In my old company, the 401k plan was miserable. But since it was the only game available, the professional staff members chose the best alternatives, and made the best of a bad situation. The lower level (and less educated) employees avoided the Plan like the plague, believing that the company was again screwing them (as it did with the health care plan offered).

But in my location I quietly spread the word that it was a good thing, that it was something they should consider doing, and that if they wanted me to I'd explain it to them. Several did. That was the best I could do. You've done much more!
"What does not destroy me, makes me stronger." Nietzsche

smitcat
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Re: Offering 401k Advice to my coworkers?

Post by smitcat » Tue Aug 14, 2018 7:31 am

Rupert wrote:
Mon Aug 13, 2018 11:15 am
augryphon wrote:
Mon Aug 13, 2018 10:57 am
I would never expect HR to give 401k direction, they poorly take care of HR business.

On my first day of work, I didn't know what a mutual fund was, but I worked with some older guys who opened my eyes to saving and investing. I was an eager student and those two men changed the trajectory of my family's life, and I try to pass it on.

Here's how I offer advice to my coworkers:
1. On one corner of my whiteboard, I list my each fund in my portfolio and the allocation to each. This is not what I say you should do, this is what I do. Spoiler...it's three funds.
2. If they're interested, they'll stop and ask, and the opportunity for conversation opens up. No huge discussion, just seeds for thought.
3. I give them a copy of Bogle's Red Book
4. I understand I can't teach the world, but I can teach a few, who can teach a few, who can....
Nothing wrong with this from an ERISA standpoint so long as you aren't holding yourself out as a representative of the employer or holding out your advice as advice sanctioned by the employer. Contrast what you are doing with what OP wanted to do. OP wanted to disseminate financial advice to his fellow employees through his employer. This placed the employer at risk because OP does not have the credentials to be hired by the employer as as an advisor, etc., and it placed OP at risk because, as someone now speaking for the company, he becomes a functional fiduciary under ERISA and faces the same potential personal liability under ERISA as the retirement plan's official decision makers. Those official decision makers likely have insurance coverage for that exposure, whereas OP, because he isn't an official decision maker, would not.
There is a possibility that it is in violation of the company policy and handbook. There is always a risk/reward to decisions which need to be carefully considered before acting.

getthatmarshmallow
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Re: Offering 401k Advice to my coworkers?

Post by getthatmarshmallow » Tue Aug 14, 2018 10:15 am

Aside from what others have mentioned regarding HR's unwillingness to pass along non-fiduciary advice, while your advice is good and well-intentioned, it might not be optimal for your co-workers. Consider that one advantage of the target date funds are that they really require no attention from the investor, and given that most people are pretty lousy at staying the course during a downturn, an investment vehicle which is really set-and-forget might well give them better returns.

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Stinky
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Re: Offering 401k Advice to my coworkers?

Post by Stinky » Wed Aug 15, 2018 4:53 pm

livesoft wrote:
Sun Aug 12, 2018 9:03 pm
Is anybody aware of a 401(k) committee member being sued by a plan participant for giving out advice? I am unaware of that happening. I think the risk of such a lawsuit is grossly exaggerated in this forum.
No, I have not heard about an individual 401(k) committee member being sued.

But I have heard of companies being sued for "mis-management of 401(k) plans" - high fee investment choices, proprietary funds, etc. It wouldn't be a far stretch to have a company be sued for giving investment advice that didn't turn out to be 100% in the participant's best interest, Such lawsuits would be filed using 100% perfect hindsight, tilting the game against the company from the start.

Besides, my company's general counsel would pitch a screaming fit if our committee gave investment advice. Life is too short for that.
It's a GREAT day to be alive - Travis Tritt

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