Buyer Beware: Dishonest 401k Sales Tactics

The Plan Sponsor Council of America was putting together speakers for the prestigious entity’s 70th Annual National Conference. The event would held at the iconic Drake Hotel in Chicago and the most logical decision would be to start with a Professor Emeritus from Harvard (MIT Grad, PhD, Award Winning Expert) Keynote Speaker and then end the conference with four guys sitting on a couch drinking beer and dishing 401k. In a serendipitous chain of events, The Retireholiks somehow found themselves on stage in front of a live PSCA audience. Lights, Camera, ACTION!
Watch The Retireholiks episode #20 by clicking here
This was a great opportunity and we wanted to makes sure we chose discussion topics that would really resonate, inform and hopefully open the eyes of our audience. What better than 401k hidden fees and more specifically the funny little games that can be played when showing fee comparisons or different proposal numbers.  Call them Sales Schemes, Number Manipulation or Tricks of the Trade. The Retirement Plan Sales world is very competitive, dog eat dog if you will. Quotas, sales goals, reward trips and overall job security are all prevalent concepts that can impact the actions of the individuals responsible for sales. If someone does not have a strong hold on their honesty, their integrity or their moral compass, well let’s just say that numbers are funny things….so Buyer Beware.
The Retireholiks decided to shine a light on some typical situations where Plan Sponsors could benefit from diving a little deeper into the numbers, the methodology, the origination and intentions involved. We focused on the following:
–       Expense Ratio representation – funny games and several different methodologies are at play here. In the wrong hands numbers can be funny things and deception can exist.
–       Fixed Account or GICs – we touched on how many times this very important investment option is overlooked and takes a back seat to all other investment options. How the fees for these investment types can be misrepresented as zero. Another dangerous trap waiting for unsuspecting Decision Makers.
–       TDFs – Yup, still talking Target Date Funds….because you just cant ignore these suckers. *81.2% of new plan assets are flowing into these funds and a high level of scrutiny is necessary. * It should be noted that I make up statistics on the regular while filming the show and the 81.2% is a prime example. The big question here is whether or not the TDF was actually selected as the best for the plan participants or if it just came along with the Recordkeeper choice.
You can learn way more about these concepts by watching the show. That’s right I wrote the blog post with the sole intent to drive you to watch The Retireholiks Episode 20 filmed in front of a live audience at the prestigious 70th Annual PSCA Conference hosted by The Drake Hotel in Chicago. Grab a cold beer (hopefully a Potosi Brew, as they sponsored the show and provided free Suds for the entire audience) and spend the next 39 minutes learning a few unique insights around 401k plans. Hopefully we can make you smile, maybe even laugh and learn some 401k shiznit at the same time.

SHAMELESS PLUGS BELOW:
There is nothing more exciting than a 401k Blog, check out more posts like this one at www.four01k.com
Plan Design Consultants, Inc. a Third Party Administrator founded in 1975 and currently challenging the status-quo of retirement plan design and service.
The Retireholiks Show – “Changing the retirement plan industry one beer at a time”

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