If the 401(k) bleeds, it does lead


When the local TV news does a report surrounding a snow storm, I always joke that they should recycle the reporting from supermarkets and hardware stores for barren shelves. It saves time and money.


The same can be said about the recent reports talking about the choppy stock market and participants losing money in their 401(k) plans. If this choppiness leads to a long term correction, expect more reporting and questions on whether the 401(k) plan is the right retirement savings vehicle. There will also be reporting about fees.


How do I know this? Like snowstorm reporting, it’s predictable. What is not predictable is how the industry deals with it and it should not be defensive about it. Until there is something out there that is better and cost effective for the employer, the 401(k) plan is still the most inexpensive option out there. The industry should just strive to improve where it needs to, which is participation and education; I think is where the industry needs the most improvement. Thanks to fee disclosure, you’ll see fewer articles about costs than we did in 2000-2001 and in 2008. I’m just warning you about the articles that come with bad investment news because I’ve lived through it before.

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