Could Super Bowl 59 Influence Your 401(k)’s Future?

 Will your 401(k) be chopped by the Chiefs — or soar with the Eagles?

That’s what adherents of the so-called Super Bowl Indicator[1] would likely conclude, after all. It’s a “theory” that when a team from the old National Football League wins the Super Bowl, the S&P 500 will rise, and when a team from the old American Football League prevails, stock prices will fall.

It’s a “theory” that has been found to be correct nearly 80% of the time — for 41 of the 58 Super Bowls, in fact. Not that it hasn’t been tackled short of the goal line.

Portfolio Prognostications

One needs to look back no further than last year’s victory by the (original AFL) Kansas City Chiefs that, according to the Indicator, should have predicated a portfolio predicament for the S&P 500 — but wound up with a 23% gain for the year. Or the year before that when those (same) Kansas City Chiefs prevailed over the original NFL 49ers — but the S&P 500 still rose 25%.

On the other hand, the year before that, the victory by the (old NFL) Los Angeles Rams (over the old AFL) Cincinnati Bengals “should” have been a portent of good times, only to see the S&P 500 slump more than 19% — for its biggest loss since 2008. 

And while the previous year’s blow-out victory by the NFC’s Tampa Bay Buccaneers (over those AFL Kansas City Chiefs) bolstered the premise behind the “theory,” the year before that the win by these same Kansas City Chiefs (who have become something of a regular in the big contest) over the then-NFC Champion San Francisco 49ers undermined its track record (or did your 401(k) miss that 18.4% rise in the S&P 500?).

Or how about the year before THAT when the AFC’s New England Patriots (who once upon a time were the AFL’s Boston Patriots) bested the NFC champion Los Angeles Rams — but the S&P 500 was up more than 30% that year (2019).

Or, looking the other way, the year before that a win by the (old NFL and) NFC champion Philadelphia Eagles against the AFC Champion Patriots turned out to be a loser, marketwise, with the S&P 500 down more than 6% (though for most of the year it was quite a different story). Ditto the year before, when the epic comeback by those same AFC Champion Patriots against the then-NFC champion Atlanta Falcons failed to forestall a 2017 market surge.

Now, one might think that the real “spoiler” to this market “theory” is the New England Patriots (who not so long ago were perennial Super Bowl participants) — but the year before that, the AFC’s (and original AFL) Broncos’ 24-10 victory over the Carolina Panthers, who represented the NFC, also proved to be an “exception.” Now, of course, we might say the same thing about the Chiefs — who, should they prevail on Sunday, would be the first team to win three in a row (though quite a few have managed to take two in a row).

Market Makings

Indeed, one might well wonder why, in view of that consistent string of “exceptions” that we’re still talking about this “theory” — but, as it turns out, that’s an unusual (albeit consistent) break in the streak that was sustained in 2015 following Super Bowl XLIX, when the AFC’s New England Patriots (yes, they DO show up a lot – or at least used to) bested the Seattle Seahawks 28-24 to earn their fourth Super Bowl title.

It also “worked” in 2014, when the Seahawks bumped off the legacy AFL Denver Broncos, and in 2013, when a dramatic fourth-quarter comeback rescued a victory by the Baltimore Ravens — who, though representing the AFC, are technically a legacy NFL team via their Cleveland Browns roots. This is where things start to get confusing, as the Ravens, who were the Browns moved to Baltimore in 1995 (though the NFL still views them as an expansion team) filling the hole left by the then-Baltimore Colts’ 1984 “dead of night” move to Indianapolis.

Admittedly, the fact that the markets fared well in 2013 was hardly a true test of the Super Bowl Theory since, as it turned out, both teams in Super Bowl XLVII — those Ravens and the San Francisco 49ers (yes, they show up a lot also — they just miss Joe Montana) — were, technically, NFL legacy teams.

However, consider that in 2012 a team from the old NFL (the New York Giants) took on — and took down — one from the old AFL (the New England Patriots — yes, those New England Patriots… again). And, in fact, 2012 was a pretty good year for stocks (and people who like to see the Patriots lose in dramatic fashion).

Steel ‘Curtains’?

On the other hand, the year before that, the Pittsburgh Steelers (representing the American Football Conference, but an old NFL team) took on the National Football Conference’s Green Bay Packers —two teams that had some of the oldest, deepest and, yes, most “storied” NFL roots, with the Steelers formed in 1933 (as the Pittsburgh Pirates) and the Packers founded in 1919.

According to the Super Bowl Theory, 2011 should have been a good year for stocks (because, regardless of who won, a legacy NFL team would prevail). But as some may recall, while the Dow gained ground for the year, the S&P 500 was, well, flat (dare we say “deflated”?).

And then there was the string of Super Bowls where the contests were all between legacy NFL teams (thus, no matter who won, the markets should have risen):

• 2006, when the Steelers bested the Seattle Seahawks;
• 2007, when the Indianapolis Colts (those old Baltimore Colts) beat the Chicago Bears 29-17;
• 2009, when the Pittsburgh Steelers took on the Arizona Cardinals (who had once been the NFL’s St. Louis Cardinals); and
• 2010, when the New Orleans Saints bested the Indianapolis Colts, who, as we’ve already remarked, had roots dating back to the NFL legacy Baltimore Colts.

Sure enough, the markets were higher in each of those years.

As for 2008? Well, that was the year that the NFC’s New York Giants upended the hopes of the AFL-legacy Patriots (yes, those Patriots) for a perfect season, but it didn’t do any favors for the stock market. In fact, that was the last time that the Super Bowl Theory didn’t “work” (well, until last year, the year before last — oh, and the year before that — and the year before…).

Patriot Gains

Times were better for Patriots fans in 2005, when they bested the NFC’s Philadelphia Eagles 24-21. Indeed, according to the Super Bowl Theory, the markets should have been down that year — but the S&P 500 rose — albeit just 2.55%.

Of course, Super Bowl Theory proponents would tell you that the 2002 win by the New England Patriots accurately foretold the continuation of the bear market into a third year (at the time, the first accurate result in five years). But the Patriots’ 2004 Super Bowl win against the Carolina Panthers (the one that probably nobody, except Patriots fans and disappointed Panthers advocates, remembers because it was overshadowed by the infamous “wardrobe malfunction”) failed to anticipate a fall rally that helped push the S&P 500 to a near 9% gain that year, “sacking” the indicator for another loss (couldn’t resist).

Bronco ‘Busters’

Consider also that, despite victories by the AFL-legacy Denver Broncos in 1998 and 1999, the S&P 500 continued its winning ways, while victories by the NFL-legacy St. Louis (by way of Los Angeles) Rams (that have since returned to the City of Angels) and the Baltimore Ravens (those former “Browns”) did nothing to dispel the bear markets of 2000 and 2001, respectively.

In fact, the Super Bowl Theory “worked” 28 times between 1967 and 1997, then went 0-4 between 1998 and 2001, only to get back on track from 2002 on (though “purists” still dispute how to interpret Tampa Bay’s 2003 victory, since the Buccaneers spent their first NFL season in the AFC before moving to the NFC).

Indeed, the Buccaneers’ move to the NFC was part of a swap with the Seattle Seahawks, who did, in fact, enter the NFL as an NFC team in 1976 but shuttled quickly over to the AFC (where they remained through 2001) before returning to the NFC.[2] And, not having entered the league until 1976, regardless of when they began, can the Seahawks truly be considered a “legacy” NFL squad?

Bear in mind as well, that in 2006, when the Seahawks made their first Super Bowl appearance —and lost — the S&P 500 gained nearly 16%.

Fun Facts to Share About the Game

The Kansas City Chiefs will wear their away white uniforms — that means, of course, that the NFC champion Philadelphia Eagles will be in their home greens — that’s the same colored pairings as in Super Bowl LVII. As it turns out, in all four Super Bowl appearances, the Eagles have worn their home green (with one win in Super Bowl LII).

In the Patrick Mahomes era, the Chiefs have worn their home jerseys in three of their four Super Bowl appearances (LIV, LV, LVIII), winning twice in red. However, Kansas City last wore its white jerseys in the Super Bowl in its first meeting with the Eagles — when the Chiefs beat Philadelphia, 38-35. 

That said, the team wearing white jerseys in the Super Bowl has won 16 of the last 20 Super Bowls. 

Right now, the Chiefs are favored to beat the Eagles — but that’s the first time in their three-year streak of Super Bowl attendance that they’ve been the favorites.

All in all, and particularly in view of the exciting playoff games that have led up to it, it looks like it should be a good game.

And that — whether you are a proponent of the Super Bowl Theory or not — would be one in which regardless of which team wins, we all do!

• Nevin E. Adams, JD

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[1] An alternate theory linking the Super Bowl to stock market performance in reverse fashion postulates that Wall Street’s results can be used to predict the outcome of the game. According to this theory, if the Dow rises from the end of November until Super Bowl game day, the team whose full name appears later in the alphabet will win. Some people have too much time on their hands…

[2] Note: Seattle is the only team to have played in both the AFC and NFC Championship Games, having relocated from the AFC to the NFC during league realignment prior to the 2002 season. The Seahawks are the only NFL team to switch conferences twice in the post-merger era. The franchise began play in 1976 in the NFC West division but switched conferences with the Buccaneers after one season and joined the AFC West.

A Red Flag for a ‘Red Flag’ Report

  Did you hear the one about how nearly all U.S. retirement plans have “at least one regulatory or fiduciary ‘red flag’ violation”?

Well, here’s hoping you haven’t. Because this so-called “analysis” of Form 5500 filings claims to have discovered that 84% of all (that’s right ALL) retirement plans in the United States have “at least one likely Employee Retirement Income Security Act (ERISA) red flag from a regulatory and/or fiduciary violation.”

Now, having grabbed your attention, you probably won’t be surprised to find in the fine print of the press release an opportunity to “schedule a cost-free benchmarking audit.” But before you do so, you might want to take a look at the criteria this firm designates as a “red flag.”

From their press release, “Abernathy-Daley defines red flag violations as either ‘infractions, fineable offenses, fiduciary failure, or plan malpractice’ and are separated into two main categories: Regulatory Infraction Red Flags (RIRF) and Egregious Plan Mismanagement Red Flags (EPMRF).” 

As if the industry needed any more acronyms — much less made-up ones. 

With regard to the former, the press release identifies the following “selected RIRF infraction categories”: 1) loss from fraud or dishonesty; 2) not offering qualified default investment alternatives (QDIA); 3) an insufficient fidelity bond; and 4) not 404(c) compliant. With a straight face the firm claims that at least 328,833 retirement plans had at least one of these RIRFs, representing approximately 43% of the total plans. 

We’ve got no numerical breakdown by category, but someone should notify these folks that there’s no legal requirement that a plan be 404(c) compliant nor that they offer a QDIA.  These are safe harbor options available to any plan that desires them and that is willing to take on the conditions that accompany them — but it’s hardly a violation of any kind not to.

As for losses from fraud or dishonesty — well, to the extent such things are actually discoverable on the 5500, it’s likely the plan already knows the issue (and has already resolved the matter). Ditto the allegedly insufficient fidelity bond — and well, considering the categories compiled here, it would be useful to know what they deemed “insufficient.”

And then there’s the “Egregious Plan Mismanagement Red Flags” (EPMRFs). Hope you’re sitting down. Those are defined as “red flags that may not necessarily result in a fine, but represent failure of: The plan administrator in their fiduciary duty to the plan sponsors, and The plan sponsors in their fiduciary duty to their employees.”

More to the point, these “infractions” (their word choice, not mine) were detailed as “1) Not including automatic enrollment; 2) No corrective distribution of excessive contributions; 3) No 404(c) with participant-directed accounts; and 4) Failure to transmit payments on time.” Once again, we don’t have a breakdown of how many in which category, but they claim that at least 584,113 retirement plans had at least one EPMRF, representing approximately 76% of the total plans.

Once again, though — neither automatic enrollment nor 404(c) compliance is legally required (unless it’s a plan adopted after Dec. 29, 2022, and those won’t yet have shown up in the Form 5500 data). And again, if you’re able to find evidence of corrective distributions and/or failure to transmit payments on time on the Form 5500 — well, that’s only because the issue has been found, acknowledged, and likely corrected.

Look, an advisory firm can set out whatever standards it deems appropriate, affix clever (if arguably misleading) names (and acronyms) to practices that fall short of those individual standards, and even issue a press release proclaiming that it has found the vast majority of plans in existence are found “wanting” based on those standards — doubtless in hopes that it will be picked up and shared uncritically by the media (and read by potential clients).

That said, the deliberate choice to position practices that are clearly neither required nor necessary as some kind of “regulatory and/or fiduciary violation” — strikes me as a “red flag” violation of another kind.

• Nevin E. Adams, JD

Missing the Mark

 A recent survey posed an intriguing question: Why are employees not participating in their 401(k)s? The answer(s) were jaw-dropping.

Now, I’ve previously expressed skepticism regarding workers’ perception of things like retirement savings needs, much less retirement savings balances, and over the years there has been plenty of anecdotal evidence to suggest that workers think they have a pension, despite plenty of actual data to indicate that’s a misguided fantasy. In sum, it seems that many, if not most, workers have a pretty distorted view of their financial circumstances, certainly as it relates to retirement.

That said, a recent survey by Principal takes that to a whole new level. 

That survey found that more than half — 59% — of workers who were not saving for retirement — thought they WERE saving for retirement. Nearly half (49%) thought they had been automatically enrolled, but nearly as many (41%) thought they had signed up on their own. And three-quarters (77%) said they had started saving as soon as they were eligible for the plan!

And if that wasn’t enough — turns out that while 83% say that they’d start contributing if they received a match ... 78% of those respondents are actually in plans that DO offer a match. Oh, and 70% of those who thought they were contributing (but weren’t) actually thought money was being deducted from their paychecks for that purpose.

Oy vey!

Some of this confusion might be a consequence of turnover — 40% said they had had more than one job in the past five years, after all. Let’s face it, it’s easy to lose track of things like benefit enrollment when you’ve changed jobs that often (or to assume that just because you were saving at your old job transferred to the new one). Some can doubtless be attributed to the industry’s growing reliance on automatic features — both by plan sponsors and workers — that lessens or eliminates the traditional need to be attentive to such things. Ultimately, a big part of it is likely nothing more than a combination of both the complexity of the process and the “distractions” of daily life.   

Now, I’m not quite sure how to remedy the passivity of those relying on their employer to sign them up, much less the myopia of individuals who aren’t even paying attention to the deductions on their paystubs. Maybe we should start mailing out statements to non-participants that showed a $0.00 balance (in red) that confirms their lack of an account — though my guess is they’d just file it away. 

Whatever the reason(s), this survey suggests that messages about the importance of saving for retirement — much less saving more — are likely going right over the heads of people who seem to think they already are. 

And in that sense, this survey also suggests that OUR assumptions about the efficacy and impact of our communications in inspiring better efforts — could be missing the mark as well.

- Nevin E. Adams, JD 

The Limits of Behavioral Finance?

  It’s long been noted that inertia is a powerful force regarding behavioral finance and automatic enrollment — but it may have limits, according to a new study.

Coverage of the report — titled “Smaller than We Thought?  The Effect of Automatic Savings Policies” — focused on how job change undermines retirement savings — both because of vesting, as well as the effectiveness of automatic enrollment, and more specifically auto-escalation, since those mechanisms tend to reset with the change in employers (and payroll).   

Don’t get me wrong. The report states quite clearly that these automatic mechanisms provide a positive result — the authors comment only that it’s perhaps not quite as positive as most think.  Their solution — give people less access to these monies before retirement, and require savings, rather than permitting an opt-out. 

From a pure mathematical stance, there’s little argument there — making people save and prohibiting pre-retirement access to those funds certainly benefits retirement savings, though it also exacts a financial toll in the here and now.

There’s little to be done about job change — which, as I’ve noted before, isn’t really all that different today than it was several decades back. And it should come as no surprise that folks that have been accustomed to automatically being defaulted[i] into saving at employer #1 will readily come to rely on that convenience at employer No. 2, if the option is available, and even if it resets their rate of savings. 

Indeed, we’ve long embraced a working assumption that automatic enrollment takes participation rates of 65%-70% and turns them into 90%.  Said another way, only about 1 in 10 take the time/energy to opt-out of automatic enrollment. 

Opt-Out Observations

That said, what caught my eye here was what turns out to be an extraordinarily high rate of opt-out when it comes to automatic escalation.  Among the plans/participants studied[ii], more than half - 57% - opted OUT of automatic escalation the very first time it came up.  And it gets worse as time progresses; while on average, the acceptance rate of the auto escalation default is 43% on the first escalation date[iii], it slips to 36% on the second date, and 29% on the third date. 

Admittedly that’s higher than previous research suggests — in fact, the researchers acknowledge that in the Vanguard “universe”, the acceptance rate of an auto-escalation default is 63%, 63%, and 60% after one, two and three years of tenure — though even that was significantly below the 85% found by in a 2013 study by Benartzi, Peleg, and Thaler. 

Those differences can be attributed to different employers, different employee populations, even different periods of time during which the assessments are made.  Just as significantly, we don’t know anything about their financial situations, the rate of deferral they were defaulted in at, or why they opted out. 

That said, the opt-out rates struck me as higher than most might be led to expect — suggesting that while inertia can be a powerful force, it’s not without its limits.

• Nevin E. Adams, JD

 

[i] The 67^th Annual Survey of Profit-Sharing and 401(k) Plans by the Plan Sponsor Council of America found that 64% of surveyed plans use an automatic enrollment feature (74.3% among larger plans).  That same survey found that more than three-quarters of the plans that use automatic enrollment also employ contribution acceleration.

[ii] The study focuses on nine firms that, sometime between 2005 and 2011, introduced either (1) automatic enrollment on its own, (2) default auto-escalation in a 401(k) plan where automatic enrollment was already present, or (3) automatic enrollment and default auto escalation simultaneously. The automatic policies applied only to employees hired from a certain date onward, so they identified their effect by comparing 62,430 employees hired in the year after the policy introductions to 55,937 employees hired in the year before the policy introductions.

[iii] Opt-out rates that, as it turns out, aren’t very different from that reported from most of the state-run IRAs.

Encouraging Words

 On what turned out to be the longest day of 2024, I said good-bye to my dear 94-year-old mother.

It wasn’t how any of us had planned to spend that day. Two days earlier, she was returning from getting new hearing aids with my sister when she slipped and fell — broke her femur, sending her to the hospital for what was to be a weekend surgery. Mom was amazingly self-sufficient — still living on her own (with some assistance from my sister, who lives nearby) — and she had gone through heart valve replacement and a pacemaker — with COVID in between those two years back.

But this time, as is often the case with older folks, the trauma to her body was more than she could fight off. Thankfully, she managed to hang on until her kids (including this one) and several grandkids were able to get to Chicago to be with her as she went to be with the Lord.    

I moved out — and my parents moved for my Dad’s new job — just as I graduated college.  My parents (and three siblings) lived in a house and a community that I only rarely visited — even less so as my own work and family drew me hundreds of miles away. As a consequence, there was a big chunk of my mother’s life that occurred outside my experience — neighbors, co-workers, and church members. Many of whom had rich and touching stories of the impact Mom had had on their lives.    

Not that Mom and I didn’t talk. After my Dad’s passing in 2006, I committed to calling her every Saturday morning — not always at the same time, and at times (I found later) wresting her out of bed when she, otherwise, probably had been sleeping. We covered a lot of ground on those Saturday mornings — weather, politics, family, investments — and religion. Mom’s faith was the central focus of her life — as the wife of a minister you might expect that — but as have many others of my acquaintance, she had a life — and a profession — outside of the church. 

See, Mom was a teacher from a long line of teachers — what some might think of as the school librarian, though in later years as a “learning center director,” she also became “custodian” and master of the school’s technology investments — video, computers, etc.  It was a skill she relished and nourished — regularly corresponding on email and using her Kindle Fire (and PC) to keep up with photos and YouTube videos. Both her love of books and reading — and technology’s gifts — she passed on to her kids, notably this one. Despite her age, Mom was no luddite, though in recent years the pace of change (the iPhone operating system updates were a particular challenge) was frustrating (and thank goodness for TeamViewer!).

I’ve shared in previous columns the lessons I picked up along the way from Mom (and my Dad, as well). Her decision to set aside money in a 403(b) when my dad insisted they couldn’t afford to (and trust me, it took some sacrifice — that was on top of the 8-10% of pay mandated pension contributions). But she also had the foresight to buy pension credits for the years she stopped teaching to raise a family.

And she, along with my Dad, bought long-term care insurance before it was “cool” (and when it was considerably more affordable) because she didn’t want to be a burden to her family — and had seen first-hand with her parents the financial toll that can take. Mom’s retirement finances — because of the thoughtful and prudent sacrifices my parents made along the way — were comfortable.  Indeed, her retirement income was better than her pre-retirement take-home even after nearly three decades of retirement.

It was, however, her faith that gave purpose to her life. And even when it was no longer safe for her to drive — and COVID kept her home — she believed with all her heart that the Lord’s purpose for her — despite, and perhaps because of those limitations — was to be an encouragement to others.

And so she did — by phone calls, texts, and an astounding amount of “snail mail” — she found ways to reach out, to support and encourage what turned out to be an incredible network of friends, family, church members — even co-workers from three decades ago.  The week she passed those notes were still arriving, encouraging those in her network(s).

I’m already missing my Saturday morning phone calls with Mom. But what a difference we could make in this world if we would all take to heart her “mission” to support and encourage those around us — to provide those “encouraging words” — because you just never know how much difference it could make…

• Nevin E. Adams, JD

5 Fiduciary Resolutions for 2025

This is the time of year when resolutions for the cessation of bad behaviors and the beginning of better ones are in vogue. Here are five for plan fiduciaries for 2025.

1. Develop a (plan) budget.

Most financially-focused New Year’s Resolutions focus on spending (less) or saving (more) —and the really thoughtful ones do both — all tied around the development of a budget that aligns what we have to spend with what we actually spend.

I expect that most, or at least many, plans also have a budget when it comes to the expenditures that require corporate funding.  Less clear is how many establish some kind of budget when it comes to what participants have to spend.  Now, granted, what they pay will vary based on any number of …variables — but an essential part of ensuring that the fees paid by the plan (for the services provided to the plan) is knowing how much — and for what.

At some level that means not only keeping an eye on things like expense ratios, the options with revenue-sharing, and the availability of alternative share classes (or options like CITs) — but it also means having an awareness not only of the plan features, but the usage rates of those plan features.

Let’s face it - when it comes to retirement plans, there often IS a direct link between spending less and saving more.

2. Check-up—on your target-date fund(s).

Flows to target-date funds (TDF) have continued to be strong — and little wonder, what with their positioning as the qualified default investment alternative (QDIA) of choice for most 401(k)s. That said, the vast majority of those assets are still under the purview of an incredibly small number of firms — with glidepaths that are not nearly as dissimilar as their marketing materials might suggest.

A TDF is, of course, a plan investment, and like any plan investment, if it fails to pass muster, a plan fiduciary would certainly want to remedy that situation, including removing the fund if necessary (don’t take my word for it — that’s coming straight from the Labor Department). 

That said, TDFs are frequently, if not always, pitched (and likely bought) as a package. While each fund in the family is reviewed separately, and certainly should be, breaking up the set certainly carries with it a series of complicated consequences, not the least of which are participant communication issues and glide path compatibility. Not that those can’t be overcome — and not that those complications would be deemed sufficient to retain an inappropriate investment on the plan menu — but it doesn’t take much imagination to think about the heartburn that might cause.  However, and once again – the Labor Department has suggested that action might be appropriate.

The reasons cited behind TDF selection run a predictable gamut; price/fees, performance (past, of course, despite those disclaimers), platform (as in, it happens either to be their recordkeepers, or compatible with their program) — and doubtless some are actually doing so based on an objective evaluation of the TDF’s suitability for their plan and employee demographics.

Whatever your rationale, it’s likely that things have changed — with the TDF’s designs, the markets, your plan, your workforce, or all of the above – oh, and there might now be a more personalized managed account option. 

The time to consider a change is before you are forced to do so.

3. Pump up - the default rate in your auto-enrollment plan.

While a growing number of employers are auto-enrolling workers in their 401(k) plan (likely even more with the new provisions in SECURE 2.0), one is inclined to assume that nearly two decades after the passage of the Pension Protection Act, if a plan hasn’t done so by now, they likely have some very specific reasons.

But for those who have already embraced automatic enrollment, those are plans who have (apparently) overcome the range of objections; concerns about paternalism, administrative issues, cost — some may even have heard that fixing problems with automatic enrollment can be — well, problematic (though things have gotten a little easier on that front).

There has been movement here over the year s— indeed the most recent PSCA survey found that half of the plans with automatic enrollment set the default deferral rate high enough so that participants receive the full possible company matching contribution (another 10% set it above that rate). More than a third now have a default rate of 6% - or higher!

4. Set goals for your plan (designs).

The mantra about retirement benefits has always been that they exist to help attract and retain good workers. More recently, a reimagined emphasis on financial wellness has offered some nuance to that — to provide better levels of engagement while they are working, to forestall the “distractions” (and potential malfeasance) that financial stress can engender, and ultimately to help workers retire “on time.” These goals are not inherently incompatible, but at any given point in time they require differences in communication, education, emphasis, and potentially program design. 

There is, by the way, a sense of a shift in such things. While the primary goal of participant education has historically been to increase participation rates, the Plan Sponsor Council of America’s 67th Annual Survey of Profit-Sharing and 401(k) plans notes that in 2023 that shifted to increasing financial literacy of employees — cited by 83.6%, and cited as the top priority for more than a third of survey respondents. 

If you haven’t revisited those objectives in a while — or, heaven forbid, have never done so — there’s no time like the present for a reset. After all, as Yogi Berra once commented, “If you don’t know where you’re going, you might wind up someplace else.”

5. Do your homework

Whether you lead a plan committee – or are “just” part of one – it’s important to be prepared.  ERISA requires that the named fiduciary (and there must be one of those) make decisions regarding the plan that are SOLELY in the best interests of plan participants and beneficiaries, and that are the types of decisions that a prudent expert would make about such matters.  Even if you (just) serve on a plan committee, you are also held to that standard.  Legally, you have personal financial responsibility for those decisions – and that motivation alone should provide the requisite focus on preparation. 

That said, ERISA does not require that you make those decisions by yourself—and, in fact, requires that, if you lack the requisite expertise, you enlist the support of those who do have it. 

But you’ll help them – and help yourself – and help the plan participants – if you do your homework BEFORE the committee meeting.

• Nevin E. Adams, JD