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401(k) Fiduciary Solutions: Expert Guidance for 401(k) Plan Sponsors on how to Effectively and Safely Manage Plan Compliance and Investments by ... Burden with Experienced Professionals Paperback – April 20, 2012
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- Mike Alfred, Co-Founder & CEO, BrightScope, Inc., San Diego, California
"In four acts, nine sections, 76 chapters and 320 pages, Chris provides a treasure trove of practical and invaluable information and insights for plan sponsors and financial advisors to 401(k) plans. If you wear either of these hats you MUST read this book."
- Harold Evensky, CFP, AIF, President, Evensky & Katz, Miami, Florida
"401(k) Fiduciary Solutions provides clear, concise, must-know info to help plan sponsors successfully navigate their fiduciary responsibilities & truly serve the best interests of plan participants. Consistent with his stellar reputation as Chief Contributing Editor of FiduciaryNews.com, Chris Carosa demonstrates a knack for cutting through the clutter of investment, administrative, & regulatory issues plan sponsors face to uncover the essence of what the reader needs to know and points to great resources for more information."
- Blaine F. Aikin, CEO, fi360, Pittsburgh, Pennsylvania
"What sets this book apart from others I've seen in this space is the thoroughness of Chris's research, the variety of experts interviewed, and the breadth and depth of the topics covered. Additionally, the book flows seamlessly from expert to expert and topic to topic. If you are a plan sponsor or in any way provide service and advice to plan sponsors this is a must-have book for your library."
- Roger Wohlner, Co-founder, Retirement Fiduciary Advisors, Arlington Heights, Illinois
"Provocative yet conversational, Chris Carosa's book will terrify plan fiduciaries before guiding them on a simple path out of the darkness."
- Jan Sackley, Fraud Examiner, PI, Fiduciary Consultant, Fiduciary Foresight, LLC, Kalamazoo, Michigan
From the Author
Some time ago I met an electrical engineer at a FIRST robotics competition. After sharing our experiences as mentors for the young innovators who built and ran the robots, we spoke of our enthusiasm for promoting science, technology, engineering and mathematics. My fellow mentor was somewhat surprised to learn that I took my Physics and Astronomy degree and promptly entered the field of investments and portfolio management.
Well, it wasn't too prompt. It also started during the height (make that the nadir) of the 1982 recession. I was desperate to accept any job. The offer from the investment firm just happened to be the first (and only) one that came along. Now, although the company was a successful investment adviser, my job was a rung below that of mail clerk. A glorified data entry typist, each day I would enter the data for the previous day's trades from which I'd print authorization letters my company would then send to the banks holding the clients' assets, instructing them they were authorized to settled said trades.
I thought this was an incredible waste of time and energy, not to mention personally demeaning. It didn't take a rocket scientist (ironic given my degree suggests I could indeed have become a rocket scientist) to determine we could build a rather powerful computer database out of the data I entered. Indeed, within a few short years, I had created such a system, which allowed my employer to move from using paper ledgers to enjoying the wonderful world of computing. Not only did it put me in a higher pay grade, it also got me out of typing those darned author-ization letters. This turned out to be a good thing because with the implementation of the Depository Trust Company about the same time, authorization letters became obsolete. (Not in the mind of the SEC, though, and a year or so later I helped draft a no-action letter to that government agency explaining this new electronic approval system.)
That same analytical thinking placed me in the perfect position for my superiors to tap me to help create their mutual funds, head up the firm's entire operations area (after being named a Managing Director at the ripe old age of 26), set up internal custodian operations, create and build their affiliated trust company (as Executive Vice President and Senior Trust Officer) and, ultimately, build and help oversee several common trust funds (as a member of the Trust and Investment Committee).
After all that hard work, and the desire to spend more time with my family, I decided to create my own firm. This firm would be a scaled down version of my former employer. As such, with a fully integrated information system from the get go, it would be more manageable with fewer people. The Internet certainly helped.
Truth be told, my original intention upon leaving my old firm was to write a book to help everyday investors make better decisions. After 150 pages of outline, I figured it was too long and would never sell. With a young family in need of daily feeding, I had to think of some way to provide for them. I looked to the only business model I knew I could turn profitable in the shortest amount of time.
I told the electrical engineer this whole story and a little bit more. Rather than dying from boredom, he seemed genuinely intrigued. A moment later his eyes fell to the floor and flitted back and forth as he shyly inquired, "Do you mind if I ask you a personal question -- about me, I mean, not you?"
"Sure," I said. He had my curiosity.
Still somewhat embarrassed, he asked, "Do I have enough to retire?"
This is what I knew about him: He worked for a large firm but wasn't top management. He had been working since graduate school and was in his mid-fifties. His oldest child was about to start college and he had a couple more. He lived in a modest house in a small rural community that's more Midwest than east or west coast. It's more rustbelt than sunbelt.
Here's what I know about that question: I hated it. I've read so many stories of people not having enough to retire. I've met so many people who never thought of saving for retirement. I really hate being the bearer of bad news.
Perhaps he saw this in my hesitation when he meekly offered, "My 401(k) plan is well north of a million dollars."
I smiled and explained that, although he wasn't alone in his savings level, he was much better off than many of his counterparts.
After the robotics tournament, I thought about his situation and how so many people really do share his good fortune. In fact, Thomas Stanley and William Danko's 1996 bestseller The Millionaire Next Door describes the phenomenon I'm talking about. It's about how everyday people, living a life of modest discipline, can accumulate retirement assets into seven figures. And I mean seven figures even after the 2007-2009 market debacle.
Unfortunately, while the 401(k) plan offers an excellent means for workers to meet their retirement needs, it remains a far too underutilized tool. Two reasons rise to explain this. First, the average worker does not take advantage of the clear economic opportunity afforded by the 401(k), specifically through the employer match. Academic research shows people regularly -- and inexplicably -- turn away from these no-strings-attached free money offers.
Academic research also suggests reliable solutions to prevent these poor decisions, which brings us to our second problem. Typical 401(k) plan sponsors find themselves consumed by the rigors of the particular rat race in which they've chosen to compete. They simply can't spend the time needed to fine-tune their retirement plan. Worse, to the extent they do devote that time to their 401(k) plan, they expend far too much of it trying to avoid fiduciary liability.
That got me to thinking. What if I interviewed folks from across the country who could reveal best-of-breed solutions and then share those solutions with 401(k) plan sponsors throughout the land? I got the chance to do precisely this thanks to Pandamensional Solutions, Inc., which publishes FiduciaryNews.com, a website providing essential information, blunt commentary and practical examples for ERISA/401(k) fiduciaries, individual trustees and professional fiduciaries. This led to other publishing venues and, with more than 300 articles published in paper, print and on the web, I soon found my readers asking for a book; hence the birth of this volume, 401(k) Fiduciary Solutions -- Expert Guidance for 401(k) Plan Sponsors on how to Effectively and Safely Manage Plan Compliance and Investments by Sharing the Fiduciary Burden with Experienced Professionals.
I hope you find this book as enjoyable to read as it was for me to write and as useful a tool as there can be in today's challenging and ever changing 401(k) environment.
- Christopher Carosa, Mendon, New York, April 27, 2012
Top Customer Reviews
Dale F. Smith, QPA, ERPA, Consulting Principal, Pension Plan Professionals, Inc., Jacksonville, FL