In any event, while I've been out there, I ran across a few consistent themes. Here is a summary:
- There are a lot of 401(k) plans out there in America, but many of them are pretty darn small.
- Some of these plans have average account balances of less than $5,000 and they are not brand new plans. That frightens me.
- Among much of the advisor community, there are three types of retirement plans: defined contribution (primarily 401(k)), defined benefit (mostly frozen of one type freeze or another), and cash balance
- Notably, cash balance appears to be a new concept primarily for doctors and lawyers (I found this interesting)
- Many people in the retirement plan advisor community speak in code, or should I say Code. They discuss the distinction between being a three thirty-eight (that's actually 3(38)) and being a three twenty-one (3(21)). It must make for interesting discussion over drinks when the question they are considering is whether to take on responsibility for investment decisions or not.
- Another word that gets tossed around is fouroheightbeetwoo. That's 408b2 or more precisely, the fee regulations under ERISA Section 408(b)(2).
I had always heard that actuaries spoke their own language and that they couldn't (or wouldn't) translate it into English. For some of us, that's very true, but many of us use common everyday language as often as is practical. We only revert into technospeak when we have no other alternative (or when we are sufficiently language-deficient that we are incapable of using our lack of mastery of the language to find a suitable alternative).
To look at the other side of things, though, these advisors are pretty much the everything on retirement plans to small (and nearly small) business owners. They have to know the participant side, the employer side, the recordkeeping side, the investment side. It's not easy to know all that stuff, and to stay on top of it. And, some of those people are really good at it.
The next time I write, I'll try to give you something of more substance. In the meantime, for those of you are celebrating holidays before you see my words again, I wish you the merriest of Christmases, the happiest of Chanukkahs, and a wonderful end to 2011 and start to 2012.
Be safe and be well.