Consider the typical 401(k) experience, with Joe Employee.
Joe is 30 years old and his companyis offering a 401(k) plan. Joe
sits though an initial 60 minute educationalseminar where he is
instructed on how to enroll in the company 401(k); determine,set
and adjust his contribution rate; analyze pick and manage his
investments; access,use, and understand his retirement calculator;
assess, examine and monitor hisfinancial plan and make all
necessary adjustments over time to each variable asconditions
This process is tedious and dated. Nearly all of these tasksrequire
the employee to perform numerous manual processes because the
technology,behind the 401(k) plan, lacks the ability to perform
these tasks in anefficient and simple manner.
Realistically, the retirement industryhas been suspended in a
time warp, operating and building on top of antiquatedsystems,
whose origins date back to the 70s.
Retirement plans simplyhave not evolved in a way that makes them
satisfactory to today's modernstandards of ease, simplicity and
power; and this excessive lack of change resultsin a firmly
This paradigm has become so developed that the ideas abouthow to
change for the better mirror more like what Christian monks
discussed inthe middle ages, pouring over questions like 'How many
angels can dance on apin?'
It's not that bad of course, but the monks' pondering
doesreflect, in terms of importance, what's being discussed and
what grabsheadlines. What you see is a continuous cycle of the same
topic; participantsmust be educated, despite numerous studies which
reveal that educatingparticipants is failing to produce positive
This emphasis on educating participants is a direct result of
outdated technology which requires that participantsmust be
'educated' or trained in using these antiquated systems due to
thenumerous manual processes a participant must go through before
an instructionfrom the participant can be implemented; otherwise
the plan does absolutely nothing.
So industry magazines print stories like: '10 secrets
toeducating on investment selection' or '5 best practices for
examiningprospectuses;' engaging in a constant struggle to teach
the old dog new tricks.Very few people have the opportunity to
consider real, fundamental change.
Ignoring the fact that America workers are in great need of
the retirement industry wants to live in the dark ages. Why?
Simply because these antiquated systemscannot evolve at the pace
consistent with modern standards of interaction.
Sometimes it takes an entrepreneurial company to make thatgiant
leap forward. By using low-cost investment vehicles, Exchange
TradedFunds (ETFs), Invest n Retire, LLC, a record keeper in
Portland, Ore., quicklyrealized that the record keeping systems of
yesterday, which were built totrade mutual funds, were inadequate
for trading ETFs. That one simple factrequired new modern
Facts:ETFs trade like stocks, throughout the day at marketprice,
and can only be purchased and sold in whole shares. In contrast,
mutualfunds trade at net asset value (
) closing price and can be purchased or soldin whole and fractional
shares. Since old legacy record keeping systems werebuilt to trade
mutual funds in dollar certain orders, these antique systemshave no
- (a) buy
in sharecertain orders or
(b) track residual cash
Going forward, Invest n Retire (
) ignored the promotersof mutual funds who claimed that no one
wanted ETFs in defined contribution plansand INR proceeded to build
its patented system and method for record keepingand trading ETFs
in tax-deferred retirement plans (pat. US 8,060,428). This
whitepaper is the road map for a new way forward:
'401k Manifesto - The New Standard'
Is there any ROI for 401k Education Policy Statements?
by Sanders Booze, Capital Advisors,Oct 2011
'ERISA, the federal law governing private-sector retirement
plans, requiresthat the participants receive certain information
about their plan, but doesnot require that the participants
Anderson, Nancy, 'The 401(k) is not working for Gen Y, but it
can,' ForbesMagazine, October, 2011:
Abrahamson, Darwin, 'Can exchange traded funds (ETFs) be traded
just likemutual funds?' November, 2011: