If a template represents an ideal meant to induce consistencyand efficiency, why did the DOL leave this vital tool out of their 2012rule?

Related: Fiduciary fail: A difference withoutdistinction

Look at what "template" really means. We derive the word fromthe Latin templum, which meant “plank” or “rafter.”

The word traveled through the French templet, whichtranslates to “horizontal piece under a girder or beam.” We cantrace this particular use of the word back to the 1670s. In thissense, a template evokes the image of the ideal, in that you mustlook up to see it.

It wasn’t until the mid-nineteenth century that the word took onthe meaning we use it for today. As early as 1819, template meant a“pattern or gauge for shaping a piece of work.”

The purpose of a template leads us right into the industrial era(which is why we had to wait until the 1800s until we see it usedthe way we use it today). If you want to build a better widget,first build a template.

We create templates to increase consistency. With increasedconsistency, we increase efficiency. With increased efficiency, weincrease profits. Everyone loves increased profits. It’s what makesthe capitalist world goround. And that’s a good thing.

Related: How to build a stronger401(k)

In fact, for those of you old enough to remember, Frenchdemographer Alfred Sauvy came up with the term tiers monde(“third world”) to describe pre-industrial countries. (He wasmaking an analogy between these countries and the “third estate”(i.e., the poor class of pre-Revolutionary France.)

Incidentally, when first used, the term “third world” stoodalone. It was only after the Cold War establishment took over thephrase that we had a “first” and a “second” world. (Bonus pointsfor those who know what those worlds represented.)

You might be thinking “what does the use of templates to leadour agrarian society into the modern age have to do with saving forretirement?” The answer came to me when I recently interviewed theauthors of the 401k Averages Book (see “Exclusive Interview with David Huntley and JosephValletta: Plan Sponsors Need Template to Identify Fees,”FiducairyNews.com, March 21, 2017).

Since 2012, when the DOL implemented its Mutual Fund FeeDisclosure Rule for 401(k) plans, the issue of fees has become asort of “global warming” for the retirement plan industry. What Imean by that is that the media meme for the past five years hasbeen that the malicious nature of fees is “settled science” withinthe retirement industry.

News flash, in its original explanation of the Fee DisclosureRule, even the DOL emphasized it wasn’t about “low” fees, but thevalue derived from those fees. Of course, to determine the exactnature of the relationship between fees and value, one needs tomeasure both. It’s understandable that value is hard to measure.Value means something different to everyone. It is situationdependent.

For example, a plan sponsor whose company specializes infinancial literacy might not find any particular value in theirretirement plan’s service provider’s education meetings. On theother hand, a company that doesn’t focus on financial literacy mayvery well see a value that that same educational program. Value,then, comes in many (my guess there’s more than fifty) shades ofgrey.

Fees, on the other hand, are black and white. Or at least that’sthe way it should be. No doubt it was the primary intention of theDOL’s 2012 rule to make fees obvious, understandable, and clear.This, in turn, would lead to consistency, efficiency, and moreprofitable retirement plan returns. And that would be a goodthing.

Except the DOL seems to have skipped the class in Capitalism 101that taught what tool was most responsible for making any process,system, or factory more consistent, more efficient, and moreprofitable.

While the 2012 Fee Disclosure Rule brought us 80% of the waythere, the DOL forget the one thing needed to take us that final20% – a template. They actually tried. They proposed one.

It was overly complex and actually misled retirement savers.When the DOL came out with the Rule sans template, it promised itwould soon follow up with a template. It’s been five years andwe’re still waiting.

Just how critically important is a template? Ancient Romans hadanother meaning for templum: “consecrated place.” It’swhere we get the word “temple” from. You go to these places topreserve your soul. In the same way, a 401(k) fee template canprotect the soul of your retirement savings.