This has been one of the toughest interviews for me to land. For two years I tried to convince a reluctant subject to agree to it.

He was at once extremely modest and understandably private. But I felt it was an important discussion to share on the record. He had experienced things others wished they experienced and wanted to experience.

But that’s not the only reason why this interview was so important. This was an individual on the front lines. Indeed, it was more than that. He – specifically, his retirement plan – led on the vanguard of the 21^st century. He had boldly travelled where no one had gone before, where to this day still few could go. This was a journey even veteran professionals continue to believe is not possible, let alone the future standard.

That’s why his story was so important to tell. That’s why this interview was so important. That’s why, unlike my usual response (which is to ask only once then move on), I continued to pursue him. If you want to show the world what the future of plan design looks like, you must talk to plan sponsors working where the future is now. Very few plan sponsors fit that category. Almost all of them are very private.

A few months ago, Dale Neibert called me out of the blue. I met him at the last-ever CCD Conference in San Antonio, Texas where I had been invited to speak about using behavioral techniques described by Robert Cialdini to help better teach and prepare retirement plan sponsors and participants.

Dale appeared on a panel during a different session at the same event. He was calling me to chair a panel he was going to be a member of during a private meeting of major institutional players within the retirement industry. It was an offer I couldn’t refuse, especially since it gave me the opportunity to again ask for the interview.

This time Dale said yes, although still modestly reluctant. Though he doubted the significance of telling his story, my gut told me it was going to answer a lot of questions I get both from plan sponsors and their service providers.

Now, here’s the thing. I have been blessed with the golden opportunity to speak with many thought leaders and leading-edge folks in all areas of the retirement industry – from ERISA attorneys (both sides) to regulators to academics to plan sponsors to plan service providers.

Many of these conversations are off the record. This means I can only speak of their wisdom in general terms (which is often good enough for many of audiences), but certainly not with specific examples and actual real-life citations.

This time, however, it would be different. This time I had the primary source willing to talk directly to my readers. This time would be one of those “times” that would be remembered.

Dale did not disappoint. His comprehensive responses described the nature, structure, and actual workings of one of the nation’s largest 401k plans (read it here in “Exclusive Interview: Dale Neibert Explains 21st Century 401k Plan Design,” FiduciaryNews.com, July 18, 2017):

Allow me to briefly summarize in a way that no doubt does suggest to his detailed answers but quickly relays the information most sought after by both plan sponsors and retirement plan service providers.

1. Keep fund options generic – remove brand names from menu options. Face it, if a fund is supposed to be a “Large Cap Growth Fund (actively managed),” why not just call it that. Employers gain nothing when employees fret over the internal goings on at specific mutual fund companies.

Worse, using specific names just adds to the already high burden of investment decision making. Keep things simple. Use generic names. Target-date funds are a great example of the success of using generic names.

2. Speaking of target-datefunds, don’t use them -- use “target risk” or “lifestyle” funds instead. These are the same kinds of balanced portfolios used in pension plans.

The difference, though, is that while a pension plan maintains only one portfolio (thus creating a greater challenge to invest in a manner consistent to the needs across the entire demographic spectrum), 401k plans can offer an array of balanced options, each focused on just one portion of that broad demographic spectrum.

After all, not every 50-year-old needs a “moderate” glide path. Some require more aggressive glide paths while others can afford more conservative glide paths. Rather, as some suggest, than try to fit a square peg into a round hole by overlaying “risk” on top of “date” (thus introducing that dreaded complexity into the mix once again), better to just simply offer traditional “conservative,” “moderate,” and “aggressive” funds.

3. Daily valuation is overrated. Again, retirement is a long-term investment. Plan sponsors ought to design plans that downplay the investing burden and augment the savings strategies.

There’s a reason 401k plans were originally call “401k savings” plans. Daily valuation only encourages employees to fear their limitations since they realize they are inexpert investors, or, worse, lead them to believe they are on the same level of sophistication as expert investors.

4. Use a category-based investment menu. By the way, these aren’t investment categories, these are “how much work do you want to do?” categories.

If you want to do a lot of work, then offer a “Do-It-Yourself” category consisting of index funds of different asset classes. If you want to do absolutely no work, then offer a single default investment (i.e., a balanced portfolio identical to what a pension plan would offer for a demographic pool of employees identical to your company), and, finally, if you want to do a little bit of work but not too much, offer a category of either balances “Target Risk”/”Lifestyle” funds and/or a category of actively managed long-term funds with different investment disciplines.

5. Finally, don’t be fooled by low fees. Sometimes you get what you pay for. Neibert provides real-life examples where higher fees produced more attractive investment returns – and he explains why.

What Dale doesn’t say, but I can because I’ve spoken to many plan sponsors with much smaller plans (some under $1,000,000 in total assets), is that each of these five points are not size dependent.

Not matter how large your plan, you can design it in a manner very similar to the $2 billion plan described by Neibert.

Don’t believe me? Then you’re not looking hard enough to discover those plans.

Instant Insights /

Don&rsquo;t believe this is how plan sponsors think? -- Carosa

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Don’t believe this is how plan sponsors think? -- Carosa