Should 401k Plans Offer Only Index Funds?

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By Robert C. Lawton, President, Lawton Retirement Plan Consultants, LLC

A number of retirement plan experts believe that 401k plan participants should only be allowed to invest in index funds. They say the additional cost that participants pay for actively managed mutual funds is not justified by better performance. Some 401k plan sponsors have agreed, offering only index funds in their fund lineups. Is that a good idea?

Arguments For Using Only Index Funds

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Socially Responsible Investing Ratings Can Boost Your 401k’s Value

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By Robert C. Lawton, AIF, CRPS, President, Lawton Retirement Plan Consultants, LLC

Recently Morningstar, creator of the Morningstar Star Ratings for mutual funds, introduced Sustainability Ratings to gauge an investment’s adherence to SRI principles. 401k plan participants, millennials especially, have become interested in socially conscious and impact investing. A recent U.S. Trust survey found SRI factors are important to 93% of millennials when making an investment decision. Your 401k plan can have greater value to your employees if you begin sharing Morningstar’s Sustainability Ratings for your 401k investment options. [Read more…]

Impact Of Higher Interest Rates On Your 401k Plan

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By Robert C. Lawton, AIF, CRPS, President, Lawton Retirement Plan Consultants, LLC

On Wednesday the Fed finally took the first step on the journey to normalizing interest rates by raising the discount rate by 1/4 percent (25 basis points). Thought long overdue by most economists, this interest rate increase, and the higher interest rates that will follow, are likely to have the following effects on your 401k plan and participants: [Read more…]

Why TDFs Are The Best Professionally Managed 401k Investment Option

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By Robert C. Lawton, AIF, CRPS, President, Lawton Retirement Plan Consultants, LLC

There has been quite a bit written recently, most negative, about target date funds (TDFs).  It is hard for me to understand why since TDFs provide 401k plan participants with: [Read more…]

White Labeling 401k Investment Funds A Bad Idea

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By Robert C. Lawton, AIF, CRPS, President, Lawton Retirement Plan Consultants, LLC

Recently, most plan sponsors were forced to make a decision about keeping a particular fixed income fund in their line-up that many participants feel is the anchor to their 401k plan investment strategy. When Bill Gross left PIMCO, plan sponsors needed to consider whether PIMCO’s flagship Total Return Fund should remain part of their investment menus. Many observers have used this situation to outline the benefits of white-labeling 401k plan investment funds. I don’t believe that white labeling makes sense, for the following reasons: [Read more…]

How To Choose Between ETFs And Mutual Funds

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I hope you had a great weekend – it’s almost time to start thinking about your Halloween costume!

LRPC’s Monday Morning Minute for this week, “How To Choose Between ETFs And Mutual Funds” (presented below) comes to you courtesy of Schwab. As an independent, objective Registered Investment Advisory firm, Lawton Retirement Plan Consultants, LLC has access to research from many sources. Be assured that I will share the most relevant information with you each week. This is a short piece that I believe everyone can finish in less than a minute.

Don’t understand the difference between ETFs and mutual funds? Have you heard that ETFs are cheaper, but aren’t really sure how to use them? In the short article below, an expert from Schwab helps you determine when and how to properly use ETFs and mutual funds.

Have a wonderful week!

_______________________________

How To Choose Between ETFs And Mutual Funds

By Michael Iachini, Charles Schwab & Company

Key points

  • Depending on your needs, ETFs, index mutual funds or actively managed mutual funds can help build the portfolio that’s right for you.
  • We’ll explain the benefits of and scenarios for each type of fund.
  • Helpful for investors looking for a breakdown of what factors to consider.

Exchange-traded funds (ETFs) typically track to index funds and trade like stocks. There are times when an ETF, an index mutual fund or an actively managed mutual fund might suit your investing needs depending on various factors and benefits.

Consider an ETF if: [Read more…]

FINRA Alert Lists Six Cautions When Investing In Frontier Markets

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By Robert C. Lawton, AIF, CRPS, President, Lawton Retirement Plan Consultants, LLC

On September 11, 2014 FINRA (The Financial Industry Regulatory Authority) issued an with regard to investing in frontier markets. Investor Alert’s like this are issued by FINRA to apprise investors of the risks of various types of investments. In this case, FINRA is concerned that  investors not overlook the substantial risks of investing in frontier markets.FINRA Alert Lists Six Cautions When Investing in Frontier Markets

On September 11, 2014 FINRA (The Financial Industry Regulatory Authority) issued an Investor Alert with regard to investing in frontier markets. Investor Alert’s like this are issued by FINRA to apprise investors of the risks of various types of investments. In this case, FINRA is concerned that  investors not overlook the substantial risks of investing in frontier markets. [Read more…]