Practice

Vanguard Group has just announced it will lower its costs for the 19 investment options in the Vanguard 529 College Savings Plan sponsored by the state of Nevada by an average of 12%.

How far the 401(k) has come since employers first introduced the savings plan in 1981. And how far it has yet to go. 401(k)s, I predict, will become universal in our lifetimes, supplanting all forms of pension plans.

Citing the vast disparity in the performance of target-date funds, Morningstar by year-end will begin rating and researching target-date funds to make them more transparent and more easily comparable, for professional and retail investors alike, the research firm announced Thursday.

European Union Internal Market Commissioner Charlie McCreevy is expected to propose uniform new rules regarding depositories for undertakings in collective investments in transferable securities (UCITs), the European Commission’s version of mutual funds.

The Connecticut state Senate passed a bill to require more disclosure and transparency of hedge funds, private equity firms and venture capitalists. It would also require the investment firms to disclose conflicts of interest to investors.

The Internal Revenue Service has proposed new rules that would grant safe harbor for employers experiencing substantial business hardship that want to suspend or reduce their 401(k) matches.

Despite all of the personal pain and economic havoc of the financial crisis, at least it is teaching people to be responsible, once again, about their money, said Ken Dychtwald, CEO of Age Wave.“People have been frightened. People have lost money. But in some ways, there is great hopefulness,” he said. “The fact that people are sobering up and learning important lessons and being more responsible for their money—that’s extremely positive.”People are learning how to get back to basics and live within their means, and planning for retirement is uppermost among their concerns, Dychtwald said.A survey that his firm conducted with Harris Interactive among 2,082 Americans between the ages of 21 and 84 found that 60% lost money in mutual funds, stocks or 401(k) plans in the past year, and, on average, they think it will take seven years to recoup those losses.Eighty percent said they have learned important lessons about financial responsibility, and 70% plan to continue working in retirement.

Government actions to stabilize asset-backed commercial paper, including the Asset-Backed Commercial Paper (ABCP) Money Market Mutual Mutual Fund Liquidity Facility (AMLF) and the Money Market Investor Funding Facility (MMIFF), are helping to stabilize ABCP and other short-term instruments, Fitch reports. However, ABCP credit ratings are not improving.

In its zeal to apply a free market philosophy to the Securities and Exchange Commission, the Bush administration created an environment where the agency's enforcement staff was unable to take definitive policy positions or bring enforcement actions, according to Mercer Bullard, associate professor of law at the University of Mississippi School of Law.Testifying on May 7 at a Senate Banking subcommittee hearing, Mercer said that the problems at the SEC reflect a state of "deregulatory capture," where the commission was unaware of and unable to respond to many enforcement matters before they surfaced.

Besides learning that investors have not bailed out of their 401(k) plans, contrary to scare-mongering media reports, there was one other surprising moment at this month's General Membership Meeting of the Investment Company Institute. And that was when Richard Davis, chairman of U.S. Bancorp, looked directly at ICI President Paul Schott Stevens and urged him to prompt his member mutual fund companies to figure out how the financial crisis has affected various age groups.