Clearer 401(k) disclosures would be much fairer

I read the article “Advisers affronted by “Frontline’ piece” (April 29).

I didn’t see the documentary. However, some of the issues raised in the article, are, unfortunately, endemic to the industry.

I really thought that a lot of this would go away with the disclosure regulations, but it was clear that the lobbying effort during rule making was really effective.

My firm has been disclosing fees since 2006 in very simple terms. On all statements, we itemize our clients’ beginning balance, contributions and variation in the account and charges, all in dollars.

The firm’s disclosures have been so simple and easy to understand that we had to make more-difficult-to-understand disclosures to our participants to follow the regulation. That seems like a problem to me.

I have seen disclosures that are 15 to 20 pages or more, full of formulas that a Massachusetts Institute of Technology graduate might have difficulty understanding in a font size that is almost difficult to see.

Teresa Ghilarducci, an economist at The New School, made a fairly valid point about the program in the article.

However, it is clear from all I have read about her that she wants to nationalize the business and turn it into another version of Social Security, which would be an abject disaster. Therefore, I don’t pay that much attention to her.

If the disclosures were clear so that the nation’s 401(k) savers actually knew what was happening to them, the business would be far fairer, and I would have a $1 billion book of business.

Tim Wood

Retirement plan consultant

Deschutes Investment Consulting LLC

Portland, Ore.

Regarding “Franken, Dems tell SEC to ban mandatory arbitration” (InvestmentNews.com, April 30), one of the misconceptions about arbitration is the abdication of rights.

Every plaintiff has the right to go to trial after arbitration.

Arbitration is a step in dispute arbitration (it may be the only one). So are mediation and civil litigation.

Resolution comes when both parties agree and act on that agreement.

Signing a pre-dispute agreement creates a level playing field before the dispute arises.

Wouldn’t it be great to buy insurance after the accident and have the insurance company pay for the claim?

But life just plain doesn’t work that way.

Fairness is a matter of perspective.

Depending on the aggrieved, fairness is different for the respondent than it is for the plaintiff.

The Financial Industry Regulatory Authority Inc.-sponsored arbitration program has become less of a time and cost saving than was envisioned, but it is still more economical and efficient than civil litigation.

And another thing: Exactly who comprises a “jury of our peers”? None of our peers will be on that jury.

No professionals will allow themselves the inconvenience of sitting on a jury as their civic duty and receive $20 a day when they typically earn $500 and up. So who would judge us?

I leave it to your imagination. If you have never met a payroll, risked your reputation or career, or put your net worth on the line, then I doubt the average juror’s qualification to judge this industry.

At least with a Finra arbitration hearing, the panelists are trained and have some understanding of industry practices.

I submit that the real problem with arbitration agreements is their ability to limit litigation attorneys’ pay.

Eliminating arbitration is a solution in search of a problem.

Doug Schriner

President

FA Risk Management Inc.

Aurora, Colo.

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