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Lee Barney

Extreme Makeover: 401(k) Edition

February 5, 2010 - Investors are about to test drive 401(k) plans with a 21st Century whole new look and feel. The Department of Labor is promising streamlined rules for 401(k) advice that plan sponsors may actually use. The government is looking into the possibility of offering annuities or other lifetime income options in defined contribution plans.

C- Grade is Nothing To Crow About for 401(k)s

January 16, 2010 - The mutual fund industry should proudly celebrate Americans' 73% approval rating for 401(k)s, according to an Investment Company Institute report, "Enduring Confidence in the 401(k) System." In our book, a 73% rating equals a C- grade that, in fact, should be a wake-up call for the industry to do a far better job of equipping Americans to adequately prepare for a decent and healthy life in their old age.

2010 Will Be The Year Fund Investors Get Real

January 4, 2010 - Since the recession hit two years ago, 80% of mutual fund firms have laid off tens of thousands of people, as total assets under management dropped from $11.999 trillion at the end of 2007 to $10.688 trillion as of October. In line with this 11% decline in assets, fees have undoubtedly plummeted by at least $1 billion a year. While the S&P 500 delivered a remarkable 24.9% return last year, the fact of the matter remains, the stock market is still down 30% from its peak in October 2007. This is why investors in 2009 remained stock-spooked, yanking $36 billion from U.S. equity funds and socking $357 billion into bond funds.

Once Again, Fidelity Marketing Machine is Right on the Money

September 4, 2009 - When Fidelity recently announced that its assets under management grew 9% since the end of 2008 to $1.4 trillion and that its market share, already formidable at 11.7%, has now topped 12.4%, pundits scoffed that it was Fidelity's money market funds that drove this growth. Those funds are no folly, and that growth was quite deliberate.

Stock Market Just Might Actually Be On the Mend

August 7, 2009 - The average return of U.S. equity mutual funds in the second quarter, a stunning 19.77%, was certainly welcome news, but it gave investors absolutely no reason to believe the stock market was turning around. After all, what fundamentals were there? The market's surprising ascent was obviously not based on earnings, which continue to be steeply negative; the consumer, who's still saving 6.9% of their earnings rather than spending; an improvement in unemployment, which is projected to top 10% this year; or corporate investments, research and development, all of which are stagnant.

Crisis Might Have Been Averted if Hedge Funds Registered With SEC

July 19, 2009 - Of course, it cannot be proved that hedge funds contributed to the financial crisis, as the Department of the Treasury said last week. However, it's more than likely that the top-performing hedge fund managers, those earning a staggering $1 billion a year in 2006, 2007 and 2008, were invested in the mortgage-backed and leveraged instruments that brought the economy to its knees. Even after a federal appeals court in 2006 tossed out a controversial Securities and Exchange Commission rule that would have required hedge funds to register with the agency, the SEC and Congress have continued to talk about requiring hedge funds to register-to no avail.

Give Control Back to Fund Managers

June 8, 2009 - Finally, insiders launched candid criticism at the mutual fund industry last week, to help it respond sensibly to the economic meltdown and reposition itself to regain investor trust. Foremost among this advice is giving portfolio managers back the power to pick stocks and run with their investment ideas, instead of being so tightly tethered to an investment class and market capitalization. Further, fund managers should step away from their style boxes and take a look at bigger economic trends.

401(k)s Will Supplant Pensions in Our Lifetimes

May 30, 2009 - 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. The first time I heard about 401(k)s, when I entered the workforce in 1982, was from a fellow classmate from the University of Pennsylvania, who was familiar with then-esoteric 401(k) section of the IRS code (then being touted merely as a tax benefit), since she worked as an accountant for Coopers & Lybrand.

Appeal to Investors' New Conservative Outlook

May 26, 2009 - 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. Davis is not alone in calling the financial crisis a life-changing event. Increasingly, there have been reports that the global economic upheaval has made such an impression on Americans that it will have a lasting effect on how they spend and save.

Salutations Where Salutations Are Due

May 19, 2008 - The mood at this year's General Membership Meeting of the Investment Company Institute was decidedly upbeat. For good reason. The industry is doing well, having grown net assets by 7% in 2007 and, largely, evading the subprime credit crisis. As well, mutual fund executives, starting with ICI President Paul Schott Stevens, spoke of the industry's vital importance to the American invsetor and our collective and individual fiduciary duties to them.

Add Forensic Testing to the SEC Exam Checklist

April 28, 2008 - At the Securities and Exchange Commission's meeting on April 17 and 18 in Washington, D.C., open only to chief compliance officers, SEC chief examiner Gene Gohlke announced that mutual funds can now add forensic testing to their SEC exam checklist of funds' own annual internal compliance reviews. If an asset management firm has not conducted forensic testing, it runs the risk of being found deficient.

4.21.2008: Inflection Point

April 21, 2008 - A number of news events in the past week alone indicate without question the U.S. economy is at a dangerous inflection point, but so far, no one-no economist, analyst, fund manager, regulator, legistator, president or CEO-is willing to put together the pieces to talk about something other than snapshot first-quarter, year-over-year or historical trendline data that make a case for the return of the markets.

Payback Time

March 31, 2008 - A Fresh Look at the $5 Billion in Mutual Fund Restitution Money

A Whole New Retirement Landscape

February 5, 2008 - In lockstep with a broadened direction by insurance firms to strip off the complex bells-and-whistles riders and bonuses of the recent past and to issue packaged retirement income solutions-and meet the demands of the new buzzword: decumulation-the other publication I edit, Annuity Market News just relaunched on Friday as Retirement Income Reporter. A 14-year-old publication, RIR's direction now is not only to keep up with the shift to a whole new retirement landscape, but to do so in a sophisticated, high-level and witty tone, thanks to the insight and humor of Senior Editor Kerry Pechter and longtime contributor and nationally syndicated columnist and author Alan Lavine.