Products November 7, 2013

Build a Plan Committee in Six Steps

Assembling the right retirement plan committee can make or break participant outcomes, and often boils down to a combination of diversity, communication and documentation.
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Plan committee members are also the primary named fiduciary for a typical retirement plan, according to a recent white paper from Chicago-based retirement plan consulting firm PlanPILOT, so there is even more at stake in committee assembly decisions. The wrong processes and decisionmaking can lead to costly litigation.

“How to Build and Run a Retirement Plan Committee” describes the process in six steps.

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First, those involved in developing the committee must determine its size. Small organizations with a relatively simple plan may need only a couple of group members, while larger organizations with multiple plan service providers and more complicated plans may require larger groups.

The principal driver is often how many committee members are available, based on an organization’s time and resources. Five seems to be the ideal number, according to the research, a number that optimizes both productivity and diversity of opinion and expertise.

Organizers should strive for diversity. PlanPILOT advises organizers to consider varied categories, such as social diversity (members of different race, age, and gender) or skill set diversity (different professional backgrounds). Another category could be value diversity, where members have different opinions about the goal and purpose of the plan.

The next step is selecting a committee leader--best accomplished by choosing someone who is process-oriented and can maintain the committee’s cohesion through challenging debates. After that, establishing effective meeting rules, such as setting time limits and ensuring meetings have a specific topic, becomes critical.

All committees should designate one person to take meeting minutes covering who attended the meeting and any decisions reached. Minutes must show the rationale for decisions made and demonstrate a prudent process was followed.

Careful consideration must be given to documenting investment policy statements, quarterly investment reports, manager search reports, committee charters, committee acceptance/resignation forms and conflict of interest disclosure statements.

Finally, effective plan committees know when to seek outside help in dealing with the above issues.

A complete copy of the white paper is available here.

Diversions November 7, 2013

Oh, Let the Computer Do the Steering

If a self-driving or autonomous car were available, one in five Americans say they’d never take the wheel again, a survey found.
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While 20% of the 2,000 licensed drivers surveyed by CarInsurance.com said they would gladly turn over the keys, interest in autonomous vehicles soared at the prospect of dramatically reduced insurance costs.

More than a third of survey respondents said an 80% discount on car insurance rates would make their purchase of an autonomous vehicle “very likely,” and 90% said they would at least consider the idea.

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Cars that park themselves, navigate stop-and-go-traffic or avert an impending collision are already on U.S. roads today. Nissan has promised to deliver a fully autonomous vehicle to showrooms by 2020. A fully automated vehicle that doesn’t need a human operator could someday follow.

Trust could be a big hurdle, according to survey results:

  • 64% said computers were incapable of the same quality of decision-making that human drivers exhibit;
  • 75% said they can drive a car better than a computer could; and
  • 75% wouldn’t trust a driverless car to take their children to school.

The survey also asked consumers which companies they would trust most to deliver driverless-car technology.

  • Communications company, such as Sprint or Verizon: 1%
  • Consumer products company, such as Apple or Samsung: 12%
  • Software company, such as Google or Microsoft: 15%
  • Start-up automaker, such as Tesla: 18%
  • Traditional automaker, such as Honda, Ford or Toyota: 54%

Asked what they would do with their additional free time, drivers responded:

  • Text/talk with friends: 26%
  • Other: 21%
  • Read: 21%
  • Sleep: 10%
  • Watch movies: 8%
  • Play games: 7%
  • Work: 7%

“Other” included two write-ins: More than 10% of respondents wrote in some variation of “enjoy the scenery” and 9% wrote in “watch the road,” “hold on for dear life” or something similar.

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