(PRWEB) January 11, 2005
The Advice Gap occurs as a result of recent court decisions and the Department of Labor (DoL) Regulation 29 C.F.R. 2550.404c-1(b)(3)(i)(B)(3) that require 401k participants Â. . .to achieve a portfolio with aggregate risk and return characteristics at any point within the range normally appropriate for the participant . . .Â [Emphasis Added.] and the fact that most 401(k) participants lack the investment knowledge to achieve a portfolio of investments and lack the ability to assess the resulting portfolioÂs suitability to themselves.
In light of the Advice Gap, prudent 401(k) plan sponsors realize they are caught in a catch-22. If they do nothing about the Advice Gap, they face the ever growing and real risk of being held liable for the three critical investment pitfalls challenging their 401k participants: Large Losses, Inadequate Returns and Money Move Lost Returns. On the other hand, if 401(k) plan sponsors provide investment advice to their 401k participants, they are fully liable for the investment results including suitability! Because the video is especially crafted and thus guaranteed by a legal opinion to not constitute investment advice within the meaning of DoL Interpretive Bulletin 96-1, 29 CFR 2509.96-1, it seeks to close an important aspect of the Advice Gap while totally avoiding the expense, plan disruptions and the patent liability of 401k sponsor provided investment advice!
When asked, Vic Gonsalves, nationally published financial author, founder and CCO of Efficient Portfolio Consultants, LLC, states ÂThe lessons regarding the benefits of diversification contained in this video are especially timely for 401(k) plan sponsors and participants alike because studies show about one quarter of 401k plan assets are kept, mostly undiversified, in fixed income investments like money markets, GICÂs, stable value, and/or bonds. For the first 36 years of recovery following the Stock Market Crash of 1929, from 1933 through 1968 the total return on the U.S. Government Long Term Bond averaged 2.32% while inflation averaged 2.81%! If history repeats itself in the wake of the Stock Market Crash of 2000 and the current bottoming of interest rates, the long term average annual total return for many 401(k) plan participants may be inadequate or not keep pace with the average annual inflation rate!Â
A full feature demonstration version of the half hour video is available, free, for download from our website: http://www.efficientportfolioconsultants.com/custom.html. Or just click the ÂVisit Our SiteÂ link and go to the ÂVideo Sign InÂ tab. A sequel program, ÂIn About 30 Minutes Learn How to Independently Assess a Reasonably Suitable Portfolio Investment OptionÂ seeks to close the aspect of the Advice Gap liability dealing with DoL requirement that 401k participants Âachieve a [suitable] portfolioÂ.
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