Out of Sight No More? The Effect of Fee Disclosures on 401(k) Investment Allocations
Abstract: The researchers examine the effects of a 2012 regulatory reform that mandated fee and performance disclosures for the investment options in 401(k) plans. The researchers show that participants became significantly more attentive to expense ratios and short-term performance after the reform. The disclosure effects are stronger among plans with large average contributions per participant and weaker for plans with many investment options.
Additionally, these results are not driven by secular changes in investor behavior or sponsor-initiated changes to the investment menus. The researchers’ findings suggest that providing salient fee and performance information can mitigate participants' inertia in retirement plans.
Read Out of Sight No More? The Effect of Fee Disclosures on 401(K) Investment Allocations
Conflicting Interests and the Effect of Fiduciary Duty — Evidence from Variable Annuities
Abstract: The researchers examine the drivers of variable annuity sales and the impact of a proposed regulatory change. Variable annuities are popular retirement products with over $2 trillion in assets in the United States. Insurers typically pay brokers a commission for selling variable annuities that ranges from 0% to over 10% of investors' premium payments. Brokers earn higher commissions for selling inferior annuities, in terms of higher expenses and more ex-post complaints.
The researchers’ results indicate that variable annuity sales are roughly six times more sensitive to brokers' financial interests than investors'. To help limit conflicts of interest, the Department of Labor proposed a rule in 2016 that would hold brokers to a fiduciary standard when dealing with retirement accounts. The researchers find that after the proposed fiduciary rule, the sales of high-expense variable annuities fell by 52% as sales became more sensitive to expenses and insurers increased the relative availability of low-expense products. Based on the researchers’ structural model estimates, investor welfare improved as a result of the fiduciary rule under conservative assumptions.
Read Conflicting Interests and the Effect of Fiduciary Duty — Evidence from Variable Annuities.
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Exposure to the COVID-19 Stock Market Crash and its Effect on Household Expectations
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Social Security Reforms and the Changing Retirement Behavior in Germany
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Chapter 5: ‘The Role of the National Employment Savings Trust in Helping Savers to Access Good Quality Retirement Products’
Chapter 1: 'Introduction'
Chapter 2: ‘How to Ensure That Savers Can Get the Best Products in Retirement’
Chapter 3: ‘Supporting Savers to Make the Right Choice at Retirement for Them and Their Family and How to Build on the Lessons of Auto-Enrolment’
Chapter 6: ‘The Role of Collective Pension Schemes and How These Could Be Introduced in the UK’
Chapter 7: 'Conclusion: Developing a National Narrative'
Chapter 4: ‘Helping Savers to Manage Longevity Risk’
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Public Pension Reform and the 49th Parallel: Lessons from Canada for the U.S.
Working Longer Solves (Almost) Everything: The Correlation between Employment, Social Engagement and Longevity
ERISA’s Preemption Clause: Progress Towards A More Equitable Preemption of State Laws
Contextual Analysis of Implementation of Tenure Track System in Higher Education Institutions of Pakistan: A Reform Perspective
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An Efficient Defined Contribution Investing Approach
Inequality of Opportunity in Bodyweight Among Middle-Aged and Older Chinese: A Distributional Approach
Longevity Risk and Capital Markets: The 2018-19 Update
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The Intersection of COVID-19 Health and Socio-Economic Vulnerabilities at the Household Level: An Analysis from the UK
Health Risk and the Welfare Effects of Social Security
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CalSavers and ERISA Redux: The District Court’s Second Opinion in Howard Jarvis Taxpayers Association v. The California Secure Choice Retirement Savings Program
The Adverse and Beneficial Effects of Front-Loaded Pension Contributions
Is Financial Literacy Dangerous? Financial Literacy, Behavioral Factors, and Financial Choices of Households
Property Tax Deferral: Can a Public/Private Partnership Help Provide Lifetime Income?
Reforming U.S. Capital Markets to Promote Economic Growth