401(k) Plan Abuses Finally Coming to Light

Posted on December 16, 2013 by Yves Smith
 
I doubt that I’m unusual in being a finance type who has heard about 401 (k) abuses and bad practices for a very long time. So it’s gratifying to see the Financial Times that something is finally being done to try to curb this behavior. But that is hardly the full extent of what is rotten in retirement fund land.

Some of the failings reflect a combination of poor implementation of already not-so-hot finance orthodoxy (see a layperson rendering in Benoit Mandelbrot’s The (Mis)Behavior of Markets, or a recap of Mandelbrot and other critiques in chapter 3 of ECONNED). For instance, one mainstay of investing is to diversify across asset classes. It won’t increase your returns but it will lower your risk.