Reader Responses November 5, 2003

SURVEY SAYS: Should Qtly Participant Statements Be Mandatory?

May 23, 2002 (PLANSPONSOR.com) - One of the key elements of most of the no-more-Enrons inspired legislation still circulating in Washington is a requirement to provide participants with quarterly statements - and not-so-subtle reminders of the importance of diversification.

Reported by

Nevin E. Adams

This week, we asked readers, “Should quarterly participant statements be required – and if they are, will they make a difference in participant awareness/behavior?”

More than 61% of this week’s respondents said that those statements should be required, although perhaps not for the reasons Congress touts. As one notes, “I think hard copies of quarterly statements should be required. They will increase participant awareness…however I’m not sure they will impact behavior.” On the other hand, “Our employees receive quarterly statements now. After reviewing monthly activity it is clear that the month the statements are received activity spikes in all areas, deferral changes, transfer between funds and contributions to funds. The activity levels off for the next two months and then spikes again after the statement is received. Quarterly statement is an excellent reminder to plan participants to take a look at there holdings.”

Several respondents questioned the wisdom of sharing information that frequently. As one noted, “We currently provide quarterly statements in “hard copy” format. I don’t believe that the statements have helped, or hindered, the allocation process. I do believe, however, that quarterly statements are inconsistent with teaching that participants should be investing for a long-term approach. We want our participants to allocate their assets. We want them to re-balance annually. We want them to invest on at least a three year, if not ten year, horizon. Why are we then shoving their noses in it quarterly? Sounds like a government job to me.”

And there were plenty who thought it was a good idea to have the statements – but weren’t so sure about the wisdom of a law mandating the action. “We do provide quarterly statements to our members. I don’t know that our members (including myself) are any shrewder as a result of these statements, but I do think it is the minimum you should provide. Having said that, I don’t believe we should have legislation mandating these statements.”

However, roughly two-thirds of this week’s respondents said that, good idea or not, statements aren’t likely to make a difference. And, there are other concerns – “Those of us inside the beltway call this approach by Congress all “fluff and circumstance” — the majority of businesses (large and medium) already provide quarterly benefit statements to their employees. The real impact of this proposal will be on smaller employers who most likely will experience a dramatic increase in administrative costs – bummer.”

“Should quarterly statements be required?
What a novel concept. We provide
quarterly statements,an 800 number and
Internet access for all our DC plans. Yet
we seem to have some Darwin candidates
on our payroll. One fellow actually called
and asked why his 401(k) deferrals were
not in his account. Seems that his
contributions had stopped 18 months
before and he was just now noticing. His
story was that since he had direct deposit
he never looked at his weekly pay statement,
and since the market has been down it was
too depressing to open his quarterly statement.

No matter what you do – there will still be
those who are two watts short of a night light.”

There were some notes of skepticism. “We’ve provided quarterly statements for years even though our plan has on-line access 24/7. Even with this availability, less than 10% of our employees have ever checked their funds and less than 2% have made any investment changes in the past 5 years. Quarterly statements do provide a nice advertising vehicle for the plan administrator though. Hummmm? Who is supporting this legislation?”

And also “Just what the world needs, another disclosure form. Written by lawyers in a language no one can understand. To be thrown out with all the disclosures designed to protect me from myself…The only thing this ridiculously stupid idea will accomplish is full employment for the paper/pulp companies and the post office.”

And then, there was this week’s EDITOR’S CHOICE : “Should quarterly statements be required? What a novel concept. We provide quarterly statements, an 800 number and Internet access for all our DC plans. Yet we seem to have some Darwin candidates on our payroll. One fellow actually called and asked why his 401(k) deferrals were not in his account. Seems that his contributions had stopped 18 months before and he was just now noticing. His story was that since he had direct deposit he never looked at his weekly pay statement, and since the market has been down it was too depressing to open his quarterly statement.

No matter what you do – there will still be those who are two watts short of a night light.”

Thanks to everyone who participated in our survey! There are some particularly good reader VERBATIMS this week. Check them out.

The question was: Should quarterly participant statements be required - and if they are, will they make a difference in participant awareness/behavior?

THE VERBATIMS

Yes, quarterly statements should be required, but I don't feel they make a difference.

All of the 401(k) Plans I work with are daily with telephone and internet access 24/7, yet the only time a large portion of the participants see their information is only the hardcopy statement. All of the Plans I work with have quarterly statements.

However, I don't believe the statements really increase awareness or affect behavior all that much. From a sponsors standpoint if they provide quarterly statements at least the participant is getting something in his/her hand which makes them aware of their balances and the market's effect on them.

I believe education is the most important tool to increase awareness and behavior. The statement alone sometimes spurs a participant to chase the prior quarter's "best" performer in an attempt at market timing. Or during a year like last year some panic and pull out of the equity and fixed funds and put it all in money market.

We need to educate them about diversification and investing for the long term. This is not most participants area of expertise, so we need to give them continuing education and tools to work with so they can make the best choices for themselves.

Should quarterly statements be required? What a novel concept. We provide quarterly statements, an 800 number and internet access for all our DC plans. Yet we seem to have some Darwin candidates on our payroll. One fellow actually called and asked why his 401(k) deferrals were not in his account. Seems that his contributions had stopped 18 months before and he was just now noticing. His story was that since he had direct deposit he never looked at his weekly pay statement, and since the market has been down it was too depressing to open his quarterly statement.

No matter what you do - there will still be those who are two watts short of a night light.

Quarterly Statements should definitely be required. I have noticed that in general must employees make changes to their 401k only after they have received their quarterly statement.

I get quarterly statements. Doesn't make any difference to me. I look at it, see how much stuff is up or down and do nothing. After all, we're supposed to look at it over the long term. I'm too unsure of my investing prowess to make any changes from the original mix.

The participant statements (hardcopy) should be required quarterly but the participants should have the ability to opt out and either themselves or the employer should receive a credit for not receiving the statement in hardcopy and instead going online to view their information.

They do make a difference in participant awareness and behavior for those that read them. Many I would imagine throw them away without looking at them or put them aside hoping to look at them later and either do not do so or do so at a much later time (i.e., prior to the next quarter but perhaps a month later) and make changes in their investment elections or participant transfers based on stale data.

Perhaps the reason investors do so poorly is because they watch the market on a quarterly basis rather than considering a longer term reaction.

Should quarterly statements be required? Yes, but that is not the whole answer. In my opinion, it will not change the participant's behavior. We (as sponsors) and our providers need to get up in front of our participants and tell them what is going on with the plan, economically and in the markets. We need to tell the participants about the dynamics of planning for our retirements. I have found that just handing out a piece of paper is not the answer. This is just Washington DC's way of increasing admin costs and a knee jerk reaction to Enron. I have engaged with a provider (Mass Mutual) that provides quarterly hard copy statements and my employees have access to their account daily, via the internet and the telephone. On top of that, in order to increase participant awareness, we have quarterly to semi-annual group meetings. Mass Mutual and I facilitate the group meetings. As a sponsor, you must provide details on the benefits of asset allocation, diversification, long-term planning, risk, etc. This is an effective way to increase awareness. How do I know? My employees call me and ask me questions. My provider provides me with internet/phone support activity by month. I have found that for every time a provide a group meeting with my employees and provider, my activity on the internet/phone support increase. Abosolute direct correlation. Paper aint the answer! Getting experts/authorities in front of the participants is.

Many plans already supply quarterly statements and they are fine. The problem with them in my opinion is that it tends to shorten the time horizon over which participants judge their investment performance, i.e. makes them market chasers instead of long term investors.

Yes, quarterly statements should be required in hardcopy format.

Statements should include performance information and the best return information given a companies choices. With performance information and information regarding the best portfolio, investors are likely to realign their portfolios on a much more regular basis.

Statements should be available on the internet electronically. I don't think most participants read their statements, anyway, so once a year is adequate.

We do provide quarterly statements to our members. I don't know that our members (including myself) are any shrewder as a result of these statements, but I do think it is the minimum you should provide. Having said that, I don't believe we should have legislation mandating these statements.

We've provided quarterly statements for years even though our plan has on-line access 24/7. Even with this availability, less than 10% of our employees have ever checked their funds and less than 2% have made any investment changes in the past 5 years. Quarterly statements do provide a nice advertising vehicle for the plan administrator though. Hummmm? Who is supporting this legislation?

We have been providing quarterly hard copy statements for over 8 years (and maybe longer, but 1994 represented a major restructuring of our 401(k) plans.

We have now gone to on-line statements updated daily and are reducing hard copy mailings to only those participants who actively elect to get them. It is our understanding that electronic delivery under the legislation will be acceptable.

Further, we have had for 3 years our own plan magazine called Pathways, the content of which has emphasized diversification, asset allocation and retirement planning above all other potential topics (and will continue to do so).

I don't think that quarterly statements should be required in hard copy.

Many participants are savvy enough now that they realize that, if the plan is daily, that the piece of paper they get 15 days after quarter end is old news. My vote is requiring a hard copy statement once a year and greater online access for updates throughout the year - including pushing updates/statements to participant emails.

Having been in this business for well over 25 years, I have seen the move from all the $$ in one pot invested by a professional manager to the free for all we now have with each responsible for his own investment. The unsophisticated tend to gather round the self styled "experts" in their company and end up switching to stocks after a good quarter. Then when they get burned in a down market, they go back to some type of fixed fund and stay there. Since interest rates are low right now, many bonds are priced above par and guess what - people are going to get burned in their fixed funds when the rates go up. Then we all get to hear the complaints about "I didn't think this fund could go down". The winners in all this are probably the brokers who get all the trades from the changes. Truth of the matter is that not many of the advisors can actually beat the market for very long.

My concern with mandatory quarterly statements is that it sends a mixed message. On one hand we tell participants to plan an investment strategy & stick with it - give it time to work - don't chase the market, maybe rebalance your portfolio annually - but now we will let you give you a quarterly report to show you how you're doing and maybe you should think about making changes if you don't like what you see.

I think it will take a lot of education to explain to most participants the need to review statements but at the same time keep your investment strategy in mind.

Are we becoming more like corporate America? We want long term results but we reward ( and punish) short term performance. There are so many ways for participants to get information about their accounts and many already either receive quarterly statements or mutual fund statements when a change is made or a contribution is deposited that mandatory quarterly seems unnecessary. And if one is not self directing - maybe still in a traditional pooled Profit Sharing Plan - clearly no need.

Yes, quarterly statements should be required in hardcopy format.

Statements should be available on the internet electronically. I don't think most participants read their statements, anyway, so once a year is adequate.

We have been providing quarterly hard copy statements for over 8 years (and maybe longer, but 1994 represented a major restructuring of our 401(k) plans.

I don't think that quarterly statements should be required in hard copy.

I think it will take a lot of education to explain to most participants the need to review statements but at the same time keep your investment strategy in mind.

I think hard copies of quarterly statements should be required. They will increase participant awareness...however I'm not sure they will impact behavior.

Our employees receive quarterly statement now. After reviewing monthly activity it is clear that the month the statements are received activity spikes in all areas, deferral changes, transfer between funds and contributions to funds. The activity level off for the next two months and then spikes again after the statement is received. Quarterly statement is an excellent reminder to plan participants to take a look at there holdings.

I believe that they should be required yet that statement has absolutely no misconceptions attached as to the difference that they will make in awareness/behavior. The people who don't respond to what an annual statement shows them will be just as unlikely to respond to what a quarterly statement shows them.

We already provide quarterly statements in written format, plus participants can call a toll free number or access a website to get account balance and diversification information daily. This can be a plus when the investments are performing well, or be a negative (scare participants) when investments are tanking like the last year or two.

I agree that quarterly statements are far better than annual statements, but the reality is that most participants are too scared to move their money to other funds or rebalance once they've set their initial choices.

I think all plan administrators stress diversification and rebalancing until we're blue in the face, but only a small percentage of participants actually heed our recommendations. Quarterly statements may cause some increase in participants heeding this message, but I don't think it will have an overall huge impact on how participants invest their funds.

As for plans with company stock as an investment, quarterly statements are far less timely than the daily stock market results!

I don't believe they should be required, IF the participants have online or vru access - the information is there for them already.

On another note, we have provided quarterly participant statements for YEARS, and many of our plan participants are very heavily invested in company stock - even though we provide a great deal of education, both in writing and verbally about diversification. So in answer to the second part of your question, no, I don't think it will make them more aware, or change their behavior.

Requiring quarterly statements for DC plans won't solve anything. To offer this as a solution is to assume the problem is the "amount" of information available to participants. This is wrong. Participants are bombarded with information and it is easily accessible if they want it. This wouldn't have prevented employees at Enron from continuing to invest in stock. They already had plenty of information around them.

They real problem is that they don't want more information, they just want things done for them - the attitude that, "My company should take care of everything for me." They want all the results with little effort from themselves.

Re quarterly participant statements: They only make sense for plans which both contain employee contributions and offer participant self-direction of investment. There are still many profit sharing plans that are solely funded by contributions from their small business sponsors. Small businesses (that are already hesitant to deal with more red tape and administrative costs associated with their plans) should not have to bear the increased cost associated with quarterly statements if their plans do not meet the criteria listed above.

Yes, I think quarterly participant statements should be required. Seeing a loss of value, or statement regarding the benefits of diversification on the same page as a concentrated portfolio, right there in black and white, is harder to ignore. And, if it's ignored by the participant, maybe it will make it into the hands of their accountant, estate attorney, or other relative with more investment savvy.

I'm ok with requiring a hard copy statement - unless electronic form is agreed to by the particpant - or giving the participant the option of one or the other (with no additional cost for the paper version).

Re: Quarterly participant statements ... we do and always have provided quarterly statements to our participants (all 1300 of them) ... yet we see the same behaviors - lack of diversification, passive savers who just let their money sit in the default fund and do nothing, and worst of all, those who choose not to participate in the plans at all and have no concept of what they are going to need to retire. The vast majority of plan participants a) do not understand the basics of investing, b) are so firmly convinced that they can't understand investing that they don't even try, c) when they do finally invest they make poor decisions - panicking at the wrong moments, d) don't trust the stock market at all - especially right now, e) would, frankly, be much happier with someone doing the investing for them or with a defined benefit plan that just yields them a retirement income in the end without their having to worry about it.

I agree that participants should receive Quarterly Participant Statements, along with Quarterly Performance numbers. Gone are the days when you can put money away and forget about it. At the same time that the market has become increasingly volatile, our society has become more litigious. With the increasing number of class action suits by participants against plan sponsors/employers, the only way plan sponsors/employers can protect themselves is to arm participants with the information.

Quarterly statements should certainly be provided, that is a very minimal amount of info to insist that participants receive on a regular basis. Neither that requirement or any other will have a significant impact on the behavior of a lot of participants, but it will at least provide a basis for making somewhat informed decisions on a regular basis.

Quarterly statements should be required however, awareness/behavior will not be impacted on any scale. Americans are overwhelmed with information.

If I based my answer on my own experience with a daily valued plan linked to internet access, my answer would be no. The hardcopy statements are nice and I would like to keep getting at least an annual hard copy one but I do check balances online. I do have an investment strategy and monitor my balances for any needed changes/transfers.

However, from what I have seen and heard at CPA meetings of small plans, I think it is a very good idea. I do think they would make a major difference in participant awareness, behavior and possibly future employment choices. A requirement to have statements would probably protect participants in small plans which exist primarily for the company's owner's benefit. Especially when the owner dies and the participants are left stranded not knowing what they are owed and who to go to get it.

However, I find it hard to believe the ENRON participants were not getting statements and I don't think the statements would have protected the participants from the company's fraudulent activities. What would prevent Enrons is a more transparent/real time financial reporting system (such as XBRL promises) and true old fashioned auditing. The problem with Enron and its participants is still investment fraud and greed.

I would think that every plan should offer quarterly statements if only for information purposes. Our statements also offer ideas/reminders on asset allocation, rebalancing and contributing enough to take advantage of the matching feature of the plan. More times than not people will not think about their retirement assets unless they have something in their hands to remind them. In our plan I would say between 10-20% will look at their portfolio on a regular basis. We need to do a better job of educating our employees like most companies. I would say and this is a small step in that direction.

You can lead a horse to water but you can't make it drink. Participants may receive statements quarterly, but how many read them? And of those, how many take action to diversify their account? Not many.

Do we really need more requirements? I don't think so. Especially, mundane requirements for quarterly statements. If employee participants really wanted statements more often I would think they could lobby their employer to do so. In this age of information much information is available on line.

Additionally, I just don't think the participants who should be making better investment elections know how to do so, nor do they care to learn to do so, nor do they read the annual statement with a knowledgeable eye.

Some it is likely don't know what diversification means to their account investment.

Save the money and allow employers to provide an avenue for their retirement planning. A knowing, reputable person or persons who can tell then how to invest their retirement dollars.

Most vendors routinely provide statements quarterly already...and most of those statements are tossed in participants' trash cans before they are even opened - making notices about diversification useless.

Quarterly statements/ quarterly valuation for balance forward seems like a great idea. More work for the recordkeepers, but it would make the participants happier. Receiving a balance statement once a year does not allow for proper diversification, a feeling of ownership of your account, nor a "fair" calculation of what you are paid out upon termination or retirement.

Quarterly statements for Daily clients who have web access or a VRU may be excessive, however.

Yes, quarterly statements should be required. Employees have a right to know the status of their money, no different than banks providing statements of saving accounts. I have worked for several employers and they all had quarterly statements. Do I think that will make a difference, no. Because of my belief that providing quarterly statements which exist in a number of companies now will not change employee behavior. I would propose that mandatory training and education of financial markets for 401k investors would result in a change because the employees would have a better grasp of how to manage their monies.

I do favor the idea of quarterly updates. Electronic or hard copy, just a regular flow of accurate information and an extreme limit on warnings and fluff.

I do not think it will make a difference in most participants behavior.

Investing seems to be like exercise. Some are aware of it's importance and actively do something about it, others consider walking to their mail box a power walk. Hopefully as time reveals the failed philosophy of depending on a government to provide a secure retirement more will take an active role in their own destiny. Culture change takes time or a major life altering occurrence. For Americans sake I hope we solve this problem over time.

I think quarterly statements should be required as long as participants get a lesson in reading them. We have had clients who have not noticed irregularities for over a year- even with quarterly statements.

Yes, they should be required - if only to keep providers honest. Any attempt to get participants to focus on their holdings is also a good thing. Then it's up to them to act on the information.

We used to send out semi-annual statements and a couple of years ago went to quarterly. The employees seem to appreciate the quarterly statements more. Of course we have a money purchase plan, so more of our employees keep up with their funds, mostly via internet, but they still like to see it in black and white.

I think quarterly statements are the norm. Any company that is so behind the times should be required to do quarterly statements. The plan is not a benefit if you can't get information. Right now, we expect on demand statements and printed quarterly statements, nothing less and maybe more!

Required "hardcopy" format? I am beginning to wish I had voted for the founder of the Internet in the last presidential election.

We provide hardcopy or electronic quarterly statements (participant choice). The most significant behavior I have seen is former participants who call to ask how they can access the accounts they didn't know they had. The few calls I receive from active participants ask that we change recordkeepers because they are losing too much money with this one. Maybe that awareness (that they are losing money) is at least a start.

We like most other Plans already supply quarterly statements and I have seen no difference whatsoever in Participant's behavior.

Times have changed on plan valuation. Balance forward plans are being converted to daily valued plans, every day. Participants are demanding current valuation and employers want to keep their participants happy. No one wants to face a Enron 401(k) scandal. Quarterly statements should be required but will certainly increase the costs to employers who are only having annual valuations. This is the wave of the future for employer sponsored plans (ready or not).

Yes, quarterly statements should be required. I've been a member of a 401k plan since 1980 and I didn't even know it was an option not to do them quarterly.

Should they be required? No. Are they nice to have as a communication and monitoring mechanism? Yes. I personally look forward to receiving my quarterly statement.

The majority of participants do not even open their quarterly statements. Communication in the workplace about diversification makes much more sense!

Quarterly statements should be required for participants. Will it make the participant more aware? It will make a difference to a small percentage of people but the availability of the information should be required.

Coming from the world of the 401K with general pool investment and annual accounting, quarterly statements would be a problem for small employers who have their plan designed in this manner.

I don't feel the governments should be dictating how frequently a plan needs to provide participant statements. Some micro employers will not be able to afford the cost of a quarterly valued plan. They will opt for no plan at all. Now that is really helping employees!

We always provide hard copy quarterly statement to our participants.

Most participants are not accessing their retirement account information on the Internet for some reason, so I believe that the quarterly participant statement is necessary to maintain awareness of the account.

I do not believe that participants take any direct action as a result of receiving this information.

Our provider mails hard copies of quarterly statements. I think this is a good but not necessarily effective policy. Our participants still show little interest in actively managing their accounts.

No and No. Participants who pay attention to their accounts don't need quarterly (or probably even annual) statements to know where they stand. The others will just throw them away without even looking at them - just like all the other information they are required to be furnished.

I do not think they should be required for ESOP's. But they should for 401k's. As our company is privately held, we obtain an annual appraisal. Based on the appraisal we conduct transactions during a 90 day window of time. If we were to prepare quarterly statements, the cost to the plan would be increased three fold! Additional appraisals would be required quarterly as well as increased effort on the TPA.

Quarterly statements should we required. A reminder that your retirement plan needs some attention can't hurt.

Education is the factor in getting people to diversify their accounts. I don't think a message on the quarterly statement will get the participant to diversify. Individual education to review their own account and needs will teach them the need to diversify.

Yes, quarterly statements should be allowed. (DC plans only of course) Most vendors provide it...so it apparently isn't a cost issue. Will it make more participants aware - yes. Will they do anything -- probably not?

I seriously doubt that requiring quarterly statements would have any impact on preventing future ENRON debacles. The majority of vendors currently send out quarterly statements and the majority of participants have daily access to their account information via the web or through Voice Response.

Education is key, but the majority of employers don't make employee meetings mandatory and if you can't reach your audience you can't get the message across. The better answer might be to not allow company stock to be an investment option in 401(k) plans, while corporate America might not like the idea, it would save a lot of headaches for both employees and vendors.

Yes, I think quarterly participant statements should be a requirement. We have always had this, and any other plans my husband and I are with have quarterly statements. Yes, I think it affects participant behavior in interest and investment.

I get a bank statement monthly, why wouldn't I want a statement of my retirement savings? Hard copy is a good idea - I don't particularly want my Social Security number and account information cruising the information superhighway.

We currently provide quarterly statements in "hard copy" format. I don't believe that the statements have helped, or hindered, the allocation process. I do believe, however, that quarterly statements are inconsistent with teaching that participants should be investing for a long term approach. We want our participants to allocate their assets. We want them to re-balance annually. We want them to invest on at least a three year, if not ten year, horizon. Why are we then shoving their noses in it quarterly? Sounds like a government job to me.

Good business practice and common sense support Quarterly statements which should be an option available to plan participants even if on line access to account balances and detail are available. Pension plans are for life and quarterly reminders of progress are appropriate and provide opportunities for errors to be discovered and goals to be assessed. Monthly statements on the other hand are overkill. Annual statements are too infrequent and would tend to be lost in the end of year chaos. .There is no need for 'big brother' to make a law. Suggested reasonable 'safe harbor' guidelines are sufficient. The market will reward good practice without the burden of excessive bureaucratic overload.

Our pension provider - - Principal - - provides VERY good quarterly statements which I cannot imagine not having. They have lots of helpful color graphics which I would not be able to print out if the statements came on line.

Needless to say, I strongly support quarterly statements.

No, the government should not make anyone issue quarterly statements. As for those people who like the government regulating businesses, they, along with many others, will only toss those statements in the trash, along with the rest of their "junk mail".

Yes. Quarterly statements should be required. Despite the fact that I have internet access to my 401k account, I rarely use it, and I look forward to that paper statement and the enclosed newsletter.

Quarterly statements should most definitely be required. The majority of plans probably already do so. Quarterly statements would increase the level of awareness of those not currently receiving them just by bringing their balance to their attention. Whether this would change their behavior is anybody's guess. It probably would for a few, but sadly nothing short of an atomic bomb would change the behavior of too many.

Quarterly participant statements should be required, though not in paper format (unless requested by participant). I think the information should be available to participants, but it will not drastically affect behavior. Those participants who would rebalance their portfolio anyway will use the information. Those participants affected by inertia will continue to be so affected. Improved access to advice is more likely to have an effect on participant behavior than would quarterly statements.

I think quarterly statements are a good idea. Our company has always provided them and I believe it does raise the level of awareness for many employees who would otherwise be inclined to put their retirement accounts on the "backburner".

Quarterly statements, hardcopy or web, with or without reminders of the importance of diversification, may impact participant behavior in appropriately:

The frequency is too high for a "retirement plan", which should be supported by long-term investment strategies. Unless the messaging goes well beyond diversification reminders, inappropriate allocations may result. The messaging would have to be about all of the participants assets, not just those in the DC plan. This would then require helping the participant to evaluate these "outside" investments in concert with the plan assets - at least with regard to asset class.

No. And....No.

Post-Enron, I think participants are all a little more aware of their investment practices. Requiring statements...especially hardcopy statements...is an overkill, and will just add to expenses.

Pre-Enron, I don't believe flashing neon signs and a BULLHORN would have made a difference.

Don't most plans provide quarterly reporting anyway? It seems like the legislation would be a bit moot...just like the reminder to diversify. Aheightened awareness (read: splashy disclaimer lines on John Q.'s quarterly statement) seems like it would generate a panicked flurry of transaction activity that would harm more participants than it would help.

When I was the HR Director for a medical practice of about 150 people, initially only annual statements were provided. When we changed to a daily valued plan, quarterly statements were mailed out. There was little change in the investment behavior of the participants. The employees, including physicians, were highly educated in the medical field areas, but few in the financial/investment areas. Basically, they wanted to be told how to invest, not have to become educated about the investment options and keep track themselves.

I now work with government plans for the counties of Georgia - 457 and 401(a) plans, and I am finding the same behavior. Our sales personal that do the enrollments and education are all Certified Financial Planners. I do not see much evidence that the participants are any more willing to really take the control over their investments. I do not think that the quarterly statements change the investment behavior of most participants. The investments are done through Charles Schwab, so participants do have 24-7 access to their accounts either via the VRU, or the Internet. This access also makes the quarterly statement less important.

Those of us inside the beltway call this approach by Congress all "fluff and circumstance" -- the majority of businesses (large and medium) already provide quarterly benefit statements to their employees. The real impact of this proposal will be on smaller employers who most likely will experience an dramatic increase in administrative costs - bummer.

Will the quarterly requirements make a difference? Not unless we provide additional investment and retirement planning advice -- you can inundate employees with information, but unless they UNDERSTAND it, it will not make any difference.

Quarterly statements should be required and of course this will ensure that the participant is AWARE of his/her diversification or lack thereof. Still, I don't think it will change their BEHAVIOR since they may truly believe that their company's stock, however volatile, is the best possible way to get ahead from a bigger picture point of view. Greed is still a human emotion.

I've experienced a few administrator changes and wonder if any providers don't provide quarterly statements? Frankly, it wouldn't matter if we sent them out monthly or weekly - if they don't understand the basics of investments, it won't matter. Now, if the quarterly statements are coupled with clear information about the various investments and how the participant's investment choices compare with results of other plan options, then we may raise awareness. (T. Rowe Price does this well) If, that is, you can guarantee that the participants will read the information.

We already provide quarterly hardcopy statements to our Plan participants as the majority of them do not have computer access. Since the majority also are not very financially sophisticated, I am unsure of the benefits of providing it to them. These days it seems that all they see is that they put in X, we match it with Y and the results are something less than X+Y. When

Washington tells us what to do, the end result usually is something more costly & of very little value other than for them to boast on the next campaign trail of what they have done to "protect" their constituents.

(Never understanding that their constituents are the ones paying for the dubious protection. Think ERISA & SPD's).

Just what the world needs, another disclosure form. Written by lawyers in a language no one can understand. To be thrown out with all the disclosures designed to protect me from myself that I get from my checking account provider, credit card company, not to mention the 55 pages of RESPA disclosures I get when I obtain a mortgage. NO ONE WILL READ IT. The only thing this ridiculously stupid idea will accomplish is full employment for the paper/pulp companies and the post office.

No quarterly participant statements should not be required, and even if they were, they would have the same effect has handing out copies of your company's annual report...providing lining for your birdcage. If Congress wants to pursue making participant plans such as 401(k) and ESPP more of an administrative burden (such as handing out quarterly statements, etc) then they will succeed in having companies reduces their availability or eliminate them completely, therefore taking them away from the very employees that are supposed to benefit.