The Retirement Plan Statement Games are on. One of the retirement plans where I have several clients recently changed their statements. Again.

This is the second major change in their statement reporting in the past six months.
As a result, this set off a tizzy of “urgent” phone calls.

So, let’s go through an example (these are not YOUR numbers):
Suppose you had:
– 1st Quarter 2012 results, again, only for example, up 12%
– And suppose 2nd Quarter 2012 results where we gave back (lost) 8%
– Third quarter and fourth quarter were flat (gains/losses off set)

And, let’s also say the first quarter THIS year we saw a gain of 8%.

This plan administrator has now changed their statements to reflect performance over “the past 12 months.”
So, your “end of the first quarter” statement will show activity from: 2nd quarter, 3rd quarter, 4th quarter of LAST year and 1st quarter of this year, right?

If the 2nd quarter 2012 was DOWN 8%
And 1st quarter 2013 was UP 8%
And the 3rd and 4th quarter offset, what kind of return would you show?

You will show only a small return for the “past twelve months.”
Incidentally, if a mutual fund returns 7% in this most recent quarter, and the return for twelve months was 9%, what was the return in the previous three quarters?
About two percent. It’s just math.

And this is not the first time this plan administrator has played retirement plan statement games.
This plan administrator also neglects to include any gains or losses from the self-directed brokerage accounts at Schwab, where we have posted some serious gains. Gains which were far more than the choices available in the core part of the plan. In fact, there are many participants who made more at Schwab (with just 30 to 40% of their balance) than they made in the entire Core part of the plan. And, this is AFTER we’ve deducted the quarterly fees for the entire account, over at Schwab!

Want more Retirement Plan Statement Games? I also reminded callers this was the same plan administrator who included “participant loans” as assets on their statements last year, instead of separating them. Think about that: as you paid down your loan throughout the year, it showed this “asset” dropping in value. Wow.

But these phone calls led to another twist.
Many folks who called in to speak with me added “I want to be MUCH more aggressive than that!” Wait, do they really mean that? Because if they want to be more aggressive, we will be taking on even more risk. More risk brings more potential for gain, but also invites more potential for loss.

Again, do they really mean that?

As I have explained to every new client, there will ALWAYS be someone who beats my returns in a given year. We will (very likely) not get out at the top of the market, nor will we get in at the exact bottom, either. My job is to have you participating when the market is on offense and climbing. And it is also my job to get you out of harms way when the market flips to defense, and when the risk is high.

Now Go Talk About It!