The debate continues in Congress over which service providers should be allowed to provide investment advice to 401(k) plan participants.
But what if plan sponsors themselves gave the advice?
It's plausible they might provide investment oversight and management the same way they operate their own businesses.
Take for instance Borden Inc., which makes Cracker Jack. The label of the snack boxes promises a "toy" inside. Well, that toy turns out to be a tiny piece of paper or card imprinted with an image, often a tattoo.
Some toy. Considering its expansive definition of a toy to consumers, think how it would define for its 401(k) plan participants investment terms like small or large capitalization. Would the definitions tend more to blending market caps? And, what kind of performance benchmark would it apply to its funds, when it regards a piece of paper as a toy?
Then there's UAL Inc. Its United Airlines overbooks flights, booting people with tickets in hand, even if the would-be passengers don't want the supposed compensation for ruining a day planned in, say, Tampa or Orlando. Considering these operating decisions, one might imagine how it would treat participants who queue up for an investment but get shut out because the company will process only so many inquiries, despite accepting a larger number of orders. What's another day to a long-term investor?
Or, what about women's apparel companies? Some make sizes bigger, supposedly to give customers a pleasant surprise about still being able to fit into a certain size. Imagine how disciplined these companies are about investment style. Value and growth might more easily become relative value and relative growth.
Then take long-distance carriers. Some have been notorious for their so-called slamming, that is, switching a consumer's long-distance company without his or her explicit permission. They might unilaterally switch 401(k) participants' asset allocations. Or they might permit the vendors providing investment services to slam participants.
What about greeting card companies, such as Hallmark Cards Inc. or American Greetings Corp. Their cards are famous for their pithy phrases, designed to be appropriate for occasions from birthday greetings to expressions of sympathy. They could condense investment education in a style similar to the succinct language of greeting cards. For instance, to borrow a creation of one investment marketer, a card shows a chicken running around and screaming, "Sky is falling. Sky is falling." The inside of the card reads "Buy Sky." In that simple way the greeting card companies could help educate 401(k) participants about opportunity in falling markets, or dollar-cost averaging.
Then again, some products or services companies sell might prove useful to 401(k) participants if adapted to investing. General Mills Inc. might take a cue from one of its products, Hamburger Helper, and provide 401(k) participants with an overlay to mix with their investment strategy to improve the blend.
But what about museums that contain works by Pablo Picasso, regarding him as the pinnacle of modernist artistic expression? What kind of asset allocation mix would they advise, when they honor an artist for work that didn't put noses in the right place?