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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: cosmicforce who wrote (115898)	7/20/2009 12:44:42 AM
From: slacker711	Respond to of 541961

More like what is the legal basis and precedent for a third party to get the legal right to dictate the asset allocation of a customer? Wait a minute....you mean that "we know what's best for you" isnt a legal argument? FWIW, I absolutely agree that this is an appalling idea. I hope any company that implements this gets the crap sued out of them. Slacker

To: cosmicforce who wrote (115898)	7/20/2009 1:18:48 AM
From: Travis_Bickle	Respond to of 541961

Generally these plans are organized as trusts. You are a beneficiary of the trust and though you never see the actual trust document, by participating in the plan you are agreeing to be bound by the terms of the trust agreement. The trustee generally has some discretion over what forms of investment are available to the beneficiaries. For example, it could offer three funds: An S&P 500 index fund, a U.S. treasury fund and a corporate bond fund. I could see a trustee deciding along the way that it needs to change the options; for example, if many participants are allocating 100% to the stock fund, it could limit investments in that fund to 50% of the account, requiring re-allocation in some cases. Because the investment decisions are made by the participant it relieves the trustee of the liability it would traditionally bear (in general if you are trustee of a trust, and the trust funds are invested primarily in equities, your ass is grass if the market tanks), but there are still liability concerns. For example, let's say that instead of the S&P 500 index the trust offered a small cap fund ... the trustee's attorney is likely to advise the trustee to pull its head out of its ass and offer a more conservative equity option.