Happy New Year!

Posted On: December 12 2015

I’ve always had trouble with celebrating the advent of a new year. Truth be told, the older I get the more depressing it is. It comes with age: 2016? Already? I just started putting 2015 on my checks. I hope this doesn’t mean I have to stay up past 10 PM.


  1. If celebrating New Year’s involves staying up after 10 PM, count me out.
  2. The only pretty young thing who will give me a great big Happy New Year hug and kiss is my granddaughter, and she’s 5.
  3. As my mother got older she would invariably tell anyone who would listen on the first day of each year, "I’ll be 65 this year. Gosh, I don’t feel 65." (Thought I, "you sure as hell look it.")
  4. Wouldn’t you know, I’ll be 65 this year.

Then there are the business issues:

I was in sales, and the first of every year the balance reverted to zero. I’d think, last year was a good year, but how am I ever going to do it this year? For me it is all about numbers: January 1 = 0. Is it any wonder I felt like I was at the base of a very big mountain every January 1?

So just for the fun of it, I thought I’d take a minute to look at some numbers from last year that won’t revert to 0 on January 1. Boy wouldn’t that be fun? The guy who produced these numbers will rest easy at the start of the New Year.

The Department of Labor shook up the world of 401(k) service providers by dropping the revised proposed new regulations expanding the definition of "Fiduciary" as applied to retirement plans. The politics of this announcement don’t interest me as much as the underlying numbers supporting the proposed regulations. Let’s have a look:


  1. The White House Council of Economic Advisers found that those individuals with retirement savings in the hands of unscrupulous asset managers lost about 1% to higher fees or commissions, amounting to $17 Billion per year!
  2. Ok, get out the old calculator: $17 Billion divided by 1% equals $1.7 Trillion assets at the mercy of the ethically challenged. Wow!
  3. But the DOL also tells us that the underlying total assets in IRA accounts in $7 trillion, meaning the new regulations will save money for only 24% of Americans with IRA accounts.
  4. Oh. How much will they save? The DOL estimates that over a 10-year period their regulations will result in savings of approximately $40 billion. That sounds like a lot of money.
  5. However, extrapolating from the same series of numbers, approximately one out of every four people with IRA accounts will lose an aggregate of $170 billion over that same period of time.
  6. Ouch! What’s the bottom line? IRA investors losing 1% at the hands of unscrupulous advisors will now lose 0.75% under the new regulations.
  7. Taking into consideration the universe of IRA investors, the proposed regulations will reduce fees by 0.06%, 6 basis points, or 6 cents for every $1,000 you pay in fees.

All of this is my way of explaining why the Secretary of Labor can cut loose and celebrate the new year: All he has to do to match last year’s accomplishment is to find a way to save $0.06 for every $1,000 we spend on fees in our retirement plan. If he increases the savings to $0.07 for every $1,000 in fees, he will be up 16.7% year/year!

Wouldn’t it be fun to achieve that growth in your own business? 16.7% year/year. This is net by the way: you don’t think the DOL will pick up the cost of those savings do you?

That’s your job.

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