Comments on: Bank Guarantees and Defined Contribution Plan Exchange Frequency http://alephblog.com/2008/12/20/bank-guarantees-and-defined-contribution-plan-exchange-frequency/ Helping Institutions and Ordinary People Invest Better by Focusing on Risk Control Sat, 31 Jul 2010 12:01:33 -0400 hourly 1 http://wordpress.org/?v=3.0 By: Ben Williams http://alephblog.com/2008/12/20/bank-guarantees-and-defined-contribution-plan-exchange-frequency/comment-page-1/#comment-20442 Ben Williams Sat, 20 Dec 2008 18:31:10 +0000 http://alephblog.com/?p=1276#comment-20442 Interesting analogy to DC. I would add that the move to daily valuation was driven by competition among the providers and by demand from a tiny minority of squeaky wheels in the plans (some of whom fancied themselves great traders). Brokerage windows also came to satisfy the latter. It's interesting that daily access reduces the usage, because it increased the costs, in several ways: the development of IT systems to support it, and the shift toward investment products with reduced "duration" (e.g., money market funds instead of stable value). It was a hassle to deal with equity wash rules to protect the stable value accounts from excess transactions. We joked in my business (providing investment advice to DC participants) that the average participant's planning horizon equalled the reporting period. Interesting analogy to DC. I would add that the move to daily valuation was driven by competition among the providers and by demand from a tiny minority of squeaky wheels in the plans (some of whom fancied themselves great traders). Brokerage windows also came to satisfy the latter.

It’s interesting that daily access reduces the usage, because it increased the costs, in several ways: the development of IT systems to support it, and the shift toward investment products with reduced “duration” (e.g., money market funds instead of stable value). It was a hassle to deal with equity wash rules to protect the stable value accounts from excess transactions.

We joked in my business (providing investment advice to DC participants) that the average participant’s planning horizon equalled the reporting period.

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