A Little Friday File Fun

If you have a wrist tattoo, a warning about the new Apple Watch. Users have reported that tattoos cause the watch to lose connection and require them to enter their passwords repeatedly. Sky News reports that darker tattoos appear to cause more problems than lighter ones.

In Gambell, Alaska, of 80 frozen pizzas stolen in the village, 75 have been recovered, according to Alaska State Troopers. Village police officers received their “strongest investigative lead” in the case when two men called the Gambell Police Department and tried to sell the pizzas to on-duty officers, according to Alaska Dispatch News.

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In Niagara, Ontario, Canada, Niagara Regional Police were monitoring traffic when an officer’s attention was drawn to a green 2000 Dodge Caravan with no license plate. As the vehicle approached, the officer noticed it also had no sliding side doors, the rear windows were missing and several items were sticking out of the open doors, CTV News reports. A wooden stool was strapped to the van’s roof, and a triangular slow moving vehicle sign was tied across the back of the van where the license plate should have been. Police stopped the vehicle, and said its 66-year-old driver told them his license was suspended. There was also no insurance on the van. Upon investigation, police realized the man had been stopped driving the same vehicle on the same road in neighboring Fort Erie two weeks earlier.

In Los Angeles, California, a woman who was told she had a brain tumor had surgery to remove it. She said she was shocked when she awoke and doctors told her that the “tumor” turned out to be her embryonic twin, according to UPI. Doctors said it had bones, hair and teeth. The woman is expected to make a full recovery.

In Warwick, Rhode Island, a woman thought a pipe had burst when she returned home to find water pouring from her garage ceiling. She went upstairs to find the source of the running water and discovered a wild turkey had crashed through a bathroom window and somehow turned on the sink, according to the Associated Press. She estimates the sink had been running for two to three hours and that caused thousands of dollars of damage to her home. Police and a Department of Environmental Management officer caught the turkey and released it. 

Theories for why we experience déjà vu.

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In New Orleans, Louisiana, strong winds blowing cars of a moving train off a bridge was caught on camera. UPI reports there were no injuries.

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In Abu Dhabi, United Arab Emirates, a man chasing his wayward camel down a highway was captured on cell phone video.

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Will DC Plans See More Robo Advice?

Defined contribution plans are not likely to use robo advisers in the near future, but may begin to if the innovation develops, sources say.

According to Alison Borland, senior vice president of retirement strategy and solutions at Aon Hewitt, the use of robo-advisers is not sparking a lot of interest from the large plans Aon Hewitt services. “Most large plans already include some level of advice, some of which is automated, and not very different from a robo-adviser,” she tells PLANSPONSOR. Whether the plan uses a third-party advice provider or not, most plan sponsors already do provide the advice without an explicit fee to participants, though there is generally a cost to the plan.

“I don’t expect plan sponsors to go out and pull in an app-like online experience until it can be integrated with existing offerings,” Borland maintains. Most plans already have access to an automated solution, she notes, adding that she thinks more competition and more offerings will be positive, since they can put cost pressures on the existing solutions. But meanwhile, she does not expect plan sponsors to go looking for additional help. “They’re not willing to scour the market for third-party solutions.”

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Borland notes that the terms are still confusing. “The difference may not be clearly defined in the marketplace,” she says. “When the industry talks about robo-advice, they generally are referring to the low-cost to no-cost tools that are out there that can manage or allocate investments in a very efficient, cost-effective way.” This is a misnomer, and defined contribution plans already have access to solutions that do that.

“Robo-advisers provide low-cost asset allocation where it was not available before,” she says. “The cost of having someone manage your account as a retail investor is quite high. Access to it in a plan is much more cost-efficient if you’re talking about actual discretion management—perhaps there’s a flat fee or much lower cost.

The size of the plan rather than fees will be a determining factor, Borland says. The level of scrutiny and oversight in the defined contribution plan space are very different from that in the retail world, she observes, but concedes that pressure on providers and more automation tends to lower costs.

It’s possible, but not likely, that plan sponsors will send participants to robo-advisers directly, says Chris Jones, chief investment officer of Financial Engines. “None of the current group of robo-advisers seems to be targeting plan sponsors as their primary way of acquiring customers,” he tells PLANSPONSOR. 


Next: What’s holding back wider-spread adoption of robo-advisers?
 

“Most robo-advisers require you to move your money to their platform in order to receive advice and management. You don’t have that luxury as an employee with a 401(k),” Jones says. Other factors that could impede plan adoption: none of the robo-advisers has the infrastructure to execute trades on the recordkeeping platforms yet, hampering their ability to support large-scale targeting of defined contribution plan participants, he points out.

The use of robo-advisers will mostly fall to individual investors seeking services from these firms rather than plan sponsors directing large numbers of participants to them, Jones predicts. “There are already established independent advice providers in the 401(k) market that provide these services, and most robo-advisors are targeting younger, affluent taxable investors,” he says.

From a more general perspective, Jones believes the influx of new firms offering investment advice facilitated by technology is positive for several reasons, such as increased choice for consumers and pressure on existing providers to improve services.

“However, there are significant differences in the quality and philosophy of the advice being provided by different firms,” Jones says. “It will take time for the market to separate out the high-quality firms from the lower quality ones. Plan sponsors make a fiduciary decision when they select an adviser for their participants.”

Whether implementing robo technology in a plan will affect the cost of providing advice to participants is still uncertain. Jones comments that the robo-advisers are putting pressure on the traditional advice and management business model. “With today’s technology, it is possible to provide high-quality advice at a lower cost,” he says. “However, many participants want to talk to a human adviser as part of their experience. I expect that the robo-advisers will contribute to an already established trend of greater price sensitivity and focus on value for fees in the financial services industry.”

Todd Clarke, chief executive of CLS Investments, sees robo-advisers as an advice solution that will fit some retirement plans, but the option is unlikely to have any effect on the cost of providing advice to participants. “We charge the same whether you eat in our restaurant or go through our drive-through,” he tells PLANSPONSOR, only half joking. The reason is that CLS delivers the same service whether it’s via technology or in a face-to-face session, he explains. “We’re putting in the same amount of work behind the scenes in managing our portfolios. Our advice is our advice. It’s just a different way to package it.”

“There are many complexities that exist in the 401(k) world that do not exist with standard brokerage accounts,” Jones says. “It will take some time for the robo-adviser firms to adapt their services to meet the needs of sponsors and participants.”

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