Understanding Employee Benefit Plan Investments: A Guide for New Trustees

Larry Beebe, CPA

New trustees can be overwhelmed by the knowledge that must be quickly acquired to function effectively in their new roles.  Investments is one area that trustees must know well, but the average new trustee may not have the detailed background and knowledge necessary to manage the investments in an employee benefit plan.

In the months to come, we will be posting an in-depth series on investments to assist new trustees in their fiduciary duty of managing plan assets.  The topics we will cover in this series include:

  • Rate of Return
  • Diversification
  • Asset Allocation
  • Risk
  • Inflation
  • Basis Points
  • Commission Recapture
  • Passive Investing
  • Active Investing
  • Dollar Cost Averaging
  • Fee Disclosures
  • Dividend Terminology
  • Yield Curve
  • Alpha
  • Beta
  • Understanding ADV Forms
  • Mutual Funds vs. Stocks and Bonds
  • Mutual Funds: Reading a Prospectus
  • Mutual Funds: Evaluation Methods
  • What is a Load?
  • Alternative Investments
  • Where to Look for Investment Information
  • What is a 12(b)(1) Fee?
  • Understanding Benchmarks (Dow Jones, S&P, etc.)
  • Accrued Investment Income
  • Derivatives
  • Creating an Investment Policy
  • The Role of the Investment Consultant

We may add additional topics, as needed; if you have questions or would like more information on a related topic – please feel free to comment on this post!

At first the numbers can seem confusing, but through this series we hope to clarify the core topics around investments to help trustees more fully understand their plan’s financial standing and fulfill their fiduciary duties.

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