On behalf of the Management Team at TP Investment Advisory, it is my pleasure to extend you the greetings of this special season. It is certainly one of my favorite times of year, and the perfect opportunity to express our gratitude to you for selecting TP Investment Advisory as your committed consultant. As I look forward to a new year and the hope it brings, I look back as well on our achievements in 2014, and the degree to which we accomplished our primary goals – protecting you as a fiduciary and helping your plan participants prepare for a meaningful retirement. Congratulations for all that you accomplished in 2014. We remain fiercely proud of being your dedicated Retirement Plan Consultant.

As we do each December, this month’s Retirement Times highlights “excerpts” from issues published in 2014. Please contact us with any questions or feedback; we look forward to serving you in 2015!  December 2014

Eight years have passed since the Pension Protection Act of 2006 virtually blessed automatic enrollment for defined contribution plans. Has automatic enrollment turned out to be the panacea intended?

In 2007, a financial services center whose plan participation languished below 50% began working with a retirement plan firm. Since the client had multiple branch offices of minimum wage-earning employees for whom English was a second language, it was difficult to meet effectively with everyone to encourage participation. As a result, the plan decided to add automatic enrollment with a default deferral at 1% into a target date fund. Participation, which started at 49% in 2007, ballooned to a whopping 84% just one year later.  November 2014

In October, the Federal Reserve (the Fed), will wrap up its asset purchase program whereby it monthly purchased billions of dollars of bonds in the open market. The Fed believes enough recovery in key economic measures has occurred and the strength of the U.S. economy now warrants winding down these asset purchases. In addition to the end of bond buying, the Fed also stated that it expects to begin raising the Fed funds’ rate at some point in 2015. This key interest rate measure—what financial institutions that maintain deposits at the Fed can charge one another when they borrow and lend overnight—has effectively stayed near zero since the depths of the credit market crisis in late 2008. These current Fed actions create a “normalization” of Fed policy and will likely create a “normalization” of the asset markets.  October 2014

Are we on the way back to normal? Do we even know what should be considered normal? A quick tour of the world around us presents a world that appears in chaos. The Middle East is the Middle East, Russia is Russia and Europe continues to be mired in economic malaise. Japan can’t seem to restart their economy, though they’ve been trying to for almost 20 years, and there are threats of global health pandemics. At least this year there has not been a major weather or disaster. Wars, rumors of wars, disasters and plagues seem to be what’s normal.  Newsletter 9-30-2014

The largest misconception about index funds is that their only distinguishing feature is their fees. It’s not uncommon to hear, “index funds are just holding the stocks or bonds in the index, so we don’t need to pay attention to them.” This assumption, however, is an oversimplification. Many investors don’t realize that all index funds are not created equally.

A key difference between indexes and index funds is that index funds are exactly that – funds. Index funds manage obstacles that indexes themselves don’t face. The largest is that funds actually must transact in securities whereas indexes do not.  September 2014