Since June, oil prices have fallen to a six-year low, down over 50% from when Brent crude hit a 2014 high of $115 a barrel. Prices began their swoon mid-year as global supply outstripped global demand. The demand side of the equation weakened as a result of the economic woes of Europe and Asia, increased fuel efficiency and a trend toward alternative fuel sources. On the supply side, the largest variable has been increased U.S. production, up about 50% since 2008 and largely driven by a boom in shale production. Oil prices tumbled further in late November when the Organization of Petroleum Exporting Countries (OPEC) members decided not to curb production. Many observers believe OPEC has an agenda to drive marginal U.S. shale producers out of business by keeping prices low.  February 2015

As we enter the New Year, many qualified retirement plan sponsors use this time as an opportunity to examine current fiduciary structure and processes to ensure all is in order.

Whether or not your organization’s retirement plans have been recently audited by the Department of Labor and/or Internal Revenue Service, it is advisable to be sure your plans will hold up under such audit and/or plan participant scrutiny, and that the proper protections for the Company and its designated fiduciaries are in place.

When reviewing your current fiduciary structure, policies and procedures, we suggest the following considerations:  January 2015

“Headline News Causes Market Turmoil”! I guess that’s why they have headlines. As the New Year unfolds, the price of oil has dropped almost 50% from its peak 2014 price of over $110 a barrel. It’s presently under $50 a barrel. I say “presently” as even lower prices appear to be possible. The last time oil was anywhere near this price was back in early 2009. We were in the midst of a financial market meltdown as the world was in the midst of the worst recession since the Great Depression. We’re not in a recession anymore, at least not in the United States.  Newsletter 12-31-2014  

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

August’s Retirement Report opens with “The Importance of historical scores.” Historical scores are quickly forgotten when new scores are released, but are they really yesterday’s news? In the same respect that rolling period returns are deemed important,
rolling score history is equally if not more.  Next “Fiduciary Liabilities: What are they?  How can they be mitigated?

Also-The Investment Due Diligence process places an important emphasis on a fund’s style, employing a technique called “quadratic optimization.” A big word, and even bigger mathematical equation, which calculates the style of a fund, reflecting how a fund behaves, or what segment of the market the fund best represent.  August 2014

July’s Retirement Report has some great topics.  The first of which is what to expect and a timeline for transitioning providers.  The next topic talks about the future of retirement plans-It is estimated that by 2017 plan 59% of plan sponsors will have received a level retirement readiness report.  Finally a quick look at GAP Analysis-Participant-directed retirement plans put onus on the employee to make important decisions regarding their financial future. The obvious (and most important step) an employee can take when it comes to his or her retirement plan is to participate in the plan. But what is the next important step?  July 2014