Comments on: An Interview with Brooks Hamilton http://www.brightscope.com/blog/2009/08/27/an-interview-with-brooks-hamilton/ Sat, 20 Mar 2010 13:47:49 +0000 http://wordpress.org/?v=2.9.1 hourly 1 By: Ryan Alfred http://www.brightscope.com/blog/2009/08/27/an-interview-with-brooks-hamilton/comment-page-1/#comment-4831 Ryan Alfred Wed, 02 Sep 2009 03:26:47 +0000 http://www.brightscope.com/blog/?p=1081#comment-4831 Lance- We wrote a piece about trading cost on the BrightScope Blog not too long ago. You can go to this post to view and download BrightScope's Transaction Cost Algorithm: http://www.brightscope.com/blog/2009/05/27/brightscopes-response-to-the-ici/ We include transactions costs in all of our "Total Plan Cost" calculations. -Ryan Lance-

We wrote a piece about trading cost on the BrightScope Blog not too long ago.

You can go to this post to view and download BrightScope’s Transaction Cost Algorithm: http://www.brightscope.com/blog/2009/05/27/brightscopes-response-to-the-ici/

We include transactions costs in all of our “Total Plan Cost” calculations.

-Ryan

]]> By: Josh Itzoe http://www.brightscope.com/blog/2009/08/27/an-interview-with-brooks-hamilton/comment-page-1/#comment-4829 Josh Itzoe Wed, 02 Sep 2009 02:19:53 +0000 http://www.brightscope.com/blog/?p=1081#comment-4829 Lance, Do a Google search for an excellent resource by Dr. Greg Kasten from Unified Trust, entitled "High Transaction Costs from Portfolio Turnover Negatively Affect 401(k) Participants and Increase Plan Sponsor Fiduciary Liability". It appeared in the Journal of Pension Benefits sometime in 2007/2008 and looks at trading costs for different asset classes due to brokerage commissions, market impact and bid-ask spreads. His study found that the effective average annual total cost (expense ratio plus turnover costs) was 1.28 percent for fixed income funds and a whopping 3.09 percent for equity funds. Very enlightening stuff and a good place to go deeper I believe. Lance,

Do a Google search for an excellent resource by Dr. Greg Kasten from Unified Trust, entitled “High Transaction Costs from Portfolio Turnover Negatively Affect 401(k) Participants and Increase Plan Sponsor Fiduciary Liability”. It appeared in the Journal of Pension Benefits sometime in 2007/2008 and looks at trading costs for different asset classes due to brokerage commissions, market impact and bid-ask spreads. His study found that the effective average annual total cost (expense ratio plus turnover costs) was 1.28 percent for fixed income funds and a whopping 3.09 percent for equity funds.

Very enlightening stuff and a good place to go deeper I believe.

]]> By: Lance Roberts http://www.brightscope.com/blog/2009/08/27/an-interview-with-brooks-hamilton/comment-page-1/#comment-4821 Lance Roberts Tue, 01 Sep 2009 16:25:16 +0000 http://www.brightscope.com/blog/?p=1081#comment-4821 On the disclosure issue of price transparency, many of the seasoned vets of pension wars fought the good fight in terms of disclosure of revenue sharing. Now I am struggling with the issue of full disclosure of trading expenses within mutual funds, which may be substantially in excess of revenue sharing. I have been actively promoting the development of collective investment funds that are fully transparent in terms of fee sharing, but absoluting need a resource that better identifies comparable mutual fund trading cost, which John Bogle in his book on mutual funds indicates might average 124 bps. annually over and above the fully disclosed OER. I could really use some help in this area, which has been entirely overlooked by the Feds to date. On the disclosure issue of price transparency, many of the seasoned vets of pension wars fought the good fight in terms of disclosure of revenue sharing. Now I am struggling with the issue of full disclosure of trading expenses within mutual funds, which may be substantially in excess of revenue sharing.

I have been actively promoting the development of collective investment funds that are fully transparent in terms of fee sharing, but absoluting need a resource that better identifies comparable mutual fund trading cost, which John Bogle in his book on mutual funds indicates might average 124 bps. annually over and above the fully disclosed OER.

I could really use some help in this area, which has been entirely overlooked by the Feds to date.

]]> By: the intruder http://www.brightscope.com/blog/2009/08/27/an-interview-with-brooks-hamilton/comment-page-1/#comment-4782 the intruder Sat, 29 Aug 2009 21:33:04 +0000 http://www.brightscope.com/blog/?p=1081#comment-4782 For someone who claims to have 40 years of experience in employee benfits Brooks is remarkably ignorant of why preemption was enacted in its present form. The orginal draft of ERISA 514 only preempted state laws which conflicted with an express provision of ERISA. However in the spring of 1974 while ERISA legislation in Congress was being debated, the Missouri Supreme Court handed down an opinion that the Monsanto Corp VEBA trust for health care benefits for its employees was the business of insurance which subject to regulation under state law. In another case a closed panel prepaid legal services program for union members was declared to be illegal under state law. After intensive lobbying by unions and employers who were concerned that state regulation would curtail innovation to find cheaper ways to deliver employee benefits by cutting out insurers (sound familar- see public health care option) Congress broadened preemption to eliminate all state law regulation of employee benefit plans regardless of whether the state law conflicted with ERISA. There have been several attempts to revise preemption through the democratic process of amending ERISA and another attempt will be likely in the proposed care legislation being considered by Congress. As far as ERISA preemeption being "democratic tyranny", prior to ERISA Congress enacted many other protective laws to protect business which void state laws and pre existing regulatory and common law remedies: for example, state and local laws cannot interfer with, regulate or prohibit the operation of airports or the operation of commercial aviation which is regulated solely by the FAA and state laws cannot interfere with the regulation or operation of nuclear reactors which are subject to sole regulation of the Energy Department. For someone who claims to have 40 years of experience in employee benfits Brooks is remarkably ignorant of why preemption was enacted in its present form. The orginal draft of ERISA 514 only preempted state laws which conflicted with an express provision of ERISA. However in the spring of 1974 while ERISA legislation in Congress was being debated, the Missouri Supreme Court handed down an opinion that the Monsanto Corp VEBA trust for health care benefits for its employees was the business of insurance which subject to regulation under state law. In another case a closed panel prepaid legal services program for union members was declared to be illegal under state law. After intensive lobbying by unions and employers who were concerned that state regulation would curtail innovation to find cheaper ways to deliver employee benefits by cutting out insurers (sound familar- see public health care option) Congress broadened preemption to eliminate all state law regulation of employee benefit plans regardless of whether the state law conflicted with ERISA. There have been several attempts to revise preemption through the democratic process of amending ERISA and another attempt will be likely in the proposed care legislation being considered by Congress.

As far as ERISA preemeption being “democratic tyranny”, prior to ERISA Congress enacted many other protective laws to protect business which void state laws and pre existing regulatory and common law remedies: for example, state and local laws cannot interfer with, regulate or prohibit the operation of airports or the operation of commercial aviation which is regulated solely by the FAA and state laws cannot interfere with the regulation or operation of nuclear reactors which are subject to sole regulation of the Energy Department.

]]> By: Wayne Bogosian http://www.brightscope.com/blog/2009/08/27/an-interview-with-brooks-hamilton/comment-page-1/#comment-4778 Wayne Bogosian Sat, 29 Aug 2009 15:04:40 +0000 http://www.brightscope.com/blog/?p=1081#comment-4778 Thanks Brooks. Your ability to distill and communicate complex concepts into understandable prose is unique and refreshing. - Wayne Thanks Brooks. Your ability to distill and communicate complex concepts into understandable prose is unique and refreshing.
- Wayne

]]> By: Mike Alfred http://www.brightscope.com/blog/2009/08/27/an-interview-with-brooks-hamilton/comment-page-1/#comment-4753 Mike Alfred Thu, 27 Aug 2009 21:38:04 +0000 http://www.brightscope.com/blog/?p=1081#comment-4753 Brooks, you are a true intellectual. Thanks for sharing your thoughts. Mike Brooks, you are a true intellectual. Thanks for sharing your thoughts. Mike

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