Business of Life

Outside Fiduciaries and Company Stock

More than 27% of all workers hold at least half of their 401(k) balance in company stock.  Some 7% have their entire account in company stock. 

Generally financial planners say no more than 15% of your overall stock should be in your employer's stock.    The debacle of Enron, with hundreds of thousands losing their entire retirement savings is the lesson in point.

Given the recent rash of lawsuits against Merck & Co, Krispy Kreme, General Motors, AIG, EDS and others alleging that company executives breached their fiduciary duty by NOT getting workers out of company stock, things are changing

More and more companies are hiring outside consultants to oversee the handling of company stock in employee retirement plans.

For employees it's an extra layer of protection.  For independent fiduciaries like State Street and US Trust , it's a rich new source of business.

Retirement Plans Get New Safeguards, Wall St Journal (subscription only)