The Plan That Didn't Bark
This blog's author is proud to have been asked by CFA Magazine to author a short piece about employee benefit plan disclosure rules and the likely impact on share price. As I've written many times before, what we know about risks being taken by plan sponsors could fill a thimble. In "The Plan That Didn't Bark" (March/April 2008 issue), I suggest that "to solve the mystery of benefit plans," analysts must play the role of investigator. This remains a truism despite recent attempts to enhance reporting guidelines about economic risks of benefit plans, including healthcare offerings.
Even clever analysts who know their disclosure standards cold must nevertheless look beyond reported numbers. "Financial analysts really have no choice but to become forensic detectives. They cannot rely solely on published numbers but instead must ask lots of pointed questions about how plan sponsors identify, measure, and manage myriad types of risk. Knowledge of accounting rules is only a beginning, and a humble one at that. Economic, fiduciary, and regulatory factors count too."
Click to "The Plan That Didn't Bark" by Dr. Susan Mangiero, AIFA, AVA, CFA, FRM (CFA Magazine, March/April 2008).
