How Does the 80/20 Rule Apply to QDROs?
Did you know that 80% of the results you achieve come from only 20% of your efforts? Stated another way, you’re spinning your wheels 80% of the time.
The 80/20 rule is an economic phenomenon that has been observed and documented throughout the world and throughout the ages. For example, in health care, 20% of patients use 80% of health care resources. In Italy in the 1700s, 20% of the population owned 80% of the wealth. In occupational health and safety, 20% of hazards cause 80% of the injuries. The 80/20 principle provides an excellent prescription for where to focus your efforts in negotiating the division of retirement. Find the 20% of activities that are going to make the biggest difference. Focus all of your resources on those activities. Allocate very few resources to the 80% of activities that will only generate 20% of the results. In this issue’s cover article, we describe the five keys to negotiating the division of a 401(k) retirement plan. The lawyer who uses all five keys to negotiate will have accomplished 80% of what has to be done to successfully divide and document the 401(k). On the other hand, the lawyer who omits one or more of the five keys, such as neglecting to negotiate how outstanding loans will be handled, is doomed to spin their wheels and devote additional resources to accomplish the same result.
Search for the vital few activities that make a difference.
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