There is a storm of concern that has been building for quite some time, and it is finally getting the attention that it deserves…. 401K FEES:
As I have discussed in past Chaos Topics there are many 401ks that have outrageous fees and limited investment options. This is very troubling because pensions are all but extinct, and most of us are relying on 401ks and 403bs to fund our future retirement.
To get an idea of how much 401ks have grown consider this figure. In 2005 there were roughly 47 million individuals participating in a 401k. Compare that to 1984 when there were only 7.5 million participants.
According to the CNNMoney.com article over 80% of 401(k) investors are not aware of how much they pay in fees. In this same article they site that excessive fees have penalized account balances by an average of 15% over the past 20 years.
The scary part about all of this is that most employers do not realize that their bad retirement investments could be a ticking time bomb. In the Department of Labor piece titled “A Look At 401(k) Plan fees” the following statement is made:
“You should be aware that your employer also has a specific obligation to consider the fees and expenses by your plan. ERISA requires employers to follow certain rules in managing 401(k) plans. Employers are held to a high standard of care and diligence and must discharge their duties solely in the interest of the plan participants and their beneficiaries. Among other things, this means that employers must:
* Establish a prudent process for selecting investment alternatives and service providers
* Ensure that fees paid to service providers and other expenses of the plan are reasonable in light of the level and quality of services provided
* Select investment alternatives that are prudent and adequately diversified
* Monitor investment alternatives and service providers once selected to see that they continue to be appropriate choices
NOW HOW MANY OF YOU THAT LISTEN TO MY SHOW WHO ARE DECISION MAKERS DO EVERYTHING LISTED ON THE DEPT. OF LABOR LIST? Consider this a warning to get your act together. The government knows that they have blown it with Social Security and they recognize that pensions are all but gone. Our government is scared about where we will be as a country in 10 to 20 years as individuals reach retirement age and they do not have adequate assets to cover retirement living expenses and healthcare.
Listen to the Podcast for details on the following:
*WHAT ARE 401K PLAN FEES AND WHO PAYS FOR THEM?
*SOME COMMON INVESTMENTS AND RELATED FEES
*WHERE CAN I GET INFORMATION ABOUT THE FEES AND EXPENSES CHARGED TO MY 401K PLAN ACCOUNT?
As many of you are aware I do this podcast as a hobby with minimal income expectations, but sometimes the hobby provides an opportunity for my business and I would be a fool not to use my audience to grow the business. My firm (Preston & Cleveland Wealth Management, LLC) provides 401k consulting services for plans with at least $1 Million in Plan Assets. If you are a decision maker at your company and have questions about the fees that you are paying please feel free to contact me directly at [email protected] or call (770) 898-4235. It could be a call that could save you thousands of dollars in plan fees, help you meet the government’s new Fiduciary requirements, and allow you and your employees access to funds and diversification that can steady the future of your retirement options.
For all those that subscribed to the “Wealth Report” Newsletter… We will be mailing them out in the next 3-4 days. Enjoy and let me know your thoughts.