"What happens in the fund business is the magic of compound returns is overwhelmed by the tyranny of compounding cost. It’s a mathematical fact. There’s no getting around it. The fact that we don’t look at it, too bad for us."
John Bogle, Founder of The Vanguard Group. From a November 2012 interview appearing on PBS Frontline documentary, "The Retirement Gamble"
"Even with the new 401(k) statement rules, you might have no idea what you’re paying in fees. In fact, a recent InvestingNerd (a division of NerdWallet) study found that a staggering 92.6% of Americans "dramatically underestimated the total 401(k) fees the average household will pay over the course of a lifetime."By the time all of your fees are added up, according to public policy organization Demos, you could be as much as $155,000 -- or more -- poorer over your lifetime.
What could you do with that extra money?
More importantly, how much would that have added up to if you had been able to compound the money over time?Every retirement account comes with fees. Here's what you might be paying:
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"The 401(k) is one of the only products that Americans buy that they don’t know the price of it. It’s also one of the products that Americans buy that they don’t even know its quality. It’s one of the products that Americans buy that they don’t know its danger. And it’s because the industry, the mutual fund industry, have been able to protect themselves against regulation that would expose the danger and price of their products." Prof. TERESA GHILARDUCCI, Economist, The New School:
"The nation's 401(k) retirement plans are riddled with conflicts of interest that are causing financial damage to tens of millions of savers, according to a Government Accountability Office report released this week titled "Improved Regulation Could Better Protect Participants from Conflicts of Interest."
Those conflicts of interest involve undisclosed "revenue sharing," in which firms administering 401k programs receive fees from fund managers, record keepers, custodians and others, who pay to be included in the plans, the GAO says.Additionally, some program providers use generalized "investment education" sessions to promote their own funds, the government watchdog added."
"If left unchecked, conflicts of interest could lead plan sponsors or participants to select investment options with higher fees or mediocre performance, which, while beneficial to the service provider, could amount to a significant reduction in retirement savings over a worker’s career," the GAO said. Post continues after video."
Watchdog hits 401k plans for conflict of interest. The GAO recommends changes to ensure that millions of savers' funds are protected.By MSN Money Partner Mar 1, 2011 2:05PM Click here to read full article and video:
401(k) Stress Test
Increasingly, savvy business owners are hiring independent consultants known as fiduciary advisors. These advisors use an objective process to cut through the confusion.
A 401(k) fiduciary advisor can assess your plan and suggest how to make it work better for you and your employees.
Your fiduciary advisor will use a rules-based process that puts the wellbeing of your employees first. The process systematically eliminates inadvertent errors and poor judgment.
Business owners gain the satisfaction of knowing their
employees achieve the best possible plan implementation and stewardship. In addition, direct costs to the company often fall as a result of working
with a fiduciary advisor.
Your first step. Call us at 214-754-0770 or click here to schedule a complimentary
benchmark analysis of your portfolio’s investment offerings customized to your overall employee account balances.
You’ll see how much you and your employees can save when you have an independent retirement plan expert on your side.