Comments on: 401(k) rip-offs: How to protect yourself Fri, 05 Dec 2014 11:27:18 +0000 hourly 1 By: protectys Sat, 05 Nov 2011 22:09:26 +0000 Is is disgusting that so many people have been ripped off and those responsible should be brought to justice. Good honest people have paid into pensions which are now in danger. For other ways to protect yourself see which is a good read.

By: JOR Thu, 16 Jun 2011 21:52:13 +0000 MaunaKea – As an advisor you would have to be careful predicting performance. Assuming past history repeats itself, then most of the time a passive approach beats an active approach assuming fees are the same. If fees for passive are lower than active then passive beats active even more often.

Susan: I consider 401k’s to be the “Madoff scandal of the average person”. It’s a shame that small business, i call them our “economic patriots” — are the people that suffer the most. Often the business owner has the largest balance. It’s like filling up a bathtub with water and it is filling, but slower than it should because of an unseen leak.

Much of the time, the non-fiduciary financial product salespersons are blissfully unaware! Just as well – they would quit if they realized the full extent of the harm they are doing.

I’ve had business owners say, “But they buy us pizza when they have a education session.” It was all I could do to nod and smile. It is a travesty and a shame.

I’m saving one small company this next week as we move them to a really top notch ERISA 3-38 fiduciary plan, transparent fees, managed model portfolios, low exp ratio (0.26) high quality inst. passive funds. Very cool. One company at a time. make the world a better place…

By: jmhMIRA Wed, 15 Jun 2011 13:12:08 +0000 Susan ” Wrap fees, commissions, and TPA subsidies are a way to pay fees and provide plans to hundreds of thousands of employees who would not otherwise have them. ” There are far better more cost effective ways to provide these services that benefit both the Employer & the participant. 12b-1 fees casue NOTHING but Friction in plans. Reach out to Mark or myself on Linked In


By: PrudentChampion Wed, 15 Jun 2011 04:04:04 +0000 Susan201,
Respectfully, it doesn’t appear you know what is going on behind the scenes. Absolutely all of us ought to be paid for our efforts and there is a cost to doing business. However, the amount of money being pilferd from the American 401k participant, by many of the largest 401k service providers, above and beyond the advisor compensation constitutes theft, pilfering to be precise.

Please Google “caveat emptor” along with my name, or review my presentation from the FI360 conference last month, or read “Stop the 401k Rip-off”. Until three years ago I was in your shoes. pHenry’s comments are exactly right, as are MaunaKea’s.

I’m happy to talk to you off-line to show you exactly where to look. I’m on LinkedIn

Mark Mensack

By: MaunaKea Mon, 13 Jun 2011 19:33:58 +0000 If you were the compare the performance of a (a) passive 401k with no management fee and another (b) 401k that is actively managed but with a management fee, which would do better? I suspect that in many cases (a) would outperform (b)

By: pHenry Mon, 13 Jun 2011 18:52:43 +0000 not a 401k expert, but “you get what you pay for” is not the problem as I see it. You/we pay people for things we don’t understand because they supposedly do. Yet it’s in their own best interest to not explain all choices fully. Charges/fees have made finance what it is…confusing to wage earners, profitable to banks. Another thousand paragraphs defending good firms won’t eliminate the unscrupulous ones. Nor should enforcement of sound legal rules offend the scrupulous. Education and enforcement both work if properly applied.

By: Susan201 Mon, 13 Jun 2011 16:55:23 +0000 As someone who has been in the retirement plan industry for over 25 years, I have certainly seen abuses of the kind the writer mentions; however, most companies and individual brokers and advisors that market 401(k) and other retirement plans are ethical and diligent in trying to provide competitive, cost-effective plans.

What no one seems to realize with 401(k) plans is that they are not free, and the companies/individuals that provide them have to feed their families too. Who do you suppose is paying for the posters in the lunchroom announcing the upcoming enrollment meetings? Who is providing the shiny kits that are passed out at that meeting? Who maintains the website where you check your account balance, educate yourself, and perform transactions? Who is that knowledgeable person standing in the front with a clear, professional, FINRA-compliant presentation at enrollment meetings? Who is explaining what a QDRO is to the employer? Who is processing the death claim? Who is educating the employer on their responsibilities when laws change? Employees (and the writer of this article) need to understand that for many small to mid-size firms, if their employers were paying all of these costs out of pocket, they would not have a plan, especially in this economy. Wrap fees, commissions, and TPA subsidies are a way to pay fees and provide plans to hundreds of thousands of employees who would not otherwise have them.

My firm has been fully disclosing all the “hidden” revenue we receive for years; I am very much in favor of the disclosure legislation and I hope the DOL is diligent in enforcing it. Employers and employees should know what they are paying; but they should also understand that you get what you pay for. If you don’t want to pay anything, that is exactly what you get.