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same here , never had a 401k with a brokerage account option . in fact there was no plan with one even available to us and i was on the 401k committee
Brokerages accounts can be added to 401k's if you specify that in your plan. It is up to the company not the 401k provider. Problem is it adds a lot of costs to your audit and would probably increase the liability to the company. I would not add a brokerage account but it is possible.
In general all 401(k) plans are a ripoff. Most people would be far better off in something like the VOO Vanguard S&P 500 tracking ETF with 0.05% net expense ratio. In current the 401(k) plan I have, the funds I can pick from have at least a 1% management fee and most are up over 2%.
This is terrible general statement and one that really shows a lot of ignorance not only of the 401k business but also those who it serves. 401k plans have generally reduced expenses over the last few years and simply because voo is a lower cost option doesn't make a higher cost option a ripoff.
HBO's Last Week Tonight with John Oliver had a show about all the retail financial services profiteering a couple of weeks ago. He touched on the reality that "Financial Advisor" doesn't mean they are at all qualified or certified. The whole Financial Advisor thing of trying to sell high commission annuities. He covered the 401(k) fee thing. No news to anyone who pays attention to all of this but presented in a very humorous way.
High commission annuities are a very small portion of the business. I've managed within a major wirehouse for a long time and overseen billions in aum/8-9 figure annual revenue and if annuity business was eliminated it would have negligible impact on the overall business
Hi, I'm sorry, I'm a super rookie on this. I have my employer plan 401(b) managed by Prudential Financial. I read online that many people are sharing similar thoughts on how they feel they've be ripped off by their employer, that their retirement plan advisor manage their portfolios incorrectly and etc. I am now wondering should I stay with Prudential Financial or move to let's say, Blooom, or any other professionally managed firm. All thoughts and suggestions will be appreciated in advance. Thanks
Do you have the option to choose another vendor for your employer's retirement plan? If you do, certainly, look into the fees of the available plans and compare.
This is terrible general statement and one that really shows a lot of ignorance not only of the 401k business but also those who it serves. 401k plans have generally reduced expenses over the last few years and simply because voo is a lower cost option doesn't make a higher cost option a ripoff.
our plan , which i am no longer part of having retired has many vanguard choices . prior to that we used fidelity which had some excellent funds and while the fees were a bit higher some of the funds performed better then voo and were worth every penny in extra fee .
Sorry to say but the fees/expenses correlate directly to the profitablity and size of your plan. 401k vendors have a profit target for each plan and will work with a company to lower expenses where possible but the companies and the advisors that sold the plan to Pru must speak up. Believe me, there are lazy advisors and plan sponsors out there that don't say anything and maintain funds that suck (for a lack of better word) both in terms of performance and fees. You have to remember that funds like Vanguard pays virtually nothing to 401k vendors so it's not an option for most smaller plans (unless of course your company is willing to pay $ to offset the loss in revenue - which I have seen in the past).
One thing that smaller companies can do to improve profitablity for the 401k vendor (like Pru) thereby allowing companies to add lower expense funds is to consider general account/insurance backed stable value funds that are often called "Guaranteed Interest Account" (GIA). Yes, it has a restrictive cashout policy if a plan as a whole ever wanted to liquidate the fund (individuals can liquidate/transfer at any time) but it will greatly improve your odds of being able to add low expense funds funds offered by a company like Vanguard. Believe me, insurance companies make a ton of $ with GIA (spread product) so it gives their finance group a fair amount of leeway in allowing low expense funds. GIA is slightly risky because it's backed by the general account of the insurer but Pru's been around forever so I wouldn't be too worried.
If your Prudential 401k currently doesn't have GIA, it may be a good idea to suggest it. Good luck!
Sorry to say but the fees/expenses correlate directly to the profitablity and size of your plan. 401k vendors have a profit target for each plan and will work with a company to lower expenses where possible but the companies and the advisors that sold the plan to Pru must speak up. Believe me, there are lazy advisors and plan sponsors out there that don't say anything and maintain funds that suck (for a lack of better word) both in terms of performance and fees. You have to remember that funds like Vanguard pays virtually nothing to 401k vendors so it's not an option for most smaller plans (unless of course your company is willing to pay $ to offset the loss in revenue - which I have seen in the past).
Yep. But it's way easier to just do an ad honinem attack saying you don't have a clue than acknowledge that most 401(k) plans are as you describe; particularly for smaller companies. Nobody is going to let you buy VOO unless you have an enlightened employer who understands the way the financial services game is played.
Yep. But it's way easier to just do an ad honinem attack saying you don't have a clue than acknowledge that most 401(k) plans are as you describe; particularly for smaller companies. Nobody is going to let you buy VOO unless you have an enlightened employer who understands the way the financial services game is played.
It's also easier just to simply state in general all 401k plans are a ripoff when in truth that's not factual
Last edited by Lowexpectations; 06-28-2016 at 10:03 AM..
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