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Our company's current 401k is bad, considering high expense fees (2.2%). Finally we have another adviser coming to pitch his services, 401k. I know about the fees and I know to push for ability to have index funds at low cost, but what else??? What questions should we be asking of a new 401k adviser?
Our company's current 401k is bad, considering high expense fees (2.2%). Finally we have another adviser coming to pitch his services, 401k. I know about the fees and I know to push for ability to have index funds at low cost, but what else??? What questions should we be asking of a new 401k adviser?
Follow up question ... it would help me if I knew exactly what it costs companies like ours to offer 401k. What determines the cost that company pays for offering 401k? thank you
I agree on asking what ETFs they have. They don't need to have a zillion of them but they ought to have S&P 500, VTSMX (Vanguard Total Stock Market Index), etc. If all they offer is mutual funds, ask the questions people have posted earlier about expense ratios. I'm not opposed to paying expenses on mutual funds, but also look at the results NET of expenses. You could come prepared with some performance data
of basic indices such as the S&P 500, emerging markets, international, etc. over 1 year, 3 years, 5 years, etc. The representative should be able to show similar figures for their mutual funds and explain why they're different, if they are. (If he/she can't, that tells you something, too.)
If there are no ETFs, ask if there are plans to include them in the future. Also ask what, for example, they'd recommend instead of the S&P 500 ETF and then compare results with your cheat sheet.
I wish I could be a fly on the wall!
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