Shedding Light on Excessive 401k Fees – NYTimes.com

Our Comments by J. David Lewis – It takes a long time to stimulate meaningful change.  Three years must have passed since we started seeing public inquiries into abusive expense in retirement plans.  Apparently our government is not yet prepared to regulate these expenses outright.  Nevertheless, I feel good that we are getting disclosure soon that will help us figure out what a retirement plan costs.  Until now, the best we could do was compare the results clients actually got from their plans to results we could simulate using published information for the same investments outside the retirement plan.  Some of the differences have really disturbed us.  This is a great article for anyone with a 401(k) to read.

Revealing Excessive 401(k) Fees By RON LIEBER – Published: June 3, 2011

“DISCLOSING FEES Thankfully, the basic question of what fees you’re paying in your 401k or 403b is about to become easier to answer. Starting in 2012, according to new Labor Department guidelines, investment and other companies like Fidelity, which is a party to the ABB lawsuit, will need to be more clear with employers about how they are charging them.

Employers, in turn, will have to itemize more information on plan fees and expenses on account statements. In addition, they will need to display the costs of each mutual fund or other investment in a way that makes it easier for employees to compare their choices.

While it’s not yet clear how all of this will work in practice, there is real potential here for employers, especially executives at smaller ones for whom managing the retirement plan is one of dozens of duties, to get a harsh wake-up call about the size of their annual bill. And even if they don’t, their employees may see a menu of high-cost funds staring them in the face and begin to ask for a better plan.”

I encourage reading the full article via Shedding Light on Excessive 401k Fees – NYTimes.com.

Contact J. David Lewis directly with david.lewis@resourceadv.com or share your thoughts on this topic below. He founded Resource Advisory Services in 1985.  National Association of Personal Financial Advisors (NAPFA) was formed only a few years before. Lewis became a NAPFA-Registered Financial Advisor in 1986.  He is a passionate advocate for fiduciary, fee-only financial planning and has been associated with financial services since childhood in a banking family.  53862

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