401k Defense Against Hidden Fees
by Doctrader
Who can you trust when investing your hard earned 401k assets? Basically you have to rely on yourself because you can't trust anyone. If you don't know all the facts about your 401k plan, you will be taken advantage of through slick Madison avenue marketing. It is not just my opinion, but a fact that you will soon realize as these hidden fees come to light with new disclosure rules. Now these new rules were to be in effect at the first of this year, then by April, now.... maybe by the time school year starts. Why the delays?
You guess it, the mutual fund industry and pension fund fiduciaries are scared of the public's reaction to what your 401k plan really cost you! There are more than 72 million plan participants who will get a full accounting by Aug 30, most employees will be shocked. Most employers will be fearful of repercussions for not offering more disclosure and better fiduciary guidance when employee were choosing their investment choices.
"According to a recent AARP survey, 71% of people with 401(k)s didn't even know they were paying fees for their retirement accounts."
"There are four kinds: administrative fees, marketing fees (sometimes called 12-b1 fees), investment management fees and trading costs", according Robert Hiltonsmith a policy analyst at Demos.
The first three types of fees are shown, as an aggregate total, in each mutual fund's expense ratio, and are generally reported in your 401(k)'s "summary documents" as a percentage of assets."
Trading costs are negoiated between brokerage houses and asset managager in mutual funds. There was an after hours trading scandal few years back amoung mutual funds/pension plan managers. Those most active mutual funds had sweetheart deals with trading fees being rebated back to high volume mutual fund/pension traders. The more "actively managed fund managers were paid in bonuses.
I have always said that employees are too trusting with their retirement funds, maybe going over the next round of fees may open their eyes. If you want to help others, post your unusual fees on my Facebook page.
good luck
Doctrader
