I know it sounds radical, but I believe it’s time to abolish 401(k) plans. Why? Because they are not working for those they are intended to benefit: employees saving for retirement.
They are working great for brokers, advisors, recordkeepers and others who “serve” these plans. By some estimates, over their lifetime, the average household will pay a shocking $155,000 in fees to have their money “managed” in these plans.
According to the Employee Benefit Research Institute, at the end of 2011, approximately $4.5 trillion was invested in 401(k) plans. That’s enough money to bring out the best sharks Wall Street can muster.
What are employees receiving for these huge fees? Lousy investment choices. Little or no investment advice and terrible returns.
Plan sponsors need to realize that the 401(k) plan they offer is their employees only vehicle for retirement savings. By trusting your broker or agent without an independent analysis is both dangerous and foolish.
Please comment or call to discuss how this affects you and your company sponsored retirement plan.