I've been helping a friend with his 401(k) for the past several years. He works at a a startup that had a very nice selection of funds, and has contributed the maximum for the past 7 or 8 years.
Well, a fast talking salesman from a finance company smelled profit and moved in for the kill. He convinced the office manager, who is a nice guy but not much into finance, to move the 401(k)s to a different plan. The finance company will handle a few chores that were previously performed by the office manager, so good for him. He was also sold on the performance of the funds with charts with improper benchmarks, cherry-picked outperforming active funds, etc.
So a quick announcement goes out only two weeks before the transfer, requesting employees to choose new investment selections. I looked through them, and they are all with very high fees. I am looking into it, but do not think my friend has too many options as he will be staying at the company for the next five years or so.
I would imagine this happens a lot, since the incentives are much stronger for those charging higher fees to sell their plans to HR managers, etc.
It seems it would be much better to allow employees to self direct their 401(k) investment choices, more in line with an IRA. The employer could suggest or choose a default at most.
Thoughts?
Well, a fast talking salesman from a finance company smelled profit and moved in for the kill. He convinced the office manager, who is a nice guy but not much into finance, to move the 401(k)s to a different plan. The finance company will handle a few chores that were previously performed by the office manager, so good for him. He was also sold on the performance of the funds with charts with improper benchmarks, cherry-picked outperforming active funds, etc.
So a quick announcement goes out only two weeks before the transfer, requesting employees to choose new investment selections. I looked through them, and they are all with very high fees. I am looking into it, but do not think my friend has too many options as he will be staying at the company for the next five years or so.
I would imagine this happens a lot, since the incentives are much stronger for those charging higher fees to sell their plans to HR managers, etc.
It seems it would be much better to allow employees to self direct their 401(k) investment choices, more in line with an IRA. The employer could suggest or choose a default at most.
Thoughts?
via JREF Forum http://ift.tt/1obNyGL
Aucun commentaire:
Enregistrer un commentaire