The Top 4 Lies Told by 401(k) Providers After the death of his beloved mother, Harry Houdini was desperate to contact her from beyond the grave with the help of psychic mediums – who claimed an ability to communicate with the dead. Mediums were very popular at the time, but it didn’t take long for Harry to discover they couldn’t do what they promised. Upset, Harry became determined to expose their lies to protect unwitting ... Read Post
Finding Hidden 401(k) Fees in Participant Disclosure Notices In a 2015 study of 4,368 retirement plan participants, the National Association of Retirement Plan Participants (NARPP) found that 89% could not correctly calculate their account fees.  Even more disturbing, only 42% knew they were paying fees at all.  Most plan participants – 58% - were unaware that fees were being “automatically” deducted from their account. Read Post
Asset-Based 401k Admin Fees Are Unreasonable; Fiduciaries Should Avoid Them 20 years ago, 401k plans were free. OK not really, but 401k providers used this lie a lot to sell 401k plans to small businesses that didn’t want to pay any out-of-pocket 401k fees. In truth, these plans paid “indirect” fees - like revenue sharing paid by mutual funds and/or wrap fees paid by insurance company variable annuities – to 401k providers based on a percentage of plan assets.    Read Post
3 Questions for Calculating Small Business 401k Provider Fees Small businesses have a fiduciary responsibility to pay only reasonable 401k plan fees. The problem? Too many 401k providers bury their fees in complex disclosure documents. When 401k fees are hard to find, it can be easy for 401k fiduciaries to pay too much for 401k services. When this happens, participant returns are handicapped unnecessarily and fiduciary liability is increased. Read Post
(Possibly) The Biggest Small Business 401k Fee Study Ever! Meaningful 401k fee data is hard to come by – and that’s a big problem for small businesses. Sponsors of small business 401k plans have a fiduciary responsibility to keep 401k fees reasonable for plan participants. When this responsibility is not met, the consequences for 401k fiduciaries can be severe - including personal liability. Read Post
John Oliver Should Be Upset; His Hancock 401k Fees Are Too High! Recently, John Oliver lambasted the 401k industry and his own 401k plan with John Hancock on his HBO show Last Week Tonight. If you haven’t seen this show segment, you should check it out now - it was educational as well as hilarious. John Oliver’s main beef with his company’s John Hancock 401k plan was its annual fees - 1.69% of plan assets + $24/participant – which he considered excessive. Read Post
Clarity in a Complex World? A 408b-2 Review I look at a lot of 401k service provider fee (408b-2) disclosures.  At least 2 per week. Some are excellent and straight forward, while others are as clear as mud.  This is a problem for 401k fiduciaries.  It’s their responsibility to ensure their 401k plan only pays reasonable plan expenses.  When 408b-2 disclosures are unclear, satisfying this responsibility becomes more difficult. Read Post
New Year’s Resolution # 1 for Fiduciaries – “I WILL Evaluate My 401k Plan Fees" I have always liked New Year's resolutions. They are a great excuse for ending bad behaviors or starting good ones. Here’s one for all small business 401k sponsors – “I will evaluate my plan fees for reasonableness.” Let me explain why… Read Post
Edison International case highlights a needed reform: Share class restrictions in 401k plans. 401k Plans Read Post
Revenue sharing is on the decline in 401k plans. Three reasons why it will soon be gone altogether. Revenue Sharing Read Post