401k plan fees too high?
While there are necessary costs to manage a 401k plan, we believe the industry has pushed fees to an unreasonable, unfair level. Participants can lose valuable retirement dollars.
High fees decrease retirement savings
Service provider fees charged as a % of plan assets and often hidden in investment funds provide an ever increasing revenue stream without any additional value being provided to participants. This can rob participants of important additional growth in their retirement savings accounts.
The Difference between Fixed and Asset-Based Fees
Asset-based fees are calculated as a fixed percentage of the plan balance. When a plan grows due to contributions and investment returns, so do the fees. This is a hypothetical example and is not representative of any specific situation. It assumes $2,000,000 in starting plan assets, 35 participants, annual contributions of $100,000 and 3% expected annual asset return. Your results will vary.
The 401k industry uses the same pricing strategy combined with confusing jargon and complex math – while participants sacrifice hard-earned retirement savings.
1. Automatic Fee Increases
(It’s called Asset-Based Pricing)
Participants place more money in the plan or experience good investment returns, the fees go up. Makes sense, right? Why do service providers benefit because participants saved more for retirement? The 401k industry never outgrew asset-based pricing because it keeps paying them more.
2. Hard To Decipher Industry Practices
The 401k industry knows they have a good thing going and wants to keep it that way. What better way to avoid change – keep everything so confusing that no one can understand who pays what? We believe regulatory disclosures aren’t much help as they were written by you know who.
3. Poor Performing Investment Funds
Investment funds are often chosen by service providers because they pay them hidden fees. That can hurt the funds’ long-term performance and hinders future participants account balance growth. Participants have to save even more to reach their retirement goals.
4. Lackluster Employee Support
Because the employer hires the service providers for the 401k plan, the service providers often waste too much time and energy protecting this relationship from industry competitors and not helping participants better understand their retirement needs. Way to go, service providers.
We believe 401k industry practices have hurt retirement savings. We want to help change that.
It’s not the employer or participants’ fault, as they have no reliable sources of information for decision making and they rely on service providers to be objective and unbiased. Participants don’t understand how much they’ll need in retirement so they’re not saving enough. Isn’t it time to change how things are done and help participants prepare for a better retirement?
Fees Matter
Asset-based 401k plan fees can be higher than a participant’s salary deferral or the employer’s matching contribution as the participant nears retirement. Think of that – participants are paying service providers more than what they are saving for retirement. Whose retirement are participants funding anyway?
Funds Matter
Industry-wide use of investment funds that pay providers through increased fund expenses can prevent lower expense funds from making it into the plan’s investment line-up. These loaded funds hide fees, prevent better cost understanding by employer and participants and can require higher savings by the participants due to poor performance.
Support Matters
Employers sponsor 401k plans to help participants save for a better retirement, plain and simple. The 401k industry wastes too much time and money protecting the status quo for their own benefit. Government regulations and poor retirement outcomes for participants should not be necessary for the 401k industry to re-align their objectives with the participants.
FixedFee401k keeps fees low and fixed so that the fees don’t go up as participants save more.
FixedFee401k selects investment funds with no hidden fees at their lowest possible cost.
Our purpose in creating FixedFee401k was to help participants better understand and save for retirement.
Fees Matter
Asset-based 401k plan fees can be higher than a participant’s salary deferral or the employer’s matching contribution as the participant nears retirement. Think of that – participants are paying service providers more than what they are saving for retirement. Whose retirement are participants funding anyway?
FixedFee401k keeps fees low and fixed so that the fees don’t go up as participants save more.
Funds Matter
Industry-wide use of investment funds that pay providers through increased fund expenses can prevent lower expense funds from making it into the plan’s investment line-up. These loaded funds hide fees, prevent better cost understanding by employer and participants and can require higher savings by the participants due to poor performance.
FixedFee401k selects investment funds with no hidden fees at their lowest possible cost.
Support Matters
