Today, the Rep. Miller’s Health, Employment, Labor, and Pensions Subcommittee held a hearing on new fee-transparency legislation, reports Sara Hansard for Investment News. The 401(k) Fair Disclosure for Retirement Security Act of 2009, will “help workers shop around for the best retirement options by requiring simple fee disclosure on the investment options contained in their employer’s 401(k) plan.
In the interim, trillions of dollars are disappearing from workers’ plans. If you are young enough and in the earlier stages of your career, there’s time to rebuild and recover, but if you are in your 50s, 60s or beyond, the consequences can be dire. Many workers are being forced to delay retirement, or scrap those plans altogether. It has jeopardized the financial well-being of millions of people, reports 60 Minutes.
The mutual fund industry is working hard to defend itself, and the Investment Company Institute (ICI) released a report about 401(k) fees that was funded by mutual fund providers. The study found that the median fee was 0.72%, but it was a wide range even in a small sampling. Some had “all-in” fees of 0.35% or less, while other had 1.72% or more.
The all-in fee was based on four primary service elements, but excluded participant activity-related fees. How is anyone supposed to wade through all of this?
The case for ETFs is getting stronger, as the fees are clear and make sense. Investors need to join this fight and ask their human resource representatives to get plans with ETFs, and insist on clarity and transparency.
No one will look after your money like you will, and until the 401(k) and mutual fund industries are as gung-ho about protecting your retirement savings as you are, you would be well-served to educate yourself about these plans and be your own best advocate.