I was raised to believe that if you take something from someone and don't provide full disclosure, that's dishonest.
For years, 401k providers and the fund industry have been hiding fees from investors. The industry created an official government fee-like sounding name, 12b-1 fee, to mask and obfuscate.
What are 12b-1 fees??
Administrative and legal fees, advertising, loan expenses, marketing and sales charges, miscellaneous and other... these are some of the expensive add-ons fund companies and service providers have been taking right out of your company retirement plan.
Finally, the Labor Department is requiring them to disclose, in great detail, the actual dollar value of these inflated charges. The industry is fighting back demanding "an exception for the 401k industry".
The mutual fund industry has a notorious history of excessive management fees. Introduced only in the 1980's, 12b-1 fees have grown to over $9.5 billion this past year.
SEC Chairman Mary Schapiro questions whether or not these fees have resulted in investors paying too much for services they may not even be aware of.
For its part, the 401k industry is now asking for these additional expenses to max out at 0.75% (there are fee-only investment advisors who charge less than this) and that retirement plan providers should be exempt from fee disclosures.
CONCLUSION: Retirement plan service providers do not want you to know that the excessive fees you pay. They want you to continue paying their advertising costs to attract new retirement dollars to their accounts.
SOLUTION: Review your 401k summary plan document to see if partial rollover of your 401k plan to an individual IRA that you can control where there are no fees. Fee-only advisors can provide guidance based upon what is best for the client. With transparency today just a few mouse-clicks away, it is inexcusable to allow an industry to short-change workers' retirement funds without giving them a choice.
