Venting: 401k Managers Websites

[BoredSysAdmin]

I don't know what is the deal with companies and their selections of 401k managers but it seems they are often terrible. And what I mean by terrible are few things:

• Mutual Funds selection is very limited (10 if you're lucky)
• Many of funds available have either terrible performance, high fees and often both
• Very unintuitive web page to find basic info, instead, one or more retirement calculator featured profamily and finding fund info is hard. Like one page shows funds performance and other their fees. Or my pain in my rear - ask for fund performance - they should you table of ALL funds, not the one you're invested in nor highlighting them on larger table.
• Very hard to actually see your selected funds' individual performance (and dividends if any)

I'm looking at Charles Schwab Workforce, New Port Plan destination, and Morgan Stanley.
A long time ago I used to have Fidelity and one more option I forgot (think it was large insurance company).
In comparison these blessing to use.

I mean I currently work for a fairly large financial company (over 60b aum) - why they think that their employees couldn't figure out how to use a 401k system more complicated than the equivalent of Lego blocks ???

Every time I switch jobs, I take my old 401k and roll over it to Vanguard traditional IRA. They could use a facelift but in comparison to they are LIGHT years better. Much more choices. Free trading on MANY of Vanguard funds and ETFs and fund management fees which are practically free. 0.04%-0.06% on many index funds. Even the mobile app is not horrible.

 

[KEW]

I don't know what is the deal with companies and their selections of 401k managers but it seems they are often terrible. And what I mean by terrible are few things:

• Mutual Funds selection is very limited (10 if you're lucky)
• Many of funds available have either terrible performance, high fees and often both
• Very unintuitive web page to find basic info, instead, one or more retirement calculator featured profamily and finding fund info is hard. Like one page shows funds performance and other their fees. Or my pain in my rear - ask for fund performance - they should you table of ALL funds, not the one you're invested in nor highlighting them on larger table.
• Very hard to actually see your selected funds' individual performance (and dividends if any)

I'm looking at Charles Schwab Workforce, New Port Plan destination, and Morgan Stanley.
A long time ago I used to have Fidelity and one more option I forgot (think it was large insurance company).
In comparison these blessing to use.

I mean I currently work for a fairly large financial company (over 60b aum) - why they think that their employees couldn't figure out how to use a 401k system more complicated than the equivalent of Lego blocks ???

Every time I switch jobs, I take my old 401k and roll over it to Vanguard traditional IRA. They could use a facelift but in comparison to they are LIGHT years better. Much more choices. Free trading on MANY of Vanguard funds and ETFs and fund management fees which are practically free. 0.04%-0.06% on many index funds. Even the mobile app is not horrible.

A confused customer is a profitable customer!
Back when I was aggressively managing my 401k, I noticed that the best performing funds were usually replaced with lesser options within a year or two. Maybe we were proving grounds for new fund managers? Once a corporation aligns themselves with a mutual fund agency, the employees become a captive market. I suspect the top level executives have a "plus" version of the mainstream options.

 

[BoredSysAdmin]

A confused customer is a profitable customer!
Back when I was aggressively managing my 401k, I noticed that the best performing funds were usually replaced with lesser options within a year or two. Maybe we were proving grounds for new fund managers? Once a corporation aligns themselves with a mutual fund agency, the employees become a captive market. I suspect the top level executives have a "plus" version of the mainstream options.

I've noticed the same thing before. Supposedly the excuse is too many people put too much money into a single find making the overall firm's 401k investment so much higher risk. Is it possible under ERISA rules as the employee is acting plan fiduciary is required to take action to rebalance?

In any case, the whole thing about 401k plans - without employee matching contribution they are sham.
It's the best sham we have to save for retirement, but sham nonetheless. 2008 has shown that many pension managers were/are a) Too greedy b) Too much risk-takers c) Too stupid.
This is the main point:
If you shifting the responsibility of managing my own pension on to myself, then why would you tie both of my hand behind my back??

 

[KEW]

I've noticed the same thing before. Supposedly the excuse is too many people put too much money into a single find making the overall firm's 401k investment so much higher risk. Is it possible under ERISA rules as the employee is acting plan fiduciary is required to take action to rebalance?

It would be one thing if they capped a fund so you could not put more money into it, but what I have experienced is a removal of that fund from my options (usually not too long after I would identify it as a well performing fund). I get the choice of choosing from the other funds which did not perform as well) or they will pick a fund to move my money to if I don't act. I much prefer my IRA that I can truly manage without a bunch of restraints which will not allow me good options. Maybe after the Amaazon/Google/Berkshire-Hathaway contingent finishes economizing health care costs they can set up a better 401k program!

As far as ERISA rules about rebalancing, I don't know, but I imagine you can take as much risk as you like with your own money. I've never seen any restrictions saying I can't put 100% in one fund.

 

[BoredSysAdmin]

I much prefer my IRA that I can truly manage without a bunch of restraints which will not allow me good options.

100% agreed. Like I said, Vanguard is my IRA manager, also I use them to invest my non-retirement money. Investing in cheap index funds beats the savings/CDs by a mile and risk is low, especially in the long-term.

Maybe after the Amazon/Google/Berkshire-Hathaway contingent finishes economizing health care costs they can set up a better 401k program!

I am hopeful too that Warren Buffet would find a way to have medical insurance profitable but lean and cheap for the consumers. If anything Gieco is a good example of having CAR insurance done cheaply.
However, on home insurance, they have partnered with one of the worst companies and I am going to change my car/home insurance just because Homestead is much more expensive than other alternatives.

 

[pwlong]

Agree with the comments so far. Presenting a dizzying array of confusing options are a great way for financial companies, brokers and advice-givers to steer the herd towards commission-based investment offerings.

In the last few years the big thing has been to push the Target Date funds. These are pitched as a set-it-and-forget-it retirement fund, but look closely for the high expense ratios -- ouch. Stay away... I prefer the self-managed route myself.

For those comfortable with that, at least a few brokerage houses offer a DIY option for their 401s choices. Fidelity has BrokerageLink, which expands you from a couple dozen fund offerings to pretty much anything available. Of course fees are lowest for their own funds.

No one cares as much about your dollars as you -- so take the time to get informed. If you choose to hire a financial advisor, make sure to pick a fee-only rep who has nothing to sell you.

 

[BoredSysAdmin]

Agree with the comments so far. Presenting a dizzying array of confusing options are a great way for financial companies, brokers and advice-givers to steer the herd towards commission-based investment offerings.

In the last few years the big thing has been to push the Target Date funds. These are pitched as a set-it-and-forget-it retirement fund, but look closely for the high expense ratios -- ouch. Stay away... I prefer the self-managed route myself.

For those comfortable with that, at least a few brokerage houses offer a DIY option for their 401s choices. Fidelity has BrokerageLink, which expands you from a couple dozen fund offerings to pretty much anything available. Of course fees are lowest for their own funds.

No one cares as much about your dollars as you -- so take the time to get informed. If you choose to hire a financial advisor, make sure to pick a fee-only rep who has nothing to sell you.

You're 100% on the dot regarding Target Date funds - they usually have both crappy performance and very high fees.
Selecting 401k manager in most case is not possible, and you're lucky your company offers Fidelity as company's 401k manager, but both I and Kurt go around that using rollover old 401k into traditional IRA with a manager of our choice.
If you want financial advisor (which I won't recommend) make absolutely sure that he/she is a fiduciary. This title meaning the advice would be only beneficial to you, not to the advisor.
I think it would be helpful to see this video:

 

[Blue Dude]

Every time I switch jobs, I take my old 401k and roll over it to Vanguard traditional IRA. They could use a facelift but in comparison to they are LIGHT years better. Much more choices.

Pretty much this. If I could make an in-service withdrawal I'd move everything to my IRAs. The vast majority of my retirement is in my current 401k, and I can't touch it yet. I do have decent company matching and outright contributions, and they're fully vested, but I can't move them either. It'll all be in my hands, someday. But that day isn't close, at least 10 years off. All I can do in the meantime is coordinate the investments with my IRAs to achieve my overall goals, even if the money is spread among separate accounts and investments.

My plan does allow moving to a brokerage account inside the 401k, but the returns net of fees I could plan on didn't seem to be worth making the move. I'm a buy and hold guy anyway, so I'm OK with that.