Many 401(k) plans waste people's hard-earned money on unnecessarily high cost services and investments.
Did you know that Congress is investigating the high cost of 401(k) plans? It's quite likely that yours is NOT optimal regarding its true cost, because facts show that retirement plans cost people more than they think.
And it seems that many employers are unwittingly comparing their plans to the wrong benchmarks.
The good news is that optimizing a 401(k) plan (cutting its cost and improving its investment performance) is easy.
Do you want more money for retirement? First, make sure that the cost of your plan matches its benchmark.
This step requires you to learn what a truly low cost plan looks like.
The truly low cost plans don't have high hidden and/or camouflaged costs.
You must have the right kind of training and experience to be able to identify every cost that a 401(k) plan has.
Second, ensure that the core mix of investments at least match the performance of their benchmarks.
Easy! Low cost index funds match the performance of their benchmarks, but few managed funds match their benchmarks, long term.
Third, ensure that the asset-allocation, target-date, lifecycle, lifestyle, and balanced funds have a long term track record.
Otherwise, it would be a mistake to put them in your plan.
Fourth, identify every conflict of interest and potential conflict of interest so that you avoid paying too much for services and investments.
Fifth, set up an effective system of checks and balances today so that you can optimize your plan..
Most 401(k) plans are too time-consuming and expensive to manage.
Many waste people's hard-earned money on unnecessarily high cost services and investments.
It's common to discover that workers have a menu of investments that under-perform their benchmarks after expenses--both short-term and long term.
The employee often knows nothing about this because he or she sees only the fund's performance, but not his or her actual return on investment (ROI) after expenses.
When you do the math, it's easy to see that people are not getting their money's worth! Why not take a minute to compare what you have now, to what you have the potential to have.
Here is an example of an optimized plan:
Let's review the benefits of optimization for both the employer and employee:
Did you know that Congress is investigating the high cost of 401(k) plans? It's quite likely that yours is NOT optimal regarding its true cost, because facts show that retirement plans cost people more than they think.
And it seems that many employers are unwittingly comparing their plans to the wrong benchmarks.
The good news is that optimizing a 401(k) plan (cutting its cost and improving its investment performance) is easy.
Do you want more money for retirement? First, make sure that the cost of your plan matches its benchmark.
This step requires you to learn what a truly low cost plan looks like.
The truly low cost plans don't have high hidden and/or camouflaged costs.
You must have the right kind of training and experience to be able to identify every cost that a 401(k) plan has.
Second, ensure that the core mix of investments at least match the performance of their benchmarks.
Easy! Low cost index funds match the performance of their benchmarks, but few managed funds match their benchmarks, long term.
Third, ensure that the asset-allocation, target-date, lifecycle, lifestyle, and balanced funds have a long term track record.
Otherwise, it would be a mistake to put them in your plan.
Fourth, identify every conflict of interest and potential conflict of interest so that you avoid paying too much for services and investments.
Fifth, set up an effective system of checks and balances today so that you can optimize your plan..
Most 401(k) plans are too time-consuming and expensive to manage.
Many waste people's hard-earned money on unnecessarily high cost services and investments.
It's common to discover that workers have a menu of investments that under-perform their benchmarks after expenses--both short-term and long term.
The employee often knows nothing about this because he or she sees only the fund's performance, but not his or her actual return on investment (ROI) after expenses.
When you do the math, it's easy to see that people are not getting their money's worth! Why not take a minute to compare what you have now, to what you have the potential to have.
Here is an example of an optimized plan:
- A diversified, core, mix of Index funds that cost you 0.
07% to 0.
20%, per year.
(Tomorrow's benchmark for the cost of index funds may be different.
) - Record keeping and administration that cost you not more than $25.
00, per eligible employee, per year with no hidden expenses.
(Again, this is today's benchmark.
Always know the current benchmarks for the cost of services--that way you'll save time and money.
) - An education program that requires less time than you currently spend.
- An effective system of checks and balances.
- Investments that match the market's performance.
You'll have more money for retirement if your investments match the market's performance than if your investments under perform it.
Let's review the benefits of optimization for both the employer and employee:
- Low cost services means that you can save more money for retirement than if your plan's cost is higher.
- Matching the performance benchmarks means that you'll have more money than if your investments under perform their benchmarks.
- Valuable time saving programs means you'll spend less time managing your plan, monitoring it for results, and monitoring your own investments.
- Effective checks and balances system means that everyone who works for the company understands how the plan was set up, why it was set up that way, and how the plan is monitored for results.
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