Business 401(k) Services / Plan Administration
How Low-Quality, High-Cost Funds Drag Down Your Retirement Savings
Many people are simply glad to have a retirement account. Who has time to dig into the fine print or crunch the numbers? Plan advisors know this and some take advantage by stuffing plans with mutual funds that carry higher fees or bring in big commissions.
But it’s you and your employees who end up paying—not only now, but also when it’s time to retire.
Retirement savings rely on compounding growth. Each dollar you earn helps you earn more dollars over the years. Every dollar you take out of your account or pay in fees leaves a gap between your potential savings and what you’ve actually saved.
On top of that, funds that rely on revenue sharing to drive sales often perform poorly because they lack incentives for top performance. For those fund managers, it’s less important how well the mutual funds in your account do because plan advisors receive revenue from pushing the product.
How do they get away with it? When the markets are up, even poorly constructed mutual funds can make your portfolio look good, but when you take a longer view and account for averages and earnings gaps over a decade or more, you can see what you’re missing.
Twenty years of an average or below average fund can cost you hundreds of thousands of dollars at retirement. Is that a price you’re willing to pay?
You can have a retirement plan advisor who takes a rigorous approach to fund selection and keeps fees low. Fiduciary plan advisors who work for you—not for kickbacks—and put their fees toward growing your wealth. The right plan advisor won’t compromise your earning potential to make a quick buck. They’ll focus on quality over the long term because they understand how big a difference this approach makes for you when it’s time to retire.
You can avoid these conflicts of interest by choosing a 3(38) Investment Manager like Fisher 401(k) Solutions. Contact us today to obtain a complimentary investment fee analysis.
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