During the last two years, much has been going on in DC, with regards 401k plans, their structure and their fees. If you’re looking at the situation from the outside, it is easy to say that disclosure is better, that the fees are too high and so on.
As opposed to what many people think, the fees in the retirement industry are not so high. If you look at the investment consulting firms, you will find that there are only a few who specialize in retirement investments, simply because the fee margin that they get from the retail section is higher. An analysis is done on various 401k plans, and the results show that these are not really inundated with charges like the general public was lead to think, from all the negative publicity the plan structure has been getting.
Not even disclosure is a real problem. If you look, you will find that lots of information is being provided to the contributors. Conflict of interest can also be another easy target, with investment decisions being biased towards the advisor’s own company.
To concentrate more on the 401k plan fees, I would also like to mention the services delivered in relation to this. When conducting fee analysis we found out that contributors weren’t actually getting any value out of the fees the pay. We found out that investment oversights and lack of service overall were happening, and it is these factors that are in reality essential to all the plan participants, and what needs to be concentrated on.
The 401k plan problem is not an illusion; it is really there, but we have to make out what is real and what is just a product of negative media publicity.
Reference: http://www.401khelpcenter.com/401k/graham_401k_fees.html
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