WealthMov: Your Retirement Plan Fees
On Sunday, HBO host John Oliver unleashed a segment that has been shared all over the financial industry (at least among the fee-only side). I've been going crazy to try and share it within my network of millennials as well. This tirade was on the fees and commissions that are embedded within retirement plans. Throughout this part of his show, John explains the difference between a regular advisor and a fiduciary financial advisor.
He also goes into the process of getting a 401k plan set up for his own staff. After finding out how the fees in that plan actually worked (his researchers trudged through the lack of transparency of John Hancock Retirement Plans), he felt so bad that they offered to pay for his team members' fees until they were able to switch to a more manageable fee structure.
What's the lesson here?
Look into what your fees are being charged. In an example during the segment, a difference in 7% and 5% in fees can result in almost 2/3s of a reduction in your ending value. Didn't get that? A 2% increase in fees can result in a 66% loss in value in your retirement plan. As millennials, that's a lot of change! Since we can't really rely on pension plans or social security, that 2/3 loss in value can put a serious damper on our financial goals.
What should you do?
There are a few options:
- Ignore it and let the chips fall where they may
- Dig in and figure out exactly how much you're paying in fees and then proceed to look for other alternatives
- Look for 3rd party solutions that can help you research and invest your 401k in the best way possible
- Hire a financial planner like Ignite Financial to do all of the heavy lifting for you
What do you think? Have you taken it upon yourself to find out what you're paying in fees? If you're interested in speaking to one of our financial guides, click HERE to schedule a meeting at your convenience.