Objective information about retirement, financial planning and investments



  1. Good post Roger! It always amazes me to speak with people that work at companies that offer horrible plans. I think at times it can come down to the company not valuing their employees or ignorance on their part in regards to what a good plan looks like. I would agree though that you should look at other options and at the very least get the full match in order to take advantage of the free money.

    • Roger Wohlner says

      Thanks John. Over the years the wide range of quality among 401(k) plans has never ceased to amaze me. I’d like to give plan sponsors the benefit of the doubt and start with the assumption that they generally want to provide the best retirement savings vehicle that they can but don’t always know how to go about doing this.

  2. We have been there. The last 401K my husband had didn’t offer many low cost diversified index funds. We settled on a Mid Cap Index and a cash alternative. I’m happy to have gotten out of that plan and rolled the proceeds into an IRA.

    • Roger Wohlner says

      Sadly there are a lot of bad 401(k) plans out there Barb, glad you were able to move the money to an IRA eventually.

  3. Roger, As one who has actively been in the 401(k) business since the 1980’s I was interested in reading your perspective on the 401(k) industry and specifically the platform providers. While there are many things I do not like the federal government mandating, I’m totally onboard and fully endorse the advent of regulations 408(b)(2) and 404(a)(5), as long overdue.
    Having worked in the “open architecture” arena, as well as insurance company group annuity contracts I think your slam on the two insurance companies you mentioned in your piece does a disservice to those companies. From my perspective the two “worst actors” in the 401(k) industry today are the wirehouses and payroll service companies (which you did reference). When it comes to non-disclosure of total fees, wirehouses and payroll services are blatant. Hopefully these regulations will incentivize these organizations to do the right thing going forward.
    Over the years I have found CEO’s and CFO’s who will make decisions as to their 401(k) provider based upon which wirehouse handles their personal portfolios, regardless of cost or performance. I had another situation where a non-profit moved their plan to a firm who’s president sat on the pension committee. When I politely pointed out the obvious conflict of interest and the fiduciary issues surrounding this move, the other committee members made up of CPA’s and attorneys simply did not care.
    The bottom line in all of this is that nearly 75% of all 401(k) plans today are being handled by advisors who have only one or two plans on the books which in my opinion can lead to higher cost. In addition, as I cited above you have decision makers making decisions many times based upon issues totally unrelated to cost or performance.
    More government interference in our lives, is not the answer. The answer lies with 401(k) providers doing the right thing, which I believe they will when given the opportunity and more importantly 401(k) participants taking an active interest in not only understanding their plan, but most importantly the total cost for the plan and who (plan sponsor / participant) pays what.

    • Roger Wohlner says

      Scott thanks for your comment. I gather you were referring to the mention of Principal and John Hancock in the post entitled 4 Signs of a Lousy 401(k) Plan vs. this post. In any event my comment was not so much a slam on these or any other companies but rather a slam on plans that are full of the product of company who is also the plan administrator. Note I also mentioned Vanguard and T. Rowe in the next section regarding this issue as well, and these are two fund companies for whom I have the utmost respect. My point was that a plan dominated by a single fund family is rarely a good idea, if that fund family happens to be the same group administering the plan it is an even worse situation and may be a conflict of interest.

      I couldn’t agree more with your comments about wirehouses and payroll services offering plans, and especially about execs going with the brokerage firm who handles their personal investing.

  4. As a teacher, I do not have access to lousy 401k plans. Instead, I get to choose from fee-bloated 403b and 457 plans. I used to complain about it, but that did no good. So, I decided to make lemonade out of the lemon grove by fully funding both my 403b and 457 plans (my wife did the same). We parked our money in the short-term fixed account and maxed out our accounts for three years straight. We saved a lot of money in our “horrible” retirement accounts, roughly $220K. Then, we did the logical thing and quit our jobs in order to be able to roll our money over to Vanguard. Quitting is often needed to roll 403b money out of fee-bloated accounts.

    • Roger Wohlner says

      Ed thanks for your comment. Boy I agree with you, some of the high-fee, low investment quality plans offered to teachers are just pathetic. Sound like you are making the best of a bad situation, kudos to the two of you.

  5. I’m really lucky that I have an excellent 401k but my dad had a lousy one. They didn’t offer a match so he instead opted to max out his money into an IRA and HSA instead.

  6. 401K plans seem like they take power away from the individual in favor of dubious corporate strategies. As you say, not all investments are bad but there seems to be much better ways to optimize your portfolio by controlling the direction of your investments yourself. This isn’t to say we shouldn’t take professional advice in our investments, but rather that we shouldn’t be limited in what and where we choose to invest.

    • Roger Wohlner says

      Thanks for the comment. I disagree that the 401(k) is part of some dubious corporate strategy. In fact there are many good 401(k) plans out there and those provide an excellent retirement savings vehicle. While doing things on their own is great for those who are comfortable doing so, the reality is that many investors are uncomfortable picking their own investments and lack the skill or the tools to monitor them. Further the automatic savings feature if a 401(k) plan is what many folks need to be sure they allocate this money to retirement savings. I think where the ability to manage one’s own retirement investments is key is the need to manage old 401(k) plans when folks switch jobs. Also there are some really rotten plans out there and at that point people do need to decide whether the advantages offered by the plan are worth the negative features such as a lousy, costly investment menu and others.

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