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At a place I've worked at, the expense ratio was x10 compared to equivalent funds on the market. For example VTI had a 0.05% expense ratio while their S&P500 f
by mahyarm 12y ago
At a place I've worked at, the expense ratio was x10 compared to equivalent funds on the market. For example VTI had a 0.05% expense ratio while their S&P500 fund, the lowest expense ratio fund they had, was %0.5.
I asked HR multiple times if we could switch from 'great west retirement services' (now empower retirement) to something like schwab, fidelity or vanguard where the expense ratios are far lower. They never changed because it was cheaper for the company to stay on with GWRS than it would be with schwab for example.
So these crappy 401k services offer a cheap price to the company so they can make it up + more through their high expense ratio through the employees.
- kasey_junk 12y agoI would never argue that there aren't bad 401k plans. But you are not forced to use them and the market offers alternatives. Those alternatives may be influenced by a lot of other factors such as regulatory environments (the 401k/IRA contribution difference is baffling) or your employers decisions. But you can price that into your benefit evaluation. "You have a bad 401k plan, normally I'd take X in salary compensation, but you need to provide me X+Y". You do this when comparing health benefits right? Why wouldn't you do this for retirement benefits? The op was claiming that he had no choice but to use high fee options, and he later qualified that with regulation based in Sweden which made that largely true. In the US, it is not true, for better or worse it can be inconvenient to use low cost providers, but you aren't forced into it.