just in time to avoid a proper political consequence about 72 million people will open an envelope and see the true cost of their 401k plans laid out in a new $3 trillion americans have tied up in one part of the financial markets one tiny subparagraph of a subparagraph (erisa 404 (a)(5) will provide a cloudy detail or 3 about those “expenses” within a uniform standard.
amusingly enough it is not the sec which mandated this change, nor is it the irs which might wish to have an opinion about the prospects of tax deferment. nope, it’s the department of labor.
not too many pages away lurks section 408(b) (2) demands some light on the direct and indirect compensation providers receive, including fiduciary or ria services, recordkeeping and backroom activity involved in the choices within the plant; and of course a few other services for which indirect compensation is demand. The fun comes in with service providers are told to explicitly state that they are actually acting in a fiduciary capacity or is the glorified hucksters and fan supplied the bucket shops that are so laughingly called commission-based service providers.
naturally enough the rules actually don’t call for full fee disclosure, since the actual “investment costs” racked up to the participants –which is most of the money lost by the working person who’s been conned into the fancy names and flashing lights of financial market casinos– is not something the federal government in any shape way or form has the stones to demand be put down in plain english.
It’s been a selling point– which is to say a typical finance industry lie– that 401(k) plans have no packaging costs. aarp says that about three quarters of the people in 401(k) plans have no idea that there are fees at all:
about 5/8 no idea on which the fees are;
about a third feel they have some sense of them.
in the real world, which is to say the one where the sharks feed on tuna, houses build 401(k) plans to stuff people into specialized bundles including mutual funds. all you have to do is layer service fees on top of the so-called investment expenses to generate the vig.
the finance industry is figuring that a couple hundred $bb or more will be moved from one plan to another as a few households begin to wake up about how much they are doing to contribute to Wall Street’s self stimulus plan.
plain english? feeding frenzy in the “wealth mgt” “financial advice” wading pool.
wanna have some fun? ask your financial advisors for an early heads up on how all this breaks down and see how much they stammer and humhaw during the call.
amidst the pitter patter drops of sweat falling onto the advisor’s desk will be some garbage about how essential he and his services are and how his tiny slice off every scrap of fruit ends up with your fried pie big mostly grease and air pockets.
things to look for now look over what ever quarterly statements you might have for the term 12b-1.
In point of fact 401(k)s have failed on all fronts. the principal tool of the failure is in the financial industry skimming of a couple dozen points as compensation for walking 8 feet from a dart board and letting fly.
The efficient market theory is explained to americans is a joke. if it had any factual basis most 401(k) activity could be done through a dedicated account making spdr purchases.
your ria – if he is doing his job – can perform the services of a high-grade plumber who works on the hydra-headed piping that is finance, and be paid no more, be entitled to no more, than any plumber or electrician.
when america had the fundamental chance to keep on being a place where they make things this could have happened. but once again in the auction bridge that is wall st, the scum robed in tailored suits and double talk took the trick.
Posted under business
This post was written by admin on November 18, 2011
