One who intends to leave others better off for his having existed.

3/4/15

On Retirement Plan Fees, Index Funds and Fiduciary Duty

"...Common flaws in the popular savings plans include high fees and the absence of low-cost index funds, which can make investing cheaper and easier. Conflicts of interest, fraud or theft, though far less common, also can cost 401(k) participants dearly.

...Jessica Robinson, a 37-year-old dental hygienist, and her husband, Brian, pointed out to her boss, Brad Dodds, how fees were affecting everyone who participates in the 401(k) plan at her small dental office.

The fees “kind of put up a red flag,” says Ms. Robinson, who lives in Eden Prairie, Minn.

Mr. Dodds hadn’t paid much attention to fees. “I just looked at my statements and put them in the drawer,” he says. He and the Robinsons approached Wells Fargo Advisors, a unit of Wells Fargo, which recently agreed to reduce the plan’s annual administrative fee to 0.75% of assets, down from 1.5%. For a participant with an account worth $100,000, the change would save $750 a year.

Index funds, which are designed to track investment benchmarks such as the S&P 500, also are worth lobbying for. Many experts consider them the best option for investors because the funds tend to charge lower fees than those run by active stock pickers. Index funds also don’t leave investors at risk of lagging behind the market, which active funds often do.

...Even in some relatively large companies, the people in charge of making decisions about the 401(k) plan may not know much about investing.

...“A lot of times, companies themselves don’t know they’re overpaying,” says Mike Alfred, BrightScope’s chief executive.

...Many broad stock-market index funds charge annual fees of less than 0.20%, or $20 on a $10,000 investment, so if you are paying substantially more, that could be a sign of a high-fee plan.

The average expense ratio on an actively managed mutual fund, adjusted for assets, is 0.85%, according to investment-research firm Morningstar..."

http://www.wsj.com/articles/how-to-lobby-for-a-better-401-k-1424459507
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Most investors, both institutional and individual,
will find that the best way to own common stocks
is through an index fund that charges minimal fees.

Those following this path
are sure to beat the net results (after fees and expenses)
delivered by the great majority of investment professionals."

Warren Buffett
Berkshire Hathaway Annual Letter, 1996

http://www.bogleheads.org/wiki/How_to_campaign_for_a_better_401%28k%29_plan
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"An IA must adhere to a fiduciary standard of care laid out in the US Investment Advisers Act of 1940. This standard requires IAs to act and serve a client's best interests with the intent to eliminate, or at least to expose, all potential conflicts of interest which might incline an investment adviser—consciously or unconsciously—to render advice which was not in the best interest of the IA's clients."

http://en.wikipedia.org/wiki/Registered_Investment_Advisor

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