You are likely overpaying for your 401(k) mutual funds. Worse, you are not receiving the investment performance you deserve.
The flurry of company 401(k) lawsuits in the last few years is proof. The top executives of many companies are not paying close enough attention to annual company 401(k) retirement plan fees and performance.
According to Morningstar. as of Feb. 6, 2017, the average annual expense ratio of all domestic U.S. mutual funds was 1.11%. Many of the popular actively managed mutual funds in that study can be found on company 401(k) retirement plan menus.
In 2018, no individual company 401(k) retirement plan participant should be paying over 1% annual in total fees and expenses every year. There are too many lower cost and better performing mutual fund investment options available today.
Many individual company 401(k) retirement plan participants are paying these excessive fees and expenses and receiving poor investment returns every year.
The most recent Standard & Poor’s Indices Versus Active (SPIVA) report stated that over the 10-year period ending June 30, 2016, 87% of actively managed mutual funds failed to outperform their benchmark index. The largest actively managed mutual funds in the U.S. can be found on several company 401(k) retirement plan menus.
Now is a great time for a company 401(k) retirement plan account review. Start by requesting a copy of the annual report from your company 401(k) retirement plan provider. This report will include the most recent fees, expenses, and investment performance for all mutual fund options on the plan menu.
Find the annual expenses and fees that you pay to own your current company 401(k) retirement plan mutual funds. Next, check the last 12 months’ investment performance on these same mutual funds.
I am in my 19th year of providing investment advice to individual company 401(k) retirement plan participants. The current gap between mutual fund annual costs and mutual funds annual investment performance is as wide and the Grand Canyon.
But all is not lost. You now know where to look for your annual company 401(k) retirement plan mutual fund costs. It is up to you to make the necessary changes in order to improve your annual investment performance.
Ric Lager
Lager & Company, Inc.
