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June 25 CNN Money article on 401(k) fees, "Is your 401(k) ripping you off?" (link below)
This article is more well-written and complete than others we've seen.
It also includes a brief interview with Dimensional Fund Advisors' CEO David Booth. We implement the exclusive DFA fund family in investing for our high net worth clients as well for our corporate retirement plan clients. They are growing rapidly as 401k plans move to transparency.
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Common Mistakes
Just because something is done a certain way by many doesn't mean there is not a better way. The biggest mistake we see is plan sponsors not taking a few moments to understand the difference in the status quo and a plan structure that includes an ERISA 3(38) advisor as we offer. The improvements are vast. When you move to a clean transparent plan that includes an ERISA Section 3(21) and 3(38) advisor - and eliminates 12b-1 fee paying mutual funds - then all the problems occurring inside 99% of the plans, that the DOL Regs attempt to fix just disappear. Plan sponsors that have these type of "clean" plans will have a much easier time dealing with the 2012 regulations. Your fee disclosure to plan participants is simple, clean and reasonable. We encourage all plan sponsors to seriously consider upgrading their plans now. AVOID THE 2012 MESS!!! The new regulations are attempting to "legislate quality" into 401(k) plans. Yet, "quality plans" are available today and we provide them. Avoid the mess! It's completely unnecessary to subject yourself and your participants to it. This is not a one-time event - it's every quarter, every year.
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What to Do Next
Problem Solved: Use an ERISA Section 3(21) independent advisor (RIA) that insists on bringing an ERISA Section 3(38) independent advisor (RIA) with them. They both have strict disclosure requirements built into their licensing so that complete transparency is the norm from day one. They'll be watching each other as well as the TPA, record-keeper and custodian, that are also independent. Multiple checks and balances - a fiduciary wouldn't have it any other way. Call us at 760-804-0910.
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