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I recently read a story on FoxBusiness.com titled, “401k Disclosures Not Working For Investors.” The article made the point that participant fee disclosures are at best confusing, and at worst, completely ignored.
Friends, it should come as no surprise that I am in favor of more 401k fee disclosures, presented with total clarity. As I have blogged about many times in the past, hidden fees eat away at retirement savings. And these disclosures have got to be crystal clear. All the information in the world won’t help you if it’s written in a language you don’t understand. Are we getting either with the current fee disclosure regs?
No. Here’s why -
Joshua Itzoe, a Certified Financial Planner (full disclosure: Employee Fiduciary has common clients), was interviewed for the story. Here’s an excerpt:
The fee disclosure forms are "the retirement industry's version of Y2K," according to Itzoe. "The anticipated impact was much more than what actually came to pass. I don't think the forms worked as anticipated."
Itzoe is particularly disappointed that fees are expressed as a dollar figure for every $1,000 invested. That means participants must perform various calculations to arrive at their total fees from a percentage standpoint, he says.
"That's the best we can do for people?" he asks. "How many people actually did that work?"
If 401k fee disclosures aren’t working for plan participants OR financial advisors...who exactly are they working FOR?