How Does Your 401(k) Measure Up?

Analyzing a 401(k)

Readers of this blog know that one of the main messages is that the financial services industry has a strong tendency to grossly overcharge for its services. The industry takes advantage of the gullible public that refuses to educate itself on how much it costs to get professional money management services. The bottom line is that a big part of workers' nest eggs are lining the pockets of fat cat advisors. Nowhere is this more prevalent than in 401(k)s. But how can you assess your 401(k)?

Brightscope

An important resource to check is to go to www.brightscope.com. Put in your company name. If you are fortunate, your company 401(k) is rated. If it isn't, you may want to consider asking your human resources department why it isn't.

CLICK IMAGE TO ENLARGE. As you can see, there are a number of categories rated. Of interest in this plan is the "Investment Menu Quality" rating of "poor."

If you go a step further and complete the free registration, you get even more detailed information. You can actually put in specific information to see the true cost to you, the participant, in the plan.

CLICK TO ENLARGE. If you drill down, you can find costs for the portfolio and the costs of funds in your peer group that have superior investment choices. With the information provided by this service, there are explicit steps that can be taken to improve one of the most important benefits provided to workers. It is an excellent resource to lead to the right questions for employees to ask.

This is also a useful resource if you are wrestling, à la Mickey Rourke, with whether you should roll over your old company 401(k).