A tsunami of retirees is about to hit the beach. And they aren't in a position to retire. And it is going to get worse. A big part of the problem is that retirees have poorly structured 401ks that they aren't contributing enough to.
BrightScope is a service that has taken on the monumental task of rating 401ks relative to peer plans. Every 401k participant can now look up the rating of his or her plan by going to www.brightscope.com.
If your plan is not rated, you should go to your human resources person and request that it be rated. If it is rated, you should look at the component ratings to ensure that you have good choices in your investment menu and low costs for the plan. You will notice that the site allows you also to do a personalized analysis of the costs you are bearing. Again, if the ratings are not satisfactory, you should ask the plan administrator why.
For too long, the costs of plans has been opaque, as Wall Street has hidden the excessive fees it charges.
Plan administrators are fiduciaries. As such, they are legally bound to provide plan participants with appropriate investment choices and educate plan participants in the investment process.
Full disclosure: I use the BrightScope data in counseling pension plans and pension plan participants.
I'll have to see what I can do to get my new company into Brightscope. They aren't there, and could certainly improve in terms of costs and choice of funds.
ReplyDeleteHey Grouch: Maybe you can work with human resources to choose funds. Part of the problem is many of them don't have the knowledge to set up a plan and choose appropriate investments. Furthermore they are fiduciaries and therefore legally liable for bad choices.
ReplyDeleteThere will be a wave of disgruntled workers suing plan administrators in the future as they see how poorly positioned they are for retirement because of excessive costs. At least that's my prediction.