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401(k) Myths

Without noticing significant issues with your 401(k) plan investments or service, it can be tempting to think your employee investments are growing, your fees are minimal, and your plan is being actively managed. But have you really taken the time to sit down and review all aspects of this very important employee benefit?


Some 401(k) “myths” to be aware of:


Myth 1: Our 401(k) is free.


A 401(k) is never free, but it can appear that way if your company never receives a bill…which likely indicates the fees are being directly deducted out of your employee retirement accounts. This payment option often leads to higher costs because nobody is tracking and monitoring the plan. Make sure you know exactly what you are paying and where the fees are being charged.


Myth 2: Our advisor provides great service.


This may NOT be a myth. However, did you know that a lot of advisors/brokers only have to do what is “suitable” when it comes to client care? This low standard leads to your company purchasing financial products that may or may not be in your best interest. On the other hand, a Registered Investment Advisor (RIA) must document and prove he or she is acting in the "best interest of their clients." Who is managing your plan — a broker or Registered Investment Advisor?


Myth 3: Our plan is actively managed.


Many large broker-dealer firms are using technology to manage investments while continuing to make millions from clients who wrongly assume a person — not a computer — is actively managing their plan. Make sure you know who, and how often, your plan investments and plan design is being reviewed.


If you’re wondering about the status of your company’s 401(k) plan and want an outside opinion, give us a call. We’ll help you figure out what’s working for your employees and what needs a little tweaking.



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