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TheClub55 (< 20)

The Latest Fidelity 401k customer RIP-OFF Program

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January 15, 2010 – Comments (10)

This seems like a good place to post this rant...

I just received a nice custom printed brochure from Fidelity featuring the following program:

Fidelity® Portfolio Advisory Service at Work

Here are the highlights: We help keep your retirement goals on track by-

- Managing your investments through the ups and downs of the market

- Aligning your account to a model portfolio that is constructed to enhance growth and manage risk

- Keeping your account's investment strategy appropriate to your needs through annual reviews and check-ins

Now this would be nice feature for someone that does not have a clue about the investing as part of the 401k program, this RIP-OFF changes an annual fee of 1% of your portfolio value, and recommendations are only in our company plan fund choices which average .75 to 1.25% annual fee!!!!  And the plan has fairly limited choices, its not self directed with access to individual stocks/etf!!!!

As far as I can tell all you receive is allocation plan based on your age and retirement, they don’t even take into account other investments, home ownership, income, personal goals, etc – it looks like it’s just a computer driven allocation report!!!!  You’re even responsible for making the recommended changes.

This is even a bigger rip-off when you consider that our plan offer target dated retirement funds, ex. FID freedom 2035 (at .78% fee) which are geared toward folks that want assets allocated by age / retirement date, event this fee is a rip-off when you consider Vanguard had targeted fees at .19%.  So, some sucker will likely sign-up for this program, be pointed to more expensive funds, plus this BS fee… the user will be spending 1.75 to 2.25% in fee.  This should be called The Retirement Delay and Make Fund Manager Rich Program!!!!

Companies need to start getting sued for placing there employees in program such as this that are a such a scam… but they will because Fidelity offer the company a kickback of the fee and Vanguard does not!   End of rant!

10 Comments – Post Your Own

#1) On January 15, 2010 at 1:41 PM, miteycasey (31.29) wrote:

You should point this out to HR.

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#2) On January 15, 2010 at 2:03 PM, ChannelDunlap (< 20) wrote:

Fidelity offer the company a kickback of the fee and Vanguard does not!

That's terrible.  "We will offer you a 401k because we make money off of it!"

And then include it as one of your 'benefits'.

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#3) On January 15, 2010 at 2:36 PM, eskatonic (29.33) wrote:

set it to 100% tbills or some such then periodically roll it into an ira.  consult with your accountant.

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#4) On January 15, 2010 at 3:25 PM, TheClub55 (< 20) wrote:

eskatonic - Thanks, that is what I've done in the past and will be doing again shortly... generally I am ticked that folks that don't understand the affect of fees will get suckered into this looser of a program. 

Maybe what we need here is to have some regulation or transparency rules to the actions between ' the company' and '401k provider' - either we could ban kick backs to the company or at least require all compensation (kick backs) to the company from the 401k provider to be disclosed in policy document.

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#5) On January 15, 2010 at 3:30 PM, TheClub55 (< 20) wrote:

MC - I don't think HR is a the best resource here, they set-up the 401k program then get to report to their manager that the program will be a revenue center for the HR department.  If they went w/ a non-profit it would make them look worse in the eyes of mgmt.  

 

And the paranoid side of me does not want to become the “trouble maker” for the company… I don’t want to job hunt in this market.  When I can takes E’s advice and move the dollars to my IRA.

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#6) On January 15, 2010 at 4:14 PM, russiangambit (29.42) wrote:

> When I can takes E’s advice and move the dollars to my IRA.

I don't know why people keep saying that. You can only rollover into IRA if you quit, you cannot rollover current 401K.

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#7) On January 15, 2010 at 4:24 PM, ease1 (91.26) wrote:

"You can only rollover into IRA if you quit, you cannot rollover current 401K"

That was my thinking as well.  I didn't know how you could do that.

Does your employer match controbutions to a certain percentage?  If so why complain, your getting some free money anyway.  Compared to those that don't have a job at all.

IMO....

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#8) On January 16, 2010 at 4:02 PM, tonylogan1 (28.28) wrote:

At at least one company I've worked for I tried to roll out of the 401k into IRA and it was not allowed.

Whenever you change jobs these days, it is always a nice time to roll out into an IRA.

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#9) On January 17, 2010 at 6:52 AM, MGDG (35.62) wrote:

There are 401K providers that allow rollovers to an IRA while you employed. There are no Federal rules that prevent it. One thing to keep in mind is an IRA can be raided by the IRS, while a 401K cannot.

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#10) On January 18, 2010 at 1:22 PM, adamabluesky (54.45) wrote:

 I guess it's why their tv ad says follow the green trail

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