According to The Week Magazine, participants in 401(k) plans pay approximately $164 in daily fees to the financial services industry, and most don’t even know what they are paying for. But the new Department of Labor regulations requiring the disclosure of all fees and expenses for 401(k) plans can potentially save millions of dollars for 401(k) investors.
“The mutual fund industry has evaded the deeper customer disclosure provisions and consumer protections found in many other industries,” said Chuck Epstein, author of How 401(k) Fees Destroy Wealth and What Investors can do to Protect Themselves. “The new DOL regulations, which were only enacted in July 2012 after years of delays, should finally allow investors to see how the industry is working against their long-term interests and jeopardizing their retirement security.”
Epstein warns that employers are shifting retirement planning risk to employees so investors must learn to recognize conflicts-of-interest in financial relationships in order to avoid serious financial losses. Principal groups in the financial services industry have come out against the adoption of a fiduciary standard as that could reduce profitability of the market. Epstein says that almost $10 billion per year in revenue sharing and 12b-1 fees are paid to financial firms and representatives, creating severe conflicts of interest between investors and investment professionals. But new DOL fee and expense disclosure regulations enacted in July 2012 may be able to save investors millions of dollars.