401K Fees Charged by Investment Advisors

How do I find out if I am paying my registered investment advisor too much for my small business 401K plan?- Alicia Spencer, Florida– Owns a furniture refurbishing shop.

A few years back, a 401K plan was quite an expensive plan to maintain from the employer’s perspective. There were not many choices, though, so both small business owners and their employees resigned themselves to paying some hefty charges to plan administrators/ managers and investment advisors etc, in exchange for the peace of mind afforded by a safe tax advantaged retirement plan like 401K. But today, with many feature rich software suites like http://smallbusiness401k.com offering complete 401K plan set up and administration tools at budget prices, this scenario has changed completely.

If you have a 401K plan for your small business set up through your registered investment advisor then you need to make sure that you are not paying far more than you have to. After all, you can simply switch to an online software suite with relative ease and save money. If you choose one with a host of investment options then you simply eliminate the need for an advisor. Here are a few points to consider that help you determine if your advisor is fleecing you.

The important thing is to know how the advisor is paid. If you pay him a percentage of assets held in the 401K, then you may want to shift to a fixed fee instead. This way, if your investment does well, your advisor will not be making money off your investment acumen.

Get a written statement from the advisor that he does not receive payment from the administrator of your plan so that you avoid paying him twice for the same 401K. Ask him to fill out a Department of labor 401K disclosure form that specifically asks for details of various possible fees and charges. This form will show you exactly what charges are being paid to your advisor. An advisor who does not want to fill this form is probably fleecing you with too many hidden fees.

About Elliot Earl, Director, Pension Trade Association
Director, Pension Trade Association Founded in 1982, the Pension Trade Association [California Domestic Nonprofit Corporation #C1629080] is dedicated to helping workers save for their retirement through expanded coverage of 401k -type defined contribution pension plans.

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