Hello all!
I sincerely apologize if this topic is covered in an earlier post, I am fairly new to the forum and I have not had time to read every post. If it is covered, please direct me there and I will appreciate it!
I started working almost exactly one year ago at my first big girl job (post college). I am 23 years old working as an electrical engineer (EIT...i.e. not professional licensed just yet...)
Our company is very small. There are 13 people here including accounting, reception, marketing and IT (which are all contract positions within the company). The average age of the work force is about 40 years old (this is a guess).
The company benefits are minimal but acceptable, with the exception of the 401k plan. Here is the situation:
Funds to choose from
--1 cash fund (i.e. they will take plain cash from you that will not grow and charge an expense ratio of 0.69%)...seriously??
--5 "retirement 20__" funds from 2020 to 2040 - Blended funds with expense ratios ranging from 1.94% - 2.79%
--7 bond funds - expenses ranging from 1.69% to 2.7% (I am not that interested in bonds though so these are mostly pointless for me)
--4 blended funds - expense ratios ranging from 1.89% - 2.89% (each of these funds includes a percentage of their cash fund...)
The "portal" within which you create a profile is a pitiful excuse for a website. It is extremely hard to navigate and very minimal in nature. The "investment profiles" page takes you to a text list of the above mentioned funds. You can click on the fund and it takes you to one of either:
-A broken website link "error cannot be found",
-An auto download of a 400+ page PDF "prospectus" for the "family" of funds it is associated with, of which only maybe 2 pages are relevant and buried somewhere in the middle, or
-A "fund fact sheet" that is half a page of "track record" info that benchmarks the fund against an index (which it under-performs more than 50% of the time) and fee information. There are 3 subsequent pages of "fine print" I honestly haven't gotten the motivation to read.
Essentially there is no consistency in the information available about the funds and thus no way to compare them to each other and make an informed decision. On top of that, there are no simple, low fee options. Only complex, hyper-managed high-fee funds.
I was initially extremely disappointed. I am already a Vanguard investor so I am accustomed to extremely low expense ratios and fees. However, I would like to participate in my company 401K plan (my IRA is already full) and I would like to take advantage of some additional tax deferral. I ran the long term numbers and the tax savings do outweigh the increased fees, however, I am still unsatisfied with the plan.
I tried to take the high road and discuss my issues with our allocated "financial adviser" but I was very quickly stonewalled with comments like "the platform doesn't allow index funds" and "we offer high quality funds with good track records" and "lower expense ratio means lower returns". When I asked about lower fee options, they added an index fund to the options (expense ratio of 1.8%) and proceeded to tell me index funds are not supported. Basically that is a dead end. They have stopped responding to me all together.
There is no employer match for any amount contributed to the plan. I was told there was "profit sharing" but I was given no details about how that is allocated.
Now that is has taken me forever...let me get to my point. I intend to compile several options for other small business 401(k) providers and bring them to the owner of the company (who is also my direct supervisor because..well..small companies).
My question to all of you is, "who do you recommend?"
If anyone could suggest some decent plan providers and associated info, that would help me significantly. I am VERY new to all of this so I feel like I am just keeping my head above water.
My concerns:
-Expense ratios - I need low fee options, I don't trust any manager can do something magical worth 2.5% of my assets.
-I don't know what 401(k) plans cost the employer. I don't want to show up with a bunch of ideas, all of which will be an increase in what she currently pays for our plan (if anything).
-I need a strong case since, if we change providers, everyone else in the company will have to change over as well.
Our current plan is through Merrill Lynch. So far I am extremely unimpressed.
Any suggestions, comments, ideas or information will be greatly appreciated!
Thanks in advance!