Upset with poor performance of employer's 401k

[Jake P]

Looking for advice everyone! My work 401k earned an average return of 1.6% in 2014.... Not good.  The boss is not interested in making any changes and I want to keep getting the company match.  I'm considering pulling the majority of my money (about 40k) and rolling it to a Vanguard account.  Then I'll keep investing at my work place to get the match. I'm currently putting in quite a bit more than my employer will match, about 15% of my salary.
Just wondering what the best way to go about this is.  I don't want to pay tax on this money, just roll it over to Vanguard.  I'm leaning toward VTSAX for stocks, but should I buy bonds as well?
Can I change my investments at my work HR office without the rest of the company?
Help!

[jba302]

Someone in my company was able to accomplish a self-directed 401k and still got employer match etc. I know it was a fairly huge pain in the ass to get accomplished and it isn't something that is advertised, but that might be an option. Not even sure how to direct you other than "this is a thing" though.

[FLBiker]

I think you'll only be able to move your 401k money to Vanguard if they're offered by your employer as a 401k provider.  Otherwise, you'll have to wait until you leave the employer and roll it in as an IRA.  That's my understanding, anyways.

[Louisville]

Jackie,
It would be very helpful to know what investment options you are in inside your 401k?  401k is just a type of investment account. It doesn't tell us what you're invested in.  What mutual funds are you in? And what mutual funds are available? Who is the custodian (Fidelity, T Row Price, John Hancock, etc)? Have you even chosen funds, or are you just allowing your money to go into some default offering? Because the only investment class that returned 1.4% across all of 2014 is going to be a money market fund or something very conservative like that.

Generally, one can't roll money out of a 401k into an IRA while one is still with the employer. Some plans allow in service distributions, but most don't.

[Mr. Frugalwoods]

Seconding the call for your actual investment options within the 401k.  They may all be crap, but you can at least have diversified crap :-)

[Louisville]

Can I change my investments at my work HR office without the rest of the company?

Just noticed this sentence.
I think the first thing you need to do is sit down and do some googling about the basics of what a 401k is and how it works.
As far as changing the investments within your 401k, most people will not have to go through their employer. You should have a login/password to the custodian's website where you can do that sort of thing.

[thenextguy]

Yeah, even a crappy 401k plan could have returned mor than that in 2014 with the right investment choices. Your plan might suck, but we need to see the funds you're in. You could still be doing better most likely.

[Jake P]

So, I've recently decided that I need to educate myself better on my investments.  Sorry if I sound inexperienced, but I've basically been trusting my advisor to make good decisions for me for the last decade.... Anyway, looks like I'm investing in 12 funds: FFALX, REMSX, RGESX, RGISX, RGCSX, RFCTX, RSESX make up the majority of shares. The investment is hosted by wells fargo.  Anyone know how I find out how much I pay in fees?
Thanks!

[Louisville]

So, I've recently decided that I need to educate myself better on my investments.  Sorry if I sound inexperienced, but I've basically been trusting my advisor to make good decisions for me for the last decade.... Anyway, looks like I'm investing in 12 funds: FFALX, REMSX, RGESX, RGISX, RGCSX, RFCTX, RSESX make up the majority of shares. The investment is hosted by wells fargo.  Anyone know how I find out how much I pay in fees?
Thanks!

Can you post your percentage breakdown across those funds?

Can you give us a list of funds that are available but that you're not investing in? I ask because, even when most of the fund choices suck, there's usually one option that's a nod to index investing. That's been my experience, anyway.

The fees on these are very high. Very, very high. They're all actively managed, which folks around here will generally say is a no-no. However, I find it hard to beleive you only made 1.4% across 2014 with these. How did you arrive at that number?

You should be able to find out for yourself what the fees are. They're in the prospectus, which is available from your custodian. You have read the prospecti on these funds, right? Well maybe not "read" but scanned for key info like asset class and fees, right?

I don't want to put you off by being too much off a smart ass, but, yeah, you need some education in investing basics. We all had to start somewhere.

Here's one place to start. I'm sure the community can recommend many others.
http://www.fool.com/School/MutualFunds/Basics/Intro.htm

[Mr. Green]

morningstar.com is a great place to view all kinds of information about the funds you are invested in. You can search for those symbols and see the fees that are charged, past performance, what stocks/bonds/etc. actually make up the fund, and so on. I always use Morningstar to see what is in the funds offered by my 401k before making my selections.

[rubybeth]

So, I've recently decided that I need to educate myself better on my investments.  Sorry if I sound inexperienced, but I've basically been trusting my advisor to make good decisions for me for the last decade.... Anyway, looks like I'm investing in 12 funds: FFALX, REMSX, RGESX, RGISX, RGCSX, RFCTX, RSESX make up the majority of shares. The investment is hosted by wells fargo.  Anyone know how I find out how much I pay in fees?
Thanks!

You can Google all of the ticker codes or just use one site like Morningstar or Yahoo Finance to find out your expense ratios for each of these funds.

For example, RGESX has a 1.24% expense ratio: http://quotes.morningstar.com/fund/RGESX/f?t=RGESX

For comparison, VTSAX has a .05% expense ratio: http://quotes.morningstar.com/fund/vtsax/f?t=VTSAX

Your 401k provider (sounds like it's Wells Fargo) should have a listing of all of your fund options. Sometimes they list expense ratios right on this info. page, sometimes not. If the expense ratio isn't listed or you don't understand what the fund is, I'd suggest looking up each and every one of your options and write down the expense ratio and figure out what kind of fund it is (look at the top holdings, etc.). It's probable that there will be at least one fund option that is an S&P index fund with lower fees than what you are paying.

If there aren't any good funds, Wells Fargo should have lots of others to choose from. Asking your employer for more options couldn't hurt if there aren't any fund options you like.

[James]

Find out if you can roll your fund into your own IRA during employment, sometime you can and sometimes you can't, just have to ask. If you can, there is absolutely no reason not to do so, transferring all your funds out as often as you can or with to within the limits of your company. That way you know your funds are in a low fee IRA with vanguard or whatever company you choose.


Otherwise find out which fund in your selection best matches the overall index of the full market with the lowest fee, and go with that one.

[ZiziPB]

If you post a list of the available investment options in your 401k (name of the fund, ticker symbol and expense ratio), people here will be happy to help you select the best options.  Just on the face of it, 12 funds is too many to be invested in.  Do you have an idea of what type of an asset allocation you want?

[AH013]

So, I've recently decided that I need to educate myself better on my investments.  Sorry if I sound inexperienced, but I've basically been trusting my advisor to make good decisions for me for the last decade.... Anyway, looks like I'm investing in 12 funds: FFALX, REMSX, RGESX, RGISX, RGCSX, RFCTX, RSESX make up the majority of shares. The investment is hosted by wells fargo.  Anyone know how I find out how much I pay in fees?
Thanks!

Wow, what an awesome investment pool.  So FFALX is a fund of funds with a healthy 5.75% load AKA commission kicked back to the advisor.  And in addition to investing in funds that have management fees of 1%+ individually the fund of funds also has its own .4% management fee....plus a .25% 12b1 fee AKA "people wouldn't buy this garbage unless we marketed the heck out of it" fee.  So basically 6% of your money off the top and 1.6% of your money every year...for ho-hum market returns with no active management skill but active management expenses.  The rest of the stuff is just as ripe with loads & heavy management fees.  Yeah, I'd flip on my employer too if they foisted this on me.  See if you can find an index fund buried in the mix.  If not, question whether there are better investment options for retirement -- best decision tree with a subpar 401k plan is usually 1) 401k up to the employer match 2) fully fund IRA 3) fully fund 401k

[ZiziPB]

So, I've recently decided that I need to educate myself better on my investments.  Sorry if I sound inexperienced, but I've basically been trusting my advisor to make good decisions for me for the last decade.... Anyway, looks like I'm investing in 12 funds: FFALX, REMSX, RGESX, RGISX, RGCSX, RFCTX, RSESX make up the majority of shares. The investment is hosted by wells fargo.  Anyone know how I find out how much I pay in fees?
Thanks!

Wow, what an awesome investment pool.  So FFALX is a fund of funds with a healthy 5.75% load AKA commission kicked back to the advisor.  And in addition to investing in funds that have management fees of 1%+ individually the fund of funds also has its own .4% management fee....plus a .25% 12b1 fee AKA "people wouldn't buy this garbage unless we marketed the heck out of it" fee.  So basically 6% of your money off the top and 1.6% of your money every year...for ho-hum market returns with no active management skill but active management expenses.  The rest of the stuff is just as ripe with loads & heavy management fees.  Yeah, I'd flip on my employer too if they foisted this on me.  See if you can find an index fund buried in the mix.  If not, question whether there are better investment options for retirement -- best decision tree with a subpar 401k plan is usually 1) 401k up to the employer match 2) fully fund IRA 3) fully fund 401k

You should not assume that front loads are charged on these investments.  Or, for that matter, that all the fees listed on Morningstar are charged to the 401k participants.  Quite often fees are waived or reduced for funds in a 401k.  To give you an example, I have Vanguard Target Funds available in my 401k - available to retail investors at 0.18% but in our 401k we are only charged 0.075% for them.

The OP needs to list all available investment options with expense ratios (from the 401k plan documents, not Morningstar) in order for us to comment intelligently.

[Jake P]

Thanks for the help guys.  I'm going to check with my HR about any discounts on fees, but looking at my account online, and my various funds prospectus' it does look like i'm paying a shit ton in fees.  It also looks like I made more like 3.9% in 2014 according to my online account.  I pulled the 1.6% figure off of my Dec 2014 statement saying "2014 average return 1.6%".  I may see if I can buy a Wells Fargo (they manage my account) Index fund, like WFIRX, plus some bonds....

[frugaliknowit]

Step#1:  Find out if you can roll any/all of your 401K to a self directed IRA while still employed at your current employer (I doubt it).

Step#2:  You need to freagin kick it and read through all of the fund prospectuses in your 401K plan.  Look for "management fees" and "loads".  You probably want stock index funds combined with extremely low fees (rule out anything over 1%).  This is very important.  Most people spend more time picking out a smartphone or a TV.

[Jake P]

So, apparently our 401k is set up as a brokerage account.  So I should have access to a wide range of funds.  It does look like due to my account being "actively" managed that I've been locked out of all management ability on my online account.  I'm waiting to hear back from my account manager so I can make some changes...