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What Are Your Goals?
WALL STREET IS HIDING ILLEGAL FEES
The Word Has Been Out for Years
Wall Street has been caught red-handed charging more fees than listed in 401(k) investment prospectuses.
What is an investment prospectus? It is the document that comes with any registered security. It shows two things:
1) What do you get, and
2) How much does it cost you.
What Do You Call It?
If the investment prospectus says Wall Street will be withdrawing 1% in fees annually, but then they pull out an additional 2% in hidden fees for a total extraction of 3% annually, there is a name for it.
But What Has Been Done to Stop It?
Congress has been informed and knows that Wall Street is stealing, and some members are out to stop the hidden fees. However, many other Congress members seem worried about the power of Wall Street's influences against their desires for re-election.
GOVERNMENT RESPONSE
To Avoid Losing Face, but Not Disturb Wall Street
While our legislature failed to pass any meaningful legislation on eliminating hidden (illegal) fees, a response — however weak — was made.
The U.S. Department of Labor, in 2012 issued a rule: Final Rule to Improve Transparency of Fees and Expenses to Workers in 401(k)-Type Retirement Plans (downloadable below).
RULES SO WATERED DOWN AS TO BE COMPLETELY INEFFECTIVE
Fee Transparency Rules Stripped to the Bone
Wall Street's lobbyists neutered the rule to be so ineffective that still today, mutual fund and EFT fees remain hidden industry wide.
Tony Robbins' Example Is Real and Accurate
If someone invested $100,000 at 7% for 30 Years:
His or her ending balance with 1% Fee = $574,000
His or her ending balance with 3% Fee = $324,000
Lost Opportunity Cost = $250,000
The absence of $250,000 that really should be in seniors' retirement accounts if not for hidden (illegal) fees is a large enough dollar amount to make the difference between living comfortably the rest of their lives or sliding into poverty. Economic forecasts predict 25 million law-abiding seniors that followed all the rules — worked hard, saved religiously and did what was asked of them — will slide into poverty due to no fault of their own. They listened to Wall Street and were hoodwinked.
If the Mutual Fund Fees Weren't Bad Enough...
There are 401(k) Administrative Fees, Advisor Fees, etc.
The outrageous mutual fund fees discussed above don't even include the 401(k) administrative fees. Add the median of 1.38% every year!
On top of it all, let's not forget some investment advisors charge an assets under management annual fee. This fee's national average for an account under one million dollars is 1.02%!