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08-20-2016, 12:17 PM
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#2
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Recycles dryer sheets
Join Date: Apr 2014
Posts: 233
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08-20-2016, 01:04 PM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2014
Location: Spending the Kids Inheritance and living in Chicago
Posts: 17,012
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I find it a bit of ironic justice to know that the same Financial guys that help folks into 5% front end load mutual funds with high MERs suffered the same fate
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08-20-2016, 01:51 PM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
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IMO, even having their employees simply eat their own cooking, so to speak, is an act of fiduciary malpractice.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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08-20-2016, 07:33 PM
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#5
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Recycles dryer sheets
Join Date: Aug 2016
Posts: 177
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Education is a powerful thing. It is indeed unfortunate that the courts have to intervene because the masses simply refuse to be educated.
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08-20-2016, 07:34 PM
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#6
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Recycles dryer sheets
Join Date: Aug 2016
Posts: 177
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Well put. Hey, the Kool-Aid tasted great!
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08-21-2016, 05:04 AM
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#7
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Thinks s/he gets paid by the post
Join Date: Dec 2012
Location: Georgia
Posts: 2,240
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Quote:
Originally Posted by FIREchief
Education is a powerful thing. It is indeed unfortunate that the courts have to intervene because the masses simply refuse to be educated.
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I think a lot of that is because of how little power education has typically provided in this regard, in the past. At my small company we were educated - well, I was, at least - and I produced wonderfully colorful and compelling condemnations of the 401k plan (comparing it to that of another small company down the block, where my spouse worked). I proceeded to embarrass the Merrill Lynch agent every year with my annual exposé until I was told by management that, since no remediation was forthcoming for the concerns I was raising, I was doing nothing more than hurting morale and very effectively dissuading participation in the plan - neither of which was in the best interests of the employees who could still benefit from deferral of taxes to when they'd be in a much lower tax bracket, even in the context of a rapacious 401(k) plan like ours.
Of course, our rapacious 401(k) didn't go over the line into malfeasance - financial services companies probably have the ability to transgress in that regard in a way that regular company 401(k) plans cannot.
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08-21-2016, 07:39 AM
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#8
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Thinks s/he gets paid by the post
Join Date: Mar 2013
Location: Southern California
Posts: 3,995
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We are changing our 401K providers and the company was getting ready to go with Morgan Stanley before I got involved. I found the Morgan Stanley rep to be really slimy. The lawsuit doesn't surprise me at all.
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08-21-2016, 10:06 AM
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#9
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Posts: 17,205
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Quote:
Originally Posted by bUU
I think a lot of that is because of how little power education has typically provided in this regard, in the past. At my small company we were educated - well, I was, at least - and I produced wonderfully colorful and compelling condemnations of the 401k plan (comparing it to that of another small company down the block, where my spouse worked). I proceeded to embarrass the Merrill Lynch agent every year with my annual exposé until I was told by management that, since no remediation was forthcoming for the concerns I was raising, I was doing nothing more than hurting morale and very effectively dissuading participation in the plan - neither of which was in the best interests of the employees who could still benefit from deferral of taxes to when they'd be in a much lower tax bracket, even in the context of a rapacious 401(k) plan like ours.
Of course, our rapacious 401(k) didn't go over the line into malfeasance - financial services companies probably have the ability to transgress in that regard in a way that regular company 401(k) plans cannot.
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Well, that was just wrong in what they told you... they COULD have actually done some work and changed providers!!! But hey, why should mgmt do anything to fix a problem
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08-21-2016, 10:11 AM
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#10
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Posts: 17,205
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I think some of this is just bad press...
As the Fidelity article says, there were funds in their plan with expense rations as low as .05%... Sure, there probably were funds that were close to or above 1%, but if you do not like it just do not choose those funds...
The thing that I think is bad was one of my sisters plans.... you could actually choose from different providers, but ALL providers charged 1.25% on ALL funds... even MM funds... it was a 403(b) and they had a provision that they could not charge more than that... so, fees were invented to get them up to that level by every provider...
Not sure if the ML plan had any good funds or not.... but I think that the writing on the wall is that most plans are going to be changing over time and expenses are coming down... which is a good thing IMO.....
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08-22-2016, 03:40 AM
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#11
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Thinks s/he gets paid by the post
Join Date: Dec 2012
Location: Georgia
Posts: 2,240
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Quote:
Originally Posted by Texas Proud
Well, that was just wrong in what they told you... they COULD have actually done some work and changed providers!!!
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They never said they "couldn't". They said that no remediation was forthcoming. Big difference.
And let's be clear - they didn't need to do any real work. I found great options for them to switch to. All they had to do is a quick vetting which would have been simple given the available references.
But that wasn't the point... The company's purpose of the 401(k) plan was to be able to include "401(k)" in the job ads - that's all. Just like "health insurance", the objective was firmly to accomplish the goal most efficiently (read: costing the least money). Whatever legitimate cost sharing they could get away with was the undeniable expectation. Our German HQ made that abundantly clear, and abundantly clear that we Americans should be happy that they don't just move our jobs to Germany.
I wonder what went through their minds when their company was bought by a Texas-based division of a large corporation.
Quote:
Originally Posted by Texas Proud
I think some of this is just bad press... As the Fidelity article says, there were funds in their plan with expense rations as low as .05%... Sure, there probably were funds that were close to or above 1%, but if you do not like it just do not choose those funds...
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By comparison, as I shared here on the forum years ago, we had one choice with an ER < 1%, a S&P500 index fund at 0.86%.
I think the main issue with Fidelity and Morgan Stanley is that they used their (lower-level) employee 401(k)s as a dumping ground for the funds they couldn't "sell" to anyone else. Like I said, as a financial services company, they had the ability to commit wrongs that non-financial services companies like mine couldn't. If all Fidelity and Morgan Stanley was doing was cost-reducing an employee benefit, then they'd be free and clear. But they were also burying some losers.
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08-22-2016, 10:31 AM
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#12
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Posts: 17,205
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Quote:
Originally Posted by bUU
By comparison, as I shared here on the forum years ago, we had one choice with an ER < 1%, a S&P500 index fund at 0.86%.
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That was pretty common years ago... I think that only Vanguard was cheaper... but hey, I could be wrong...
Now, smart people know it is high.... but still, there are many funds that charge that much even for S&P 500....
Quote:
Originally Posted by bUU
I think the main issue with Fidelity and Morgan Stanley is that they used their (lower-level) employee 401(k)s as a dumping ground for the funds they couldn't "sell" to anyone else. Like I said, as a financial services company, they had the ability to commit wrongs that non-financial services companies like mine couldn't. If all Fidelity and Morgan Stanley was doing was cost-reducing an employee benefit, then they'd be free and clear. But they were also burying some losers.
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But you miss my point... just because they offer that fund in their 401 does not mean any employee has to buy it... why are they being sued for just making it available....
I can understand someone complaining if all options are expensive like in my example of my sister... there was nothing that was cheap... but, like the plan that I set up at my old small company.... there were 60+ funds to choose from... some with high expense ratios and some with the 5 BP mentioned.... nobody was forcing any of the employees to buy the expensive fund...
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08-22-2016, 10:54 AM
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#13
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Thinks s/he gets paid by the post
Join Date: Dec 2012
Location: Georgia
Posts: 2,240
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Quote:
Originally Posted by Texas Proud
why are they being sued for just making it available....
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Intent.
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08-22-2016, 11:38 AM
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#14
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Thinks s/he gets paid by the post
Join Date: Jul 2005
Posts: 2,223
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The problem , as my tiny brain can see is the employer/plan being the same joint. It would be ok of if everyone at MS was a broker, and got back a large chunk of the load as a commission .
Many of the financial firms have been sued over the same issues as MS. In this unique situation, the plans need to be at a 3rd party picked by vote of the plan members, not by a board packed management cronies . No other way I see for objective decisions in the best interest of MS employees.
My 457 plan is with an obscure firm that does a lot of gov. 403 and 457 plans, has ok fund choices, and a carve out where we can use Schwab to buy, stocks, bonds , options, and any funds offered by Schwab.
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08-22-2016, 01:59 PM
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#15
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Posts: 17,205
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Quote:
Originally Posted by Lakewood90712
The problem , as my tiny brain can see is the employer/plan being the same joint. It would be ok of if everyone at MS was a broker, and got back a large chunk of the load as a commission .
Many of the financial firms have been sued over the same issues as MS. In this unique situation, the plans need to be at a 3rd party picked by vote of the plan members, not by a board packed management cronies . No other way I see for objective decisions in the best interest of MS employees.
My 457 plan is with an obscure firm that does a lot of gov. 403 and 457 plans, has ok fund choices, and a carve out where we can use Schwab to buy, stocks, bonds , options, and any funds offered by Schwab.
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I disagree...
How does it look to people on the outside when a big financial firm outsources their 401(k)
IOW, MS, Citi, BofA, Fidelity, Vanguard etc. etc. want to show the world that they are the best at management... so picking one of their main competitors would tell the world that they are not capable of managing such a plan...
Since I used to work at one of the giant firms, I just checked... there is one fund at 62BP, then a few in the 30s, but most are less the 20BP... and a few at zero... so, none out of whack IMO...
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08-22-2016, 08:51 PM
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#16
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Thinks s/he gets paid by the post
Join Date: Jul 2005
Posts: 2,223
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Quote:
Originally Posted by Texas Proud
I disagree...
How does it look to people on the outside when a big financial firm outsources their 401(k)
IOW, MS, Citi, BofA, Fidelity, Vanguard etc. etc. want to show the world that they are the best at management... so picking one of their main competitors would tell the world that they are not capable of managing such a plan...
Since I used to work at one of the giant firms, I just checked... there is one fund at 62BP, then a few in the 30s, but most are less the 20BP... and a few at zero... so, none out of whack IMO...
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It's the employees money, not the firms. If the consensus of the employees was to chose a direct competitor, that says a lot.
My mom had accounts at MS and they really put the firm's interest before the client. I found things that were FINRA violations, and they only complied after I raised a stink. She has a choice to move , people stuck with the employers def. comp. plan don't have that choice. They should have the major say, IMO.
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08-22-2016, 09:02 PM
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#17
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Thinks s/he gets paid by the post
Join Date: Jun 2007
Posts: 2,657
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My company changed 401k providers. They went from one pretty terrible insurance company plan to another just about equally bad insurance company plan. They used the same broker to "choose" both plans and the two plans are almost identical except they are provided by a different company. The broker's only incentive was to keep the plan with a company he represents. No one seemed to care that there were much better plans available.
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08-23-2016, 05:08 AM
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#18
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Thinks s/he gets paid by the post
Join Date: Dec 2012
Location: Georgia
Posts: 2,240
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Free of conflicts of interest.
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08-23-2016, 06:59 AM
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#19
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Thinks s/he gets paid by the post
Join Date: Oct 2008
Posts: 2,782
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At my last employer, they changed 401K to Wells Fargo from whatever they had before. I noticed WF had a Stable Value fund. I got into the SV fund which was offered at at 2.5 %. I started conscientiously tracking my funds as soon as I could. About 2 weeks later I noticed the daily increase (annualized) in the SV fund wasn't quite 2.5% (it had been 2.5% at first) but was now down to 2.0 %. I also noticed the name of the fund had changed slightly. Had a suffix tacked onto it. Same ER of .74 % for both versions of the SV fund, I think. Hmmm. I called the 800 number at WF and inquired. They unashamedly told me they had mistakenly offered the "wrong" stable value fund at first, but had corrected the problem, nothing to see here, all is well, you're fine, no worries. And they confirmed that the original SV fund they offered was indeed a half percent higher than the one we ended up with. Makes you wonder what happened to the half percent. They do have a .04 ER Vanguard Stock Market Index fund, though, so they're not completely evil.
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08-23-2016, 07:05 AM
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#20
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Posts: 17,205
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Quote:
Originally Posted by Lakewood90712
It's the employees money, not the firms. If the consensus of the employees was to chose a direct competitor, that says a lot.
My mom had accounts at MS and they really put the firm's interest before the client. I found things that were FINRA violations, and they only complied after I raised a stink. She has a choice to move , people stuck with the employers def. comp. plan don't have that choice. They should have the major say, IMO.
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Since the company is setting up the plan... and the company is responsible for the plan... it really does not matter what the consensus of employees is....
I was with a firm who had a 401(k) plan with a total of 5 investment options... not great options.... but I got a huge match... I had the choice of investing or not knowing my choices were limited...
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