Ford 401k,units and shares

[robjr100]

I`ve been taking my ending day balance and dividing it by the closing price and as the days go on my total shares seem to decrease.Example.About 10 days ago or so I had 5000 shares.Today I do that same math and I get 4990 shares.Regardless if it`s units or shares I believe the total value divided by the closing price should always come to 5000 shares.

The above was just a example.I`ve done this twice now finding my shares to be less each time.Each time there were no transactions.It really makes me wonder if Wall Street isn`t pulling a fast one by skimming off the top.All the while my 401k tells me that there are no fees with Ford stock.

The official response is that there are so many shares traded that final prices can have a few percentages of error.With modern technology I find that hard to believe.By the end of the day it should all add up.

The financial management company is BlackRock.Prior to that it was Fidelity and I believe they operated the same way.

Is there any financial management company that doesn`t gouge you?
I see Vanguard mentioned quite in often in the forums.How are they?

 

[REWahoo]

I suspect what you are seeing is the result of fees and expenses charged to your account by the 401k administrator. That information was difficult to come by in the past but new laws went into effect on Jan 1 requiring disclosure: EXPERT: New 401(k) Fee Disclosure Rules Won't Come Soon Enough - Business Insider

 

[robjr100]

I suspect what you are seeing is the result of fees and expenses charged to your account by the 401k administrator. That information was difficult to come by in the past but new laws went into effect on Jan 1 requiring disclosure: EXPERT: New 401(k) Fee Disclosure Rules Won't Come Soon Enough - Business Insider

I knew this is coming.Somehow I have very little faith in anything congress gives us.New regulations always seem to be written by the lobbyists working for the people who are suppose to be policed.

Thanks

 

[donheff]

I knew this is coming.Somehow I have very little faith in anything congress gives us.New regulations always seem to be written by the lobbyists working for the people who are suppose to be policed.

Thanks

So, you think your employer and the banks are in cahoots to defraud you but you are more upset ("I knew this is coming.") that the Government would try to force a little transparency?

 

[robjr100]

So, you think your employer and the banks are in cahoots to defraud you but you are more upset ("I knew this is coming.") that the Government would try to force a little transparency?

I didn`t say anything about my employer.What I did say much legislation is written by the lobbyists who work for the outfits who are supposed be policed.So can you trust anything that congress gives you?

Take this Dodd Frank Bill that was written to protect the financial system from the disasters from a few years ago.You will find many that say it does nothing of the sort and that another financial disaster is likely to happen again.By in large because it was written by the same people it`s suppose to police.

My question is.Is there any financial management company that doesn`t gouge you?

 

[MichaelB]

I`ve been taking my ending day balance and dividing it by the closing price and as the days go on my total shares seem to decrease.Example.About 10 days ago or so I had 5000 shares.Today I do that same math and I get 4990 shares.Regardless if it`s units or shares I believe the total value divided by the closing price should always come to 5000 shares.

The above was just a example.I`ve done this twice now finding my shares to be less each time.Each time there were no transactions.It really makes me wonder if Wall Street isn`t pulling a fast one by skimming off the top.All the while my 401k tells me that there are no fees with Ford stock.

The official response is that there are so many shares traded that final prices can have a few percentages of error.With modern technology I find that hard to believe.By the end of the day it should all add up.

The financial management company is BlackRock.Prior to that it was Fidelity and I believe they operated the same way.

Is there any financial management company that doesn`t gouge you?
I see Vanguard mentioned quite in often in the forums.How are they?

I don't understand why you can't just look at the transaction detail and prices and determine exactly where the shortfall is. Are the prices in your account different than market prices?

 

[robjr100]

Fees – The Company pays all fees associated with the Ford Stock Fund. Unit price and returns will vary.
Category: Company Stock
What it is: Essentially an investment that approximates an investment in Ford Motor Company common stock. It is neither a mutual fund nor a diversified investment option.
The unit price of the Ford Stock Fund is related to the price of Ford Motor Company common stock (and the other assets held for liquidity purposes), and may fluctuate up and/or down on any given day, as is the case for all equity securities. The fluctuation in the unit price of an investment option consisting of stock of a single company is likely to be greater than the
fluctuation in the unit price of an investment option consisting of a diversified portfolio of stocks of several companies, like an equity mutual fund. The non-diversified structure of the Ford Stock Fund, together with the fund’s need to maintain sufficient liquidity to meet redemptions
and fluctuating market prices throughout each day, may limit the extent to which the performance of the Ford Stock Fund will track the performance of the Ford Motor Company common stock. Unit price and return will vary.
Goal: Provide a return that corresponds to the total return on Ford common stock, including price changes and dividends.
What it invests in: The Trustee invests Fund assets primarily in shares of Ford common stock (par value $0.01 per share). Typically, a small portion is invested in short-term investments to provide liquidity for daily activity. Normally, stock transactions require a three-day waiting period
between the day shares are sold on one of the stock exchanges and the day the proceeds of the sale are available. The short-term investments of the Fund provide immediate cash so that absent special circumstances, a trade can be completed on the day it is requested rather than
three days later. On average (assuming there is not an unusually high volume of transactions on a particular day), it is expected that approximately up to 2% of the fund will be held in short term investments, but the percentage may be higher or lower on any given day depending upon the expected liquidity requirements of the Fund. This was the answer I got when asked about the change in the number of shares when dividing the total value by the closing price.
The inclusion of short-term investments requires
that the fund be valued in units instead of shares of stock. Shares of Ford common stock
required for the savings plan will be acquired either through trading on the market or directly
through Ford Motor Company.
Other information: You own units of the Ford Stock Fund (not shares of Ford common stock)
with each unit representing a proportionate share of the value of the Fund. To determine the number of "equivalent shares" represented by the total units in your account, divide the total value of your Fund account balance by the daily closing price of Ford common stock.
This is what I did on 2 occasions finding a drop in shares each time.

 

[robjr100]

Fees – The Company pays all fees associated with the Ford Stock Fund. Unit price and returns will vary.
Category: Company Stock
What it is: Essentially an investment that approximates an investment in Ford Motor Company common stock. It is neither a mutual fund nor a diversified investment option.
The unit price of the Ford Stock Fund is related to the price of Ford Motor Company common stock (and the other assets held for liquidity purposes), and may fluctuate up and/or down on any given day, as is the case for all equity securities. The fluctuation in the unit price of an investment option consisting of stock of a single company is likely to be greater than the
fluctuation in the unit price of an investment option consisting of a diversified portfolio of stocks of several companies, like an equity mutual fund. The non-diversified structure of the Ford Stock Fund, together with the fund’s need to maintain sufficient liquidity to meet redemptions
and fluctuating market prices throughout each day, may limit the extent to which the performance of the Ford Stock Fund will track the performance of the Ford Motor Company common stock. Unit price and return will vary.
Goal: Provide a return that corresponds to the total return on Ford common stock, including price changes and dividends.
What it invests in: The Trustee invests Fund assets primarily in shares of Ford common stock (par value $0.01 per share). Typically, a small portion is invested in short-term investments to provide liquidity for daily activity. Normally, stock transactions require a three-day waiting period
between the day shares are sold on one of the stock exchanges and the day the proceeds of the sale are available. The short-term investments of the Fund provide immediate cash so that absent special circumstances, a trade can be completed on the day it is requested rather than
three days later. On average (assuming there is not an unusually high volume of transactions on a particular day), it is expected that approximately up to 2% of the fund will be held in short term investments, but the percentage may be higher or lower on any given day depending upon the expected liquidity requirements of the Fund. This was the answer I got when asked about the change in the number of shares when dividing the total value by the closing price.
The inclusion of short-term investments requires
that the fund be valued in units instead of shares of stock. Shares of Ford common stock
required for the savings plan will be acquired either through trading on the market or directly
through Ford Motor Company.
Other information: You own units of the Ford Stock Fund (not shares of Ford common stock)
with each unit representing a proportionate share of the value of the Fund. To determine the number of "equivalent shares" represented by the total units in your account, divide the total value of your Fund account balance by the daily closing price of Ford common stock.
This is what I did on 2 occasions finding a drop in shares each time.

Honestly I think this is alot of double speak to skim off the top of each account.

 

[robjr100]

401k Fees

This is a few years old but the videos explain how 401k investment firms can operate.

Scroll down
401k Retirement

It`s great that they may have to be more transparent but will it really change anything?

 

[MichaelB]

It seems your employer has chosen a 401(k) plan with high fees.

 

[FinanceDude]

This happens a lot in 401Ks. What you own is "not really" Ford common stock, but a unit that "mirrors" Ford common stock. Of course, those "units" are subject to fees from the investment provider. It is unlike some 401Ks like GE's where you own ACTUAL SHARES of the company.

This has been going in for many years. Management of the company thinks they are doing everyone a favor but they get hosed themselves, since they tend to have a LOT of those "units" themselves.

The only merit I can see to it is that it "protects" the company from having a big run on their stock in the open market if a bunch of employees get wind bad numbers are about to hit. In effect, it limits how much you can cash out at any one time. Of course, Blackrock or Fido gets their "cut" no matter what.

I am looking forward to the new disclosure rules, so I can show fund sponsors how much "nice folks" like Principal have been screwing them all these years.........

 

[robjr100]

This happens a lot in 401Ks. What you own is "not really" Ford common stock, but a unit that "mirrors" Ford common stock. Of course, those "units" are subject to fees from the investment provider. It is unlike some 401Ks like GE's where you own ACTUAL SHARES of the company.

This has been going in for many years. Management of the company thinks they are doing everyone a favor but they get hosed themselves, since they tend to have a LOT of those "units" themselves.

The only merit I can see to it is that it "protects" the company from having a big run on their stock in the open market if a bunch of employees get wind bad numbers are about to hit. In effect, it limits how much you can cash out at any one time. Of course, Blackrock or Fido gets their "cut" no matter what.

I am looking forward to the new disclosure rules, so I can show fund sponsors how much "nice folks" like Principal have been screwing them all these years.........

Thanks for that input.
Are there any financial firms that are more user friendly that I could move to with IRA after retirement?

 

[Alan]

You can see if your company 401k is listed on Brightscope and see how it compares to its peer regarding fees, choices etc.

Other low-cost, easy to work with companies, include Vanguard, Fidelity and Schwab. When we RE'ed we used Vanguard for me, Fidelity for DW, to roll over our 401ks, and both companies made it very easy to do.

 

[NW-Bound]

What I have seen from one of my previous megacorps' 401k was that the "tracking error" was not entirely caused by management fees, but by fellow 401k participants who were market timers.

Let's say the share price hits $20 at the market close. People who decided earlier in the day to transfer out are guaranteed that closing price. The redemption is covered by the few percent of cash that the fund manager holds. The next day, they go out to actually sell some shares to raise that cash reserve back up, but the price has dropped to $19. So, they have to sell more actual shares than they would originally.

This kind of problem potentially holds true with any mutual fund. Hence, it is common nowadays to charge some penalties for people who trade short-term and cost other shareholders.

Years ago, I worked for a megacorp who held actual shares in employee's 401k accounts. We were not guaranteed any share closing price. When we wanted to sell to transfer to another fund, our own shares would be sold the next day at whatever market price they fetched. Our trading action would not impact other employees in any way.

 

[Texas Proud]

I have units in my old mega corp and the statement tells me the number of shares it would represent... there are no fees...

 

[brewer12345]

Are there any financial firms that are more user friendly that I could move to with IRA after retirement?

Lots. Credit unions, Schwab, Fidelity, Vanguard, etc.

 

[NW-Bound]

I would like to add to my previous post regarding short-term trading in a 401k.

Again, suppose the company stock goes up for a day, and many employees decide to transfer out of the company stock fund. So, they are guaranteed the high closing price, but the next day, when the fund manager goes out to actually sell the shares, the very act of dumping more shares out on the market will depress the price further.

On the other side of transactions, when the stock closes down and many employees want in, they are guaranteed the lower price if the stock bounces back higher the next day, which is more likely because of the higher demand for the company stock. Result: instant profit!

In a normal day, there are always so many million shares changing hand on the open market. But if there is suddenly a lot more demand or supply, that will adversely affect the price. The "fair price" should be the spot price, not the closing price of yesterday! The former is affected by the collective buying or selling of the trader, while the latter is not.

The profits that trading employees make come out of the pockets of people who do not trade. The usual way to curb this is to levy a penalty on people who trade short-term on any fund, not just the company stock fund.

The detail of any penalty or restriction must be worked out by the company, or the fund manager, but there must be something in place. I would suggest the OP to contact HR or the fund manager if there is no restriction on trading.

 

[jazz4cash]

Thanks for that input.
Are there any financial firms that are more user friendly that I could move to with IRA after retirement?

Who is the Fiduciary for the Ford 401k? I know Fidelity does GM's and they are pretty good in my opinion. I was able to move chunks from the 401k to an IRA at Fidelity (and other institutions) while still employed.

 

[robjr100]

Who is the Fiduciary for the Ford 401k? I know Fidelity does GM's and they are pretty good in my opinion. I was able to move chunks from the 401k to an IRA at Fidelity (and other institutions) while still employed.

It was Fidelity for a very long time.About a year ago BlackRock took over.
They seem to fly under the radar in spite of being the largest investment management corporation in the world.

 

[justplainbll]

RobJr, your example looks like there is a variance of about .2%. Does the number of units go up when the price of the stock drops? Taking into consideration the cash balance, it's understandable how the number of units can go down when the price of Ford's shares go up.

 

[target2019]

The new 401(k) rules have been postponed again. Companies must be having a difficult time getting the financial house in order. I still expect there will be a way to hide expenses. Now you see it, now you don't.

Every week or so I trade the company stock out of the EPP fund to something more trackable (follows an index).

 

[robjr100]

RobJr, your example looks like there is a variance of about .2%. Does the number of units go up when the price of the stock drops? Taking into consideration the cash balance, it's understandable how the number of units can go down when the price of Ford's shares go up.

I don`t really know.Maybe I`ll try to track it everyday for a few weeks to get a better understanding of it`s movements.With a average daily volume over 50 million shares I imagine things might be a little complex.

 

[robjr100]

This is a few years old but the videos explain how 401k investment firms can operate.

Scroll down
401k Retirement

It`s great that they may have to be more transparent but will it really change anything?

There is a part in one of these videos where they talk about making a simple transaction very complicated so their fees can be hidden.

 

[jazz4cash]

Good argument for index funds. The expenses and fees are very transparent.

 

[Animorph]

Heck, if they've got 2% in cash essentially they won't follow the stock price exactly even if Ford pays all the fees. You might be able to see this if a big price drop affects your 401k shares slightly less than the public shares (your number of equivalent shares will increase). If the number of equivalent shares in your 401k still decreases then it is a fee problem.

I have noticed that the MF choices in DW's 401k are tracking much closer to the actual MF retail shares in 2012 than in the past. WSJ was noting that some companies/managers are cleaning up their fees before they have to disclose them. We may be seeing some benefit already.