Supreme Court Case On Mutual Fund Fees

[yakers]

http://www.usatoday.com/money/perfi/funds/...eme-court_N.htm

I hate to see things in black and white but this really does look, to me, like the forces of darkness against forces of light. Its not like Bogle, AARP and others are against fees, the principle is that the people that manage our money should have a fiduciary responsibility for looking out for our interests and that includes keeping fees low.

 

[Texas Proud]

http://www.usatoday.com/money/perfi/funds/...eme-court_N.htm

I hate to see things in black and white but this really does look, to me, like the forces of darkness against forces of light. Its not like Bogle, AARP and others are against fees, the principle is that the people that manage our money should have a fiduciary responsibility for looking out for our interests and that includes keeping fees low.

Link did not work for me...

 

[yakers]

Try this:

Questions about fees land mutual funds before Supreme Court - USATODAY.com

 

[Bimmerbill]

I think companies should be free to charge whatever they want. If consumers don't like paying the fees, they will shop elsewhere. I guess I'm a fan of "buyer beware."

 

[Stevewc]

Here's another news blimp on mutual fund fee's, this time its from bloomberg.
http://www.bloomberg.com/apps/news?pid=20601087&sid=alCUUNKFoo28&pos=7

Steve

 

[travelover]

I think companies should be free to charge whatever they want. If consumers don't like paying the fees, they will shop elsewhere. I guess I'm a fan of "buyer beware."

I agree as long as the actual fees are made clear to the investor. To me "made clear" would include a separate line item on every statement showing the actual amount, in dollars, that was charged in fees during that period.

 

[DblDoc]

I think companies should be free to charge whatever they want. If consumers don't like paying the fees, they will shop elsewhere. I guess I'm a fan of "buyer beware."

Agree - but only if you add "And employees are free to choose from the entire universe of MF's in their 40x plans"

DD

 

[ziggy29]

In general, I think funds should be *allowed* to charge whatever they want as long as ALL expenses and fees are fully disclosed. Having said that, it breaks down somewhat in many 401K plans because of the extremely limited fund options.

 

[samclem]

Agreed. Disclose in a very plain way, but no micromanagement of fees by the government.

One real problem is the lack of employer incentives to offer lower cost 40X options. The employer may prefer higher cost providers because they offer the employer "benefits" (who knows? More account servicing assistance, kickbacks, free golf vacations for management, etc) and the employer doesn't really pay the fees (they come out of the employees' accounts). This problem grows now that employers pick default funds for workers who don't pick an option. I'll bet some of those default funds, even if the underlying investments themselves are prudent, will have high fees. Let's at least disclose all of this to employees along with the average fees paid by all 401K plans. Better yet, as DblDoc recommends, let employees choose from the same virtually unlimited menu that they have for their IRAs. I would not be opposed to a little mandatory reading about investing and signing of agreements/hold harmless paperwork. It shouldn't be necessary, but people have not made good IRA choices (overall) and everyone is going to have to collectively pay the price for individual bad decisions. It is becoming a theme--more nannyism begets thicker and thicker diapers.

 

[Texas Proud]

Agreed. Disclose in a very plain way, but no micromanagement of fees by the government.

One real problem is the lack of employer incentives to offer lower cost 40X options. The employer may prefer higher cost providers because they offer the employer "benefits" (who knows? More account servicing assistance, kickbacks, free golf vacations for management, etc) and the employer doesn't really pay the fees (they come out of the employees' accounts). This problem grows now that employers pick default funds for workers who don't pick an option. I'll bet some of those default funds, even if the underlying investments themselves are prudent, will have high fees. Let's at least disclose all of this to employees along with the average fees paid by all 401K plans. Better yet, as DblDoc recommends, let employees choose from the same virtually unlimited menu that they have for their IRAs. I would not be opposed to a little mandatory reading about investing and signing of agreements/hold harmless paperwork. It shouldn't be necessary, but people have not made good IRA choices (overall) and everyone is going to have to collectively pay the price for individual bad decisions. It is becoming a theme--more nannyism begets thicker and thicker diapers.

What is a 40X option?


As for some of what you say... I am sure that it does happen... but our company just change to Fidelity (very small comapny, very small plan)... but the funds they recommended for default were the target retirement funds... nothing fancy... not a lot of fees..

I was surprised that we could have 'the universe' in funds... IIRC, there were over 1,000 we could choose from.... we went hog wild and chose about 90.. (we had it lower, but they made us include the funds we had from the old plan in order to move the money over)... we can add funds as we wish... so if some company does not offer a wide variety of funds, then IMO their management is bad....

 

[samclem]

What is a 40X option?

Sorry, I was just picking up DbDoc's terminology. 40X = 401K, 403B, etc.

 

[Westernskies]

Agreed. Disclose in a very plain way, but no micromanagement of fees by the government..

But, Sam, we NEED more government intervention to protect us from ourselves. What you propose is positively unAmerican. Get with the program, comrade!

 

[Texas Proud]

From what I could read.... the argument is that the board of the MF has a fiduciary obligation to the participants...

They are not doing their fiduciary responsibility when they allow some people to come in at a low cost and then charge a high cost to you and me...

And there should not be any hidden fees or kickbacks to some...


I agree that you vote with your feet... but I also don't mind someone doing the legwork to improve the system if that is what happens... if you remember, way way back when, you had to pay an upfront fee to get in most funds... it was not an option... and brokers charged $100 or more for trading stocks... because the system was made for them to make money off you....