Arnie
Recycles dryer sheets
- Joined
- Dec 1, 2010
- Messages
- 230
Getting Going: What's 401(k) Advice Really Worth? - WSJ.com
Companies like Schwab, Fidelity, and Vanguard offering financial planner access and managed accounts with third parties like Financial Engines providing the advice. Seems to make the point by examples that most are uneducated enough to need such services and ends saying that 0.65% is in expenses is reasonable. I assume that is five to ten times what most people on this board are paying. I like the examples about how the Harvard staff members and Wharton MBA students chose a portfolio from among the four S&P 500 index funds:
Companies like Schwab, Fidelity, and Vanguard offering financial planner access and managed accounts with third parties like Financial Engines providing the advice. Seems to make the point by examples that most are uneducated enough to need such services and ends saying that 0.65% is in expenses is reasonable. I assume that is five to ten times what most people on this board are paying. I like the examples about how the Harvard staff members and Wharton MBA students chose a portfolio from among the four S&P 500 index funds:
Because the funds had the same investment strategy, the participants should have selected the one with the lowest expenses. Instead, many made their selections based on past performance—relying mostly on the return since inception, a number that varied only because the funds were started at different times. Others tried to "diversify" among the four funds, even though they all were essentially the same, except for fees. Even when provided with a cheat sheet of the annual fees and loads, only 10% of the staffers and about 20% of the MBA students selected the fund with the lowest expenses. Overall, the groups selected a portfolio with significantly higher fees than the cheapest fund, a move that would have sliced their lifetime returns.