I think John Oliver is a hypocrite and you are in violation of the candidate pledge…
lol no. retreat back to your cube you pleb.
I used to work at BNY too in Pittsburgh. Do we know each other?
Most certainly not. I was in wilmington in the darkest corners of the back office
I didn’t see the full segment, but the part I saw was a pretty reasonable critique.
Fee transparency is causing havok in the retirement space. It really is a complex issue. You essentially have to pay three people/entities - the advisor of record, the recordkeeper/TPA, and the expense ratio of each fund you pick.
The only thing participants can control, of course, is the fund they choose. The HR department can shop around different recordkeepers to get competitive pricing but you still have to pay them something to manage the plan. And, the advisor does actually work on these plans (participant education seminars, re-enrollment, periodic reviewing of investment line-up) and he/she doesn’t earn that much on plans to begin with.
That’s just the way the asset management business is going. Everyone wants us to work for free.
I think the point of a lot of the pushback on the industry is a large portion of people would much rather have an extreme low cost option where you just put it in a broad index for very cheap where there arent all these extra fees going to advisers etc.
I can see why some guy who just wants to throw his 401k in a stock & bond index could be annoyed at the sheer amount he has to pay in different fees. More to your general point though margins seem to have gotten squeezed in most american businesses and people have suffered over the last 20 years, its not entirely shocking that people are demanding lower fees out of the financial industry as well.
^No, it’s that people are stupid. I’m all for a 20-39 year old person putting everything in a Vanguard Total Market Index fund (though they would be missing out on International Equities) and leaving it be.
The problem is most people think they can manage their retirement savings without having a clue what a mutual fund even is. Going back to reddit and the thread on the John Oliver segment, someone that was highly upvoted actually asked why he couldn’t get hedge funds in his 401k.
People have no idea they should be saving 15% a year if they want to retire at a reasonable age. They sock 4% in their 401k, put it in what fund had the highest return over the last 10 years and forget about it.
No one guides them as they approach retirement to allocate away from stocks and into bonds. Then they wonder why they lose everything right when they’re about to retire.
What’s just beginning to happen in the advisor community, and is going to rapidly accelerate, is those advisors with a good value prop; those that can clearly explain why it’s important to let a professional guide your money to and through retirement are gaining tons of assets.
Current estimate put anywhere between 15,000-20,000 of the 55,000 advisors out of business in the next five years. Good. Those are the guys that give the industry a bad name. The rest will be able to demonstrate to their clients why you hire a professional for the most important aspect of your life - your money.
I don’t go around fixing burst pipes. I call those rich plumbers. People need to stay in their lane.
i have a hedge fund in my 401k…mind you, I work at a hedge fund. But still, it’s not the craziest thing in the world. I would advise against it, but if a 401k wants to group its participants’ monies into an investment, then why not give the option? Not the best way to lower that expense ratio though, and also considering the hedge fund industry generally underperforms the market…
P.S. The main reason I allocate my 401k into the hedge fund is twofold: 1. To have my own skin in the game; and 2. I am fee-exempt, thus having a much lower expense ratio than the Vanguard funds I could also choose to invest. Since this offering isn’t available to most, I would advise against it for most.
The biggest difference the average investor will see in results is fees and taxes. The literature supports this. Greenie is probably the most value added guy for the average schmuck to hire on this forum. Now if you’re HNW or have legacy considerations and what not, some advice might be useful. But a reasonable allocation between a low fee equity fund and a low fee fixed income fund is going to outperform for the average person.
What complete bullshit. Fear mongering at its best. Must be written by somebody that makes a living pushing product. Are these the new talking points? Many excellent 401ks(check bright scope ratings) offer almost exclusively Vanguard products and have incredibly employee friendly matching policies. And, yes, the company eats the minimal admistrative fees. P.S. - I’m not in favor of the new legislation and I still don’t think you’re a charterholder.
As far as I am concerned you’re just a dog behind a keyboard.
^What breed of dog?
I dislike engaging you because you are probably the most idiotic person on this board when it comes to financial advising. Vanguard is a record keeper too so they make their money managing the plan. There certainly are other record keepers that will offer vanguard but they’re hardly ever the only option in the plan and the plan itself cost the employer more because there’s no revenue sharing.
I doubt you understood anything I just wrote, so that was a complete waste of time.
PS - the only advisors I’ve run into that dislike the new regulations are the ones currently screwing their clients.
Dogs don’t have snouts. Dogs have muzzles.
Pigs have snouts.
Are you exempt from admin/audit fees as well? Tbh admin/audit fees on most hedge funds I have seen surpass the all in fee rate on many vanguard funds. Have seen specific structures that get GP/internal partners out of those as well but it seemed rare.
I am at a very large fund, so we have significant economies of scale. I’m only exempt from management and incentive fees, but non-investment expenses, excluding management fees, are about 5bps.
i thought it was a very good summary.
active managers have recently underperformed so why pay higher fees. Also important to note is that most active funds are closet indexers which explains the underperformance. so quite understandable that people demand lower fees.
But active management will never die. the best always survive and demand more comp. plus the more indexers, the easier it’ll be to outperform since most indexers just buy based on market cap.
That’s still interesting it’s offered at all. Is offered as profit sharing or some sort of match? I ask because your 401k has to be administered by someone (Schwab, Fidelity, Nationwide, etc.) and none of them have traditional hedge funds on their retirement platform.
In other words, you must have access to it directly from your firm, not through the plan itself.
Edit: I could be wrong, just never seen a hedge fund on a 401k platform. Everyone in the plan would have to be a qualified investor. Now, if you have a 40 Act or collective trust version of the fund, that’s possible.