401k Fees and Analysis

Attached is a research article Reh Wealth Advisors performed on 401k’s and their expenses.
410k Analysis Report Dated 9-29-2010 Click here to Access the PDF

Some items not discussed in the analysis but worth considering:

1) We did not and were unable to find good information on passive vs active managers and the effects on fees for 401ks. For example, a 50 bps fee on an active manager might be low but would be considered high for a passive index.

2) Adjusting for “high expense” asset classes. There was not adjustment for high expense asset classes such as small cap and international that usually will carry higher expense ratios. If a 401k avoids these asset classes, it will have lower fees but it will hurt investors because small cap and international funds add to risk adjusted return (even after including higher expense ratios).

3) Basically, this study provides a big picture. For our clients, we take a look at the plans in more detail and take into account #1 and #2 from above. It is also very difficult to estimate all expenses in a 401k plan.

** The information on this website is intended only for informational purposes. Investors should not act upon any of the information here. Reh Wealth Advisor clients should discuss with their advisor if any action is appropriate.