Most brokers charge a fee to manage the accounts. The ups and downs of the market generate income on 401K's. Money is bled off slowly. A 401K usually will increase in value over 20 to 40 years. During that time little pieces are taken for profit and from what I can see you never see that loss in your account because it is more or less invisible.
Hartmann is good about checking his facts and says he has NO 401K's of his own. There is a personal example just in our own situation. My wife left her job and had a pretty good 401K she had to move. She put it in an account. Soon after the crash occurred and she lost a third of its value close to the amount mentioned in my post in a matter of days. It has been 6 years and the value has never come back. Plus you get charged a fee for the management of your account as you withdraw it. Then you get taxed fully on your earnings from it. Another example, you might be drawing $1000 a month from you 401K but they withdraw $200 a month just to issue you a check. The $200 is their management fee for selling stock to give you your $1000.
The financial investment companies profit from their accounts whether a 401K goes up or down. Your financial planner gets a percentage of all the accounts they are managing every month. So if they are managing $2 or $3 million in accounts they might get 1% or 2% in management fees every month. The idea is to get as many accounts as they can. They are getting paid for their advice to you as a client.
Theoretically if a 401K increased with no losses over 30 years its value would be huge. The ups and downs of the market really hides the skimming over time. On top of that in a portfolio investment firms are flash computer trading and keeping the extra pennies their earn.
There are 1001 ways these banks can skim and scam on all these accounts. And the SEC is too weak to regulate.
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