Brokers Lure Soldiers Out of Low-Fee Federal Retirement Plan

[xchrom]

http://www.bloomberg.com/news/2014-08-12/brokers-lure-soldiers-out-of-low-fee-federal-retirement-plan.html


John LaRandeau, a retired civil engineer from Omaha, Nebraska and autocross sports car

John Turner suspected that brokers were encouraging federal workers to ditch their top-flight retirement plan. So he went under cover.

The former U.S. Labor Department economist called representatives at companies such as Bank of America Corp., Charles Schwab Corp. and Wells Fargo & Co. He identified himself as a potential client grappling with what to do with his own nest egg.

Turner thought he knew the right answer: Leave it alone. As a legacy of his government service, he kept his money in the Thrift Savings Plan, considered the gold standard of 401(k)-type programs for its rock-bottom fees. Yet all but one company told him to roll over all his money into individual retirement accounts. On average, stock funds charge almost 50 times more than the government plan.

“It’s a scandal,” said Turner, director of the Pension Policy Center in Washington. “They are trying to sell me an IRA clearly not in my interest. It’s in their interest. They want to get the fees.”

[Liberal_in_LA]

1. vultures

[badtoworse]

2. What were the net returns after accounting for fees?

This isn't rocket science. Just because the federal program has low fees doesn't automatically make it good. The funds still have to deliver good returns. If they do, that's the best of both worlds. If the federal program doesn't offer good returns, the low fees aren't worth much and you might be better off moving to a fund family with better returns even if the fees are higher.

Personally, I'm a big fan of Vanguard funds. Their fees are low by industry standards and they have some great funds. I've done very well with them over the years.

[xchrom]

3. some one always chimes in extolling the virtues of these rip offs.

exposing them must make people nervous in some way i don't get.

[Iggo]

4. What's not to get.

They even get a plug in now and then.

[Silent3]

5. So the only possibility (or at least the biggest) in your mind is that this other poster...

..."must" be "nervous" of the powerful TRVTH you have spoken, and they're engaged in some sinister or fearful attempt to lead people away from the TRVTH for either their own nefarious purposes, or out of quaking fear of the TRVTH?

Not that, oh, say, they could possibly be honestly considering the issue of fees vs. returns a reasonable thing to bring up?

[badtoworse]

6. I've done well with my 401k. I can retire whenever I want.

I'm sharing what worked for me.