I’m a fan of Dan Solin’s no-nonsense writing about investment. Today he makes a strong case that employees who participate in 401(k) plans are underserved and overcharged:

The 401(k) system is a disgrace. Employers get paid off in the form of subsidies to select brokers and advisors who control the investment options in the plan. They, in turn, get paid off by fund families and insurance companies which limit employees’ investment options to costly, under-performing funds.

The fox guarding the hen house is the big winner. They have a vested interest in steering employees in the wrong direction. That’s why there is no standardized investment education.

It gets worse:

The hidden costs in these plans were starkly illustrated in recent testimony before Congress. The mutual fund industry was aptly describe as the world’s largest “skimming operation”. It views the $12 trillion in 401(k) assets as a “trough” from which it siphons off an “… excessive slice of the nation’s household, college, and retirement savings.”

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