Teaching the younger generation about money/finances?

[Ken]

That is kinda what I gathered. If an employer offers a match on contributions, that should be a no-brainer.

Exactly. The only time that may not be the case is if your employer has you in a really high-fee 401(k) plan with bad investment options because you are locked into that plan for as long as you are with that employer. If the 401(k) plan is really bad and the match is not very generous you might be better off just going it alone and even just saving in regular taxable investment accounts. Or alternatively just contributing enough to the 401(k) to trigger the match and then investing the rest elsewhere. But that is only going to be true if your 401(k) plan is really really bad.

At a lot of small Mennonite businesses that is unfortunately the case. Really really bad plans.

It is probably because they are penny-wise and pound foolish. I saw the same exact thing when my wife worked for a small clinic in Texas and got stuck with a bad plan run by Standard Insurance.

If you are a CFO or business owner in charge of creating a 401(k) plan for your business then there are a bazillion insurance and financial advisor firms clamoring for your business. They sell 401(k) plans to business owners as being turn-key and no cost to the business. They wine and dine the business owner and show them how XYZ insurance financial advisor firm will take on all the administrative cost of the plan for free at no cost to the business. So what's not to like? Of course it isn't no-cost to the employee. They make all their profit on the back-end by charging management fees, sales commissions, and so forth. And they have a 100% captive audience because the law generally prevents you from taking any money out of your 401(k) until you leave the business. And if the law doesn't do so then the plan rules (written by the financial firm) most certainly do.

What a savvy business owner who wants to do right by his employees will do is contract with a big low-fee firm like Vanguard or Fidelity or Schwab which won't be zero-cost to the business since that isn't how those firms make money. So there will be more costs and DIY work to set up the plan. But it will be vastly lower fees and costs to the employees over the lifetime of their employment with that company. And you might need a separate accountant to keep track of some of the paperwork compliance that the expensive firms will do "for free". But your employees will be much better off in the long run.

[JohnH]

Fidelity doesn’t actually charge any fees either. They just don’t have some rep wining and dining you.

[Ken]

Fidelity doesn’t actually charge any fees either. They just don’t have some rep wining and dining you.

I think the difference is that they aren't necessarily going to do all of your compliance paperwork for you so an employer using Fidelity might have more recordkeeping duties than one using one of the high-priced (to employees) companies. What does that amount to? I dunno. A couple hours of work annually for your accountant as the price for giving your employees a good retirement plan compared to a bad one?

At least that was my impression when I researched this topic and helped my wife and her co-workers lobby for a better plan.

[JohnH]

Fidelity doesn’t actually charge any fees either. They just don’t have some rep wining and dining you.

I think the difference is that they aren't necessarily going to do all of your compliance paperwork for you so an employer using Fidelity might have more recordkeeping duties than one using one of the high-priced (to employees) companies. What does that amount to? I dunno. A couple hours of work annually for your accountant as the price for giving your employees a good retirement plan compared to a bad one?

At least that was my impression when I researched this topic and helped my wife and her co-workers lobby for a better plan.

They actually have a full service plan for small employers now. Does most of the paperwork. Employees can choose self managed funds, ETFs, or may choose a Fidelity advisor.

The old school “brokers” are truly obsolete. Schwab is doing funny ads about them.

[ken_sylvania]

Fidelity doesn’t actually charge any fees either. They just don’t have some rep wining and dining you.

I think the difference is that they aren't necessarily going to do all of your compliance paperwork for you so an employer using Fidelity might have more recordkeeping duties than one using one of the high-priced (to employees) companies. What does that amount to? I dunno. A couple hours of work annually for your accountant as the price for giving your employees a good retirement plan compared to a bad one?

At least that was my impression when I researched this topic and helped my wife and her co-workers lobby for a better plan.

They actually have a full service plan for small employers now. Does most of the paperwork. Employees can choose self managed funds, ETFs, or may choose a Fidelity advisor.

The old school “brokers” are truly obsolete. Schwab is doing funny ads about them.

What's your opinion on the Fidelity full service plans?

[Ken]

I think the difference is that they aren't necessarily going to do all of your compliance paperwork for you so an employer using Fidelity might have more recordkeeping duties than one using one of the high-priced (to employees) companies. What does that amount to? I dunno. A couple hours of work annually for your accountant as the price for giving your employees a good retirement plan compared to a bad one?

At least that was my impression when I researched this topic and helped my wife and her co-workers lobby for a better plan.

They actually have a full service plan for small employers now. Does most of the paperwork. Employees can choose self managed funds, ETFs, or may choose a Fidelity advisor.

The old school “brokers” are truly obsolete. Schwab is doing funny ads about them.

What's your opinion on the Fidelity full service plans?

My wife's employer uses Fidelity. They are excellent and allow you to get ETFs which basically opens up thousands of options from other companies not just Fidelity So, for example, you can buy Vanguard ETFs through a Fidelity 401(k). She is just in simple low-cost index funds though.

Compared to Vanguard which I use, Fidelity has a busier interface with more options and a steeper learning curve to master all the options.

In terms of fees, they are very low and competitive with Vanguard and even have some zero-fee entry level funds. You can't go wrong with either Vanguard or Fidelity.

But that is from the point of view of the employee. I don't know how either of them are from the point of view of the employer.

[the-real-steve]

I've dealt with Charles Shwab many years ago.

Before I had my 401(k) at my work, I dealt with T. Rowe Price, but again, that's been some years.

[Ken]

I've dealt with Charles Shwab many years ago.

Before I had my 401(k) at my work, I dealt with T. Rowe Price, but again, that's been some years.

Schwab is one of the good ones along with Vanguard and Fidelity.

The company with the consistently worst reviews is Edward Jones. But they tend to target naïve individual investors and not companies. Finance and investing forums are full of dissatisfied people raging about their experiences with Edward Jones.

[the-real-steve]

I used to ladder CD's and treasuries (T-bills) and just roll them over every month. Truth be told, it was more hassle than what it was worth, at least for the size of them anyway. Maybe in the future I'll look at doing that again but not right now.

[Ken]

I used to ladder CD's and treasuries (T-bills) and just roll them over every month. Truth be told, it was more hassle than what it was worth, at least for the size of them anyway. Maybe in the future I'll look at doing that again but not right now.

That seems like a lot of trouble to me. I just get the lowest fee index funds in a 60/40 ratio of stocks to bonds and forget about it. That has produced average annual returns in the 10% range over the past couple decades. When we retire I might change things up but probably not.