Are you happy with your 401k options?

[kv968]

Looking at the availiable funds in my 401k has me wondering if others are satisfied with the selection of funds in their 401k or 403b. I work for a Fortune 500 company and the selection is pretty minimal to say the least. Our choices are:

Company stock, 3 large-cap funds, 2 small cap funds, 2 international funds, one value fund, a blended fund, 2 bond funds and a short-term fund (MMA).

It represents a good blend of most of the asset classes but is lacking in the selection within each. With only about 2 funds to choose from in each sector, you have to do the best with what you've got.

Just wondering how many others are in the same boat or are happy with what they have.

[safari]

I am not happy at all with the selection of funds available in my 401(k). There used to be about 80 different funds available until a few years ago, when they said that many people were confused about so many different choices, so they get rid of most of the funds and created new blended funds just for our company, called Aggressive Fund, Conservative Fund, Growth Fund and Moderate Fund. There are also the company stock fund, S&P 500 Index, Small Cap Index, Small Cap Blend, Large Cap Equity, Large Cap Growth, Aggressive Growth, International Index, International Equity, Dodge & Cox Stock Fund, Capital Preservation and a couple bond funds. Total of 17 funds. There is also a thing called Fidelity Brokerage Link, which is a brokerage account that you can setup as part of your 401(k) account, and where you can invest into pretty much any funds available through Fidelity. There is a fee for setting up a Brokerage Link account. I might look into opening it next year because I am not satisfied with the current selection, even though I did earn 23% this year in my 401(k).

[LuxLiving]

Nope I'm not happy with ours but I'd surely like safari's set up even with the brokerage linking fee if it wasn't too high!

[safari]

I got curious and read up on the Brokerage Link account. Fidelity is charging a one time $30 fee to open an account and they also charge $5 each quarter. I attached a couple documents below that describe the Brokerage Link account. I am wondering if anyone on here has that account and what's your experience with it.

[kv968]

Originally Posted by LuxLiving

Nope I'm not happy with ours but I'd surely like safari's set up even with the brokerage linking fee if it wasn't too high!

I'd like that brokerage link too. Considering we have Fidelity as our 401k provider I'll have to see if I can find out if we could get that added. I'm surprised that there hasn't been any "target retirement" type funds added to our 401k. Since most of my co-workers just kind of "set-it-and-forget-it" (usually in the wrong funds for that type of investing I might add), it would be a welcome (and safe) addition.

Safari, how much is the fee to set up that account?

[kv968]

Originally Posted by safari

I got curious and read up on the Brokerage Link account. Fidelity is charging a one time $30 fee to open an account and they also charge $5 each quarter. I attached a couple documents below that describe the Brokerage Link account. I am wondering if anyone on here has that account and what's your experience with it.

The fees sound real reasonable. The only thing I would look into is in the fact sheet link you provided where it talks about referring to the "Fidelity BrokerageLink Commission Schedule for a listing of all applicable brokerage fees." I would see if there's a fee, beyond the ones you stated, to purchase a fund outside of the Fidelity family. If there isn't, great. Even if there is and that fee isn't that high then that's still a nice feature to have in a 401k.

[safari]

Originally Posted by kv968

The fees sound real reasonable. The only thing I would look into is in the fact sheet link you provided where it talks about referring to the "Fidelity BrokerageLink Commission Schedule for a listing of all applicable brokerage fees." I would see if there's a fee, beyond the ones you stated, to purchase a fund outside of the Fidelity family. If there isn't, great. Even if there is and that fee isn't that high then that's still a nice feature to have in a 401k.

There is no fee to purchase any of the Fidelity funds, and there are also over 4,500 funds available through the Funds Network, including 1,100 funds with no transaction fee. The transaction fee for other funds is $75.

[CRFSaver]

I have been lucky that I have had a good 401K program at all of the places where I work. For a 401K committee it is difficult to find a middle ground of providing enough invesment choices but not so many that it confuses people or makes it difficult for the committee to do its job.

Part of the fiduciary responsibility of a 401K committee to consistently evaluate the fund choices and make changes where necessary. If your 401k committee is doing its job your funds should consistently be better then 50-75% of the competing funds out there.

[disneysteve]

I'm not happy at all. I don't have a 401k. I've got nothing at work. Just my Roth, my wife's Roth and this past year, my wife's 403b.

[LivingAlmostLarge]

Heck no. But we're not about to NOT save for because of high fees. We'll roll it out later and yes it saves us a bunch in taxes too.

[meaghanchan]

I'd be a lot happier if I _had_ a 401(k) option...

[kv968]

Originally Posted by disneysteve

I'm not happy at all. I don't have a 401k. I've got nothing at work. Just my Roth, my wife's Roth and this past year, my wife's 403b.

Originally Posted by meaghanchan

I'd be a lot happier if I _had_ a 401(k) option...

I knew I would get these responses too. I know I shouldn't look a gifthorse in the mouth as they say, but since it's there, a couple of better funds wouldn't hurt

[kv968]

Originally Posted by CRFSaver

Part of the fiduciary responsibility of a 401K committee to consistently evaluate the fund choices and make changes where necessary. If your 401k committee is doing its job your funds should consistently be better then 50-75% of the competing funds out there.

That's the scary part. I could have picked better funds than the more recent ones they have and that's not even my job. It makes me really wonder how they go about the selection process

[Broken Arrow]

Heck no, I'm not happy with my options.

They incur a higher fees and perform lower than my litmus standard, Vanguard.

The only reason I am fully invested with them is because of employer matching.

[WellManicuredMan]

I guess I'm in the extreme minority. I'm very happy with my 401k. But then again, it's through Vanguard

I put everything into VFINX (Vanguard S&P 500 index fund), including the company match. The low fees are great.

[kv968]

Originally Posted by WellManicuredMan

I guess I'm in the extreme minority. I'm very happy with my 401k. But then again, it's through Vanguard

I put everything into VFINX (Vanguard S&P 500 index fund), including the company match. The low fees are great.

Glad to hear someone's enjoying their 401k. If it's through Vanguard it's probably kinda hard not to. Although mine's through Fidelity but I'm not exactly crowing about it. Not very many Fidelity funds in there actually.

Mr. WellManicuredMan, why don't you take advantage of some of the other great funds they offer?

[WellManicuredMan]

Originally Posted by kv968

Glad to hear someone's enjoying their 401k. If it's through Vanguard it's probably kinda hard not to. Although mine's through Fidelity but I'm not exactly crowing about it. Not very many Fidelity funds in there actually.

Mr. WellManicuredMan, why don't you take advantage of some of the other great funds they offer?

I'm only 27 and so my account is not very big yet. I will branch out into some of the other funds they offer once I build it up more. I actually just enrolled last year. But I'm very happy with it so far. I have my Roth IRA with Vanguard as well so I'll go with a different fund they offer for that. Right now I have it in their Prime money market account while I figure out what to do, but I've been thinking of the Target Retirement funds for the Roth.

[disneysteve]

Originally Posted by WellManicuredMan

I have my Roth IRA with Vanguard as well so I'll go with a different fund they offer for that. Right now I have it in their Prime money market account while I figure out what to do, but I've been thinking of the Target Retirement funds for the Roth.

I mentioned this in another thread, but it applies here too. Be sure to consider your overall asset allocation. Lump all of your accounts together to determine that. If you do a Target fund in your Roth, that should affect how you invest your 401k, and vice versa, so that you don't end up with too high a percentage in large caps (or whatever). The point of a Target fund is automatic asset allocation and automatic rebalancing over time. But you could screw that up very easily by investing other money in the wrong mix of investments.

[WellManicuredMan]

Originally Posted by disneysteve

I mentioned this in another thread, but it applies here too. Be sure to consider your overall asset allocation. Lump all of your accounts together to determine that. If you do a Target fund in your Roth, that should affect how you invest your 401k, and vice versa, so that you don't end up with too high a percentage in large caps (or whatever). The point of a Target fund is automatic asset allocation and automatic rebalancing over time. But you could screw that up very easily by investing other money in the wrong mix of investments.

Since I'm young and neither of my accounts are very large, should I just invest both of them in the Target 2045 fund right now and treat them both as one retirement account?

[meaghanchan]

Originally Posted by WellManicuredMan

Since I'm young and neither of my accounts are very large, should I just invest both of them in the Target 2045 fund right now and treat them both as one retirement account?

You could do that and that would be fine as long as you like the TR 2045 allocation;
what I would do first if I were you, though, is figure out your ideal allocation and then try to meet that in your accounts combined.

For example, if you decided your ideal allocation was this (just an example):

45% domestic stocks
35% international stocks
10% bonds
10% REITs

You would find that the 2045 fund would not meet your allocation exactly- it would be short on international stocks, and has no REITs.

Instead, let's say you had $6,000, split between $3000 in a 401(k) where (I'm presuming) you don't have to meet minimums for funds, and $3000 in an IRA (where you do)

Rather than investing the $6000 all in the Target 2045 fund, you could invest thus:

$3000 (Roth) in VTSMX (Vanguard total stock market index)
$1800 (401k) in a foreign fund (Vanguard total international or similar)
$600 (401k) in a bond fund (Vanguard total bond market or similar)
$600 (401k) in a REIT fund
and from then on contribute in a 3:1:1 ratio international stocks: bonds: REITs.

Now, if your desired allocation happens to be 90% stocks/10% bonds, with about 20% of your stocks being international, well, then, the 2045 fund is perfect- no need to overcomplicate things.