What do you want in a 401(k) retirement plan? More money at retirement? Service that’s focused on helping you be successful? Easy to understand and manage?
Chandeleur can show you how to keep more of your money, get better investment choices and improve the real service you get. The goal is to help you have more at retirement than you otherwise would have if you hadn’t talked with us. We’d be happy to help you set up an RFP for 401(k) providers so you can see for yourself who will help your dollars go farther.
Bryan Trochessett, the owner of Chandeleur Investment Consulting, LLC describes it this way, “If you wanted to buy spring water, you’d want it from as close to the source of the spring as possible. No one would say, ‘I’d prefer my water from 1000 miles down river.’ Similarly, Chandeleur would like to help people keep as few things as possible between them and their retirement investments so the investors can keep more of what’s theirs and get access to investments they otherwise wouldn’t have. The goal is clearly to help people have more money at retirement. It’s a no-brainer.”
401(k)s for small companies and mid-sized companies are often provided by well-known insurance companies. What’s not so well-known, though, is that those companies often charge unecessary, high fees that are easily eliminated or clearly used to cover worthwhile costs LEAVING MORE MONEY IN THE INVESTOR’S ACCOUNTS TO GROW FOR RETIREMENT. Also, because hidden fees are so important to those providers, investors rarely get investment choices that may be better or lower cost. So, it’s a situation where the investor is paying more to get less. Not a winning combination.
Some of the fees to be aware of are: Administrative Maintenance Charges, Total Asset Charges, 12b-1 Fees, Sub T-A Fees, etc. Most investors don’t know what these are, what they’re for, what they cost, or if they can be reduced or eliminated.
An example comparison of what is delivered by a well-known 401(k) provider vs. the smarter way:
Suppose you had $50,000 in Fund XYZ with Expense Ratio of 1.04%, Administrative Maintenance Charge of .25%, Total Asset Charge of .72% for a total charge to the investor of (1.04%+.25%+.72%) 2.01%. That same fund could be provided in a more efficient manner with an Expense Ratio of 1.04% and an Advisory and Custody Fee of .5%, AND since that fund has a 12b-1 fee of .25% embedded that can be returned to the plan, the total charge to the investor could be (1.04%+.5%-.25%) 1.29%. That’s a .72% difference every year for that investor! Assuming that fund’s before expenses return was 7% annually and the investor had it for 15 years, the difference those fees make in that persons account is $11,979. Multiply that by more funds with similar fee issues and by more money over time, and it is clear that will make a huge difference in retirement for that investor.
Because many 401(k) providers keep those hidden fees, they have an incentive to recommend investments with higher fees. Investment choices in a 401(k) should be driven by one thing only – benefit to the investor. High, hidden fees should be a thing of the past.
Chandeleur helps you pursue excellence by providing service that’s clearly driven by what’s best for the investors, a mission to deliver investment choices that are clearly and objectively the best available, and focusing on keeping fees low.
| HOW FEES AFFECT PERFORMANCE | |
| Example | |
| Total Asset Charge: | 0.72% |
| Fund Fees: | 1.29% |
| Fees on Old Plan: | 2.01% |
| Your New ADVISORY Fees (incl. custody fee): | 0.50% |
| Your New Fund Fees: | 0.79% |
| Fees on New Plan: | 1.29% |
| Age of Investor | 55 |
| Years Until Retirement: | 15 |
| Current Account Value: | $50,000 |
| Amount Invested Yearly: | $0 |
| Amount invested Monthly: | $0 |
| Annual Returns Before Fees: | 7% |
| Annual Return Minus Their Fees: | 4.99% |
| Future Value of Your Money: | $105,527 |
| vs. | |
| Annual Return Minus Our Fees: | 5.71% |
| Future Value of Your Money: | $117,506 |
| Difference in Your Account: | $11,979 |