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Downsize your 401(k) Expenses for Lower Risks & Higher Rewards

05/12/2011:

If you are a small or midsize business that has a 401(k) plan, you know that you must act in your employees’ best interest. This is part of the duties and fiduciary role you take on. Most owners want to keep the risks of offering a plan low and provide employees the best chance to receive strong performance from their 401(k) roster of funds.

Not only have low-expense funds historically outperformed higher expense funds, but also keeping administration expenses down are part of every employer's duty.

Here are a couple quick tips that can help:

  • Ensure you offer plenty of ETFs or index mutual funds in your investment line-up -- they offer low-expenses and typically have good long-term track records
  • Keep all-in expenses to employees at 1% or less (often investment management or administrative fees are partially paid for by employees, so funds with less than 0.50% in expenses are a good way to go)
  • Have a registered investment advisor (RIA) take on the investment fiduciary liability of managing your 401(k) fund roster – this lowers your risks and workload even more

Need help? We are an RIA and setup to do all of this. We think you’ll find it’s a breeze. Give us a call.

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