Forex Articles

Since their advent in the early 1980s, 401(k) plans have come to be the primary retirement savings vehicle for millions of Americans, and traditional open-ended mutual fund and annuity companies have targeted this market as a primary of investor assets. And while mutual funds and annuities continue to be major players in the 401(k) market, many critics have cited their high fees and the low performance as key reasons why even more people haven't enrolled in these plans.

New regulations have consequently required plan custodians to provide clearer breakdowns of fees to participants on a regular basis, especially for those who invest in variable annuity contracts. And the explosion of ETFs and other liquid instruments that are now available to the public have caused many participants to clamor for similar options inside their own plans.

In the wake of all these developments, a new group of 401(k) providers has sprung up with a mission to satisfy their plan participants' financial needs with greater transparency, fewer fees and a better selection of investments. Employers who see are looking to either add a plan to their benefits package or replace their current custodian (see 5 Signs That You Have a Lousy 401(k) Plan) should take a closer look at some of these up-and-comers.

Established in San Jose, Calif., in 2012, this tiny but dynamic firm can provide employers of any size with almost any type of qualified retirement plan. One of its key advantages: an extremely low and transparent fee structure that is clearly outlined on a single page, and readily provided to all clients and prospects. The composite fees average out to about 0.5% in most cases. But you don't have to guess: America's Best also has a fee checker, which can help employers to discover the real costs of current or other prospective plans.

The company also offers a complete range of fiduciary services and goes the extra mile to educate employers about their fiduciary duty to their workers. Their investment offerings consist of low-cost, passive index funds that allow participants to "buy the market," instead of paying for active fund management that has typically lagged the indices over time.

ForUsAll was founded in 2013. Headquartered in San Francisco, it focuses exclusively on 401(k) plans for small businesses and uses digital technology to conveniently enroll employees into its turnkey platform. There are currently fewer than 50 employees, but the star staffer is Dave, a virtual advisor that participants can access at any time via computer, tablet or smartphone. Dave provides users with educational audio commentary on several of the links, tabs and pages on the site, so that new users can hear a complete explanation of the company's investment philosophy and enroll in its plan with a minimum of fuss.

The company's LinkedIn page boasts that, among its clients, the employee participation rate is over 90%, with an average savings rate of over 10%. The average total fees for employees in the plan are around 0.55%, and the company also acts as the fiduciary for the plan. It can interface with the employer's payroll in order to administrate the plan. Participants can choose from a range of no-load Vanguard funds.

This unique startup only employs a handful of humans. Its whole process is digital, paperless and automated in order to facilitate easy enrollment and plan monitoring. Captain401 embraces an investment philosophy that is based on modern portfolio theory (MPT) and its corollary tenets. Its investment choices consist of an array of low-cost index funds that cover the full range of asset classes. There is also an automated investing service available that rebalances investor portfolios on either a periodic basis or when certain market or economic conditions occur. Matrix Financial Group is the plan custodian.

Like the other companies listed here, Dream Forward offers an interactive web site for its users. The home page features an interesting video that shows a member of the company interviewing random people on Wall Street about their 401(k) plans. Most of the respondents admitted that they either didn't know who managed their plan or found the information that was provided by the plan sponsor or employer too confusing to understand.

Dream Forward tries to simplify things like fees – basically, by eliminating them. "There are absolutely no hidden fees of any kind," the website swears. Companies pay no charges, and those the individual employees pay top out at 0.75% and are less for those who work for larger businesses. Investment fund options are on the low side too, costing 0.05%-0.25% annually (the offerings consist of a range of passive index funds). A knowledge portal that will provide useful educational information about 401(k) plans and investments is coming soon.

This company focuses on the three "E"s of retirement planning: enrollment, education and engagement. Using a flexible technology that can adapt to any accounting, financial operating or client management system, iJoin has delivered impressive results since its inception in 2008. Its clients can boast of a composite 96% enrollment rate among employees into 401(k) plans, and about three-quarters of those participants increased their participation, to create an average contribution rate of almost 10%. Vice-President of Sales Scott Risseeuw feels strongly that there is a huge untapped market for his company's services: "We're really excited to help our clients bridge the gap for 401(k) investing through technology and education. iJoin combines best-of-breed software and its ease of use with streamlined efficiency to aid Americans in preparing for a lasting retirement," he notes. The company hosts twice-weekly webinars on financial topics, and makes a big point of noting how clear and easy its records are to read; in fact, they're designed to be examined on a mobile device.

Americans now have nearly $25 trillion saved in tax-deferred retirement plans. But the past few years of stock market ups and downs have brought the shortcomings of many traditional mutual fund and annuity-based retirement plans into the spotlight. There has been a morass of lawsuits against many large employers over the hidden fees, subpar performance and other drawbacks that were preventing employees from reaching their retirement goals. Even some of the major financial conglomerates such as Fidelity have been forced to shell out millions of dollars in restitution payments to their own employees for these reasons.

The five companies listed here represent a new philosophy in the retirement-plan arena that focuses much more on low costs, complete transparency and maintaining strict fiduciary responsibility than on achieving profits. They have also joined the digital revolution by providing clear, easy-to-understand educational materials and tutorials via web portals that are accessible with any type of wireless device.

Admittedly, they may not offer the widest range of services or the most aggressive of investment choices; many keep costs low by offering only index funds, which have their drawbacks (see 5 Reasons To Avoid Index Funds). Still, if you're disenchanted with the usual suspects among plan providers, it might be worth giving a fresh face a try.