Your Mutual-Fund and ETF Fees Might Still Vary More Than They Should

Excerpt from The Wall Street Journal, published May 5, 2019


What investors can do

Investors don’t have to simply shut up and pay up if they’re annoyed by higher fees for funds in a 401(k) account while enviously eyeing those lucky enough to have access to lower-cost alternatives. The first step is to raise your concerns with your company’s human-resources division and ask them to review the array of investment options. “I have found that many companies are willing to explore this, if they can make the case that they’re improving the plan for employees,” says Eric Walters, president of Silvercrest Wealth Planning in Denver.

Also, you’re not locked into investing in 401(k)-eligible plans to save for retirement—you can also invest in an individual retirement account. If you find you can access a particular mutual fund at a lower cost via your IRA, you can do so, and keep your 401(k) assets invested in other funds where fees aren’t as high. Rolling over your 401(k) into an IRA when you leave a job also will give you more investment flexibility, especially if you have a sizable balance.

Net of fees, which tend to be higher than mutual fund fees, Mr. Walters said his clients are earning between 6% and 7% annually from interval funds invested in small business loans.