By John Horner
The 401(k) has evolved into one of the most popular retirement accounts in the market today. This type of retirement account is provided by employers as a benefit to their employees. If your company offers a 401(k), there are definitely a lot of providers out there to choose from. In some cases, it may be to your advantage to change to a different 401(k) provider. Here are three reasons that you might want to switch to a different 401(k) company.
High fees
One of the best reasons to switch to a new 401(k) company is due to high fees. All investment companies charge some kinds of fees, as this is how they make their money. While you should come to expect some fees, you don't want to give away too much of your retirement money. Retirement plan providers can charge for a number of different things. For example, they might charge an annual fee just for having an account. Some providers charge so much each time you buy or sell shares in your account. There are all kinds of fees that you could incur, and when a company realizes that it's paying too much, it's time to consider other options.
Limited investment options
Another reason that you might want to consider switching to another 401(k) provider is because it offers very limited investment options. Many 401(k) providers only offer a few mutual funds to put your money into. If you like to have more options, this type of account simply isn't going to cut it. Some brokers offer access to stocks, bonds, mutual funds, exchange-traded funds, and other investment opportunities. If you like to have variety in your investments and your employees appreciate it as well, it is time to switch to a new provider. Some providers keep their investment options in a very limited range, and it can be problematic to investors.
Poor service
If your 401(k) provider doesn't offer good customer service, it's time to look at another one. Generally, you can tell if your 401(k) is having issues if you get a lot of complaints and comments from your employees. They are usually the best ones to tell you if something is going on. They will be contacting the plan managers when they have questions, when they want to alter their portfolio allocation, and when they need to take out 401(k) loans. If they're having a lot of problems, this can reflect negatively on you as an employer in the long run. It can also hurt your chances of reaching your own goals with your retirement plan if you participate in it. Ideally, you should have a provider that offers great customer service and is always there to help you. Your retirement isn't something to toy with, and you should find someone who cares about it as much as you do.
Your 401(k) is one of the linchpins of a successful employee benefits package. Take the time to get it right even if it means that you're going to have to do a little bit of extra paperwork. Taking a little bit of additional time will be well worth the investment that you make. Just make sure that you do your homework in choosing your next provider.
About the author: Having worked in financial services for more than 14 years, John Horner has been able to provide many useful tips and facts about finances for his readers. John has also contributed to finding the best finance schools for others who would like to get a quality education to get started with their career in finance.
Image attribution: Tax Credits' photostream; CC BY 2.0
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