🚨Trump DOL Throws 401k Investors To The Wolves🚨

I should redo this thread with a poll.

Do you have a 401k?

Pension?

They are talking about you here.

Hey, leave us out of this, OP. We're wholly transparent about our intentions, and we play fair with each other.

Last week, the U.S. Department of Labor opened the door for plan sponsors to add private equity funds to their 401(k) plans. That’s a huge win for the private equity industry since 401ks hold nearly $9 trillion in assets and a monstrous setback to American workers who invest in 401ks for retirement security.

After over three decades of egregious retail price gouging by mutual fund companies—as to which the DOL turned a blind eye—401k costs have in recent years been trending downward thanks primarily to widespread excessive-fee private class action litigation. Now, if private equity is embraced, 401k costs will skyrocket, risk will dramatically increase and transparency will plummet.

Bay at me.

Does nobody on this site have 401k?

r5, I don't have one. A lot of people left during the endless lockout and likely haven't tried to return.

The entire financial industry was created to transfer your money to them

What a scam.

This is going wipeout my grandma. She depends on this to live.

Will this affect those of us with IRAs? Specifically self-directed stock IRAs? Specifically at Credit Unions?

You’re fucked.

Pensions too. They are also on the block.

The hedgeholes are positioning themselves to make a mint off the recession while they screw over Main st.

[quote]Does nobody on this site have 401k?

Yes.

I get to chose what my 401k invests in and I'm in a low risk portfolio.

Call your credit union ASAP.

Also call your servicer but remember they get a cut of all this even if you go bust.

You really have to look out for yourself these days.

[quote]Does nobody on this site have 401k?

No. No one has a "401k." What we have is a 401(k).

Jesus Christ: they are really going to go for it:

“Bad enough that DOL—the federal agency which is supposed to protect employer-sponsored retirement benefit plans—welcomed the wolves of Wall Street to feast on workers’ hard-earned savings, but the explanation the agency provided for its reckless action is perverse.

Ramping up the fees and risks to 401k savers will “overcome the effects the coronavirus had had on our economy” and “level the playing field for ordinary investors” by allowing workers to gamble their limited retirement savings like millionaires who can afford to lose lots.”

r9 If your IRA is self-directed, why would it affect you?

Not for long, r15.

I have a 401K

Not many 401(k)-ers here.

You don’t know what funds are getting in this so even if you self direct to a fund; unless you manage your money full time . All these funds are in each other. There is overlap.

Once this is in the system, it begins the further transfer of money from working people to the wealthy fund owners.

Why else did the hedgies work so hard to get this change? It wasn’t to help workers, that’s for sure.

I also have a fee arrangement with the 401k administrator that's capped.

“They may believe gambling on private equity is a prudent strategy for recovering pandemic losses.

It isn’t.

In my experience investigating over $1 trillion pensions, struggling plans almost always migrate to riskier, costlier investments in their final hours to save themselves—a Hail Mary that, predictably, only hastens their demise. Gambling is no way to improve retirement security.

Private equity improves investor protection? Given that private equity funds lack all of the hallmarks of prudent investments this statement is especially disingenuous.

Private equity funds are the highest cost, highest risk, least transparent and most illiquid. Their assets are the hardest-to-value and the easiest-to-inflate.

I’ve investigated thousands of these funds and found rampant violations of law.”

“SEC staff examinations of private equity firms have reportedly found that more than half allocated expenses and collected fees inappropriately and, in some cases, illegally. Why would a retirement plan regulator open the door to an industry which more-often-than-not cheats? Are 401k investors clamoring for private equity and willing to take their chances?

According to EBSA Acting Assistant Secretary Jeanne Klinefelter Wilson, the new guidance “should assure defined contribution plan fiduciaries that private equity may be part of a prudent investment mix and a way to enhance retirement savings and investment security for American workers.”

In my 35 years of experience, I have never met a defined contribution plan fiduciary who is capable of fully understanding the heightened risks related to private equity investing. For plan fiduciaries who choose to dance with these wolves, prepare to be bitten.“

“dance with these wolves“ no thanks! Wouldn’t want to be anywhere near these snakes.

They make Bernie Madoff look like a boy scout.

R21 this is true of any fund unless you follow their quarterly SEC filings. I think you're getting breathless without fully understanding how investments work. My 401k is limited to a specific risk profile and my fees are locked in for another year.

The introduction of 401(k)s in the Reagan era is what spelled the demise of traditional defined benefit pension plans.

I'm always leery of threads like these. Especially when you block one poster and half the thread disappears.

Surely some group is going to challenge this in court and have it frozen until a judgment is rendered.

“The Chairman of the world’s premier securities regulator evidently is unaware a decade-plus of private equity investing by so-called “well-managed” pensions has resulted in increasingly disappointing, not to mention inflated and unauditable performance results. Warren Buffett, arguably the world’s most respected investor, recently escalated his criticism of private equity firms.

At last year’s Berkshire Hathaway BRK.B annual meeting Buffett stated, “We have seen a number of proposals from private equity firms where the returns are not calculated in a manner that I would regard as honest… If I were running a pension fund, I would be very careful about what was being offered to me.”

Chairman Clayton and DOL may think they know more about the risks and rewards of private equity investing than Buffett.

They don’t.“

Say goodbye to your 401(k)!

It was nice knowing you.

This is the author. I would say he is qualified, to say the least:

Edward Siedle

I have been called "the Sam Spade of Money Management," “the Financial Watchdog” and "the Pension Detective." Born Edward Ahmed Hamilton Siedle, I grew up in Trinidad, Venezuela, Panama, Peru, England, Uganda, Egypt and the U.S. I am a former SEC attorney, former Legal Counsel and Director of Compliance to Putnam Investments. For over 20 years, I owned securities trading and investment banking firms. My firm, Benchmark Financial Services, Inc. and I have pioneered over $1 trillion in forensic investigations of the money management industry. I am nationally recognized as an authority on pensions and investment

The fees associated with mutual funds are a big deal.

If you invest: $5,000 per year for 30 years and earn a 6% return each year and your average expense ratio is .05% You will have $415,143 in 30 years

If you invest: $5,000 per year for 30 years and earn a 6% return each year and your average expense ratio is 1.05% You will have $345,659 in 30 years

This is why I don't like financial advisors who charge an AUM. They typically charge 1% plus you pay the expense ratio of the mutual funds. 90% of all mutual fund managers can not beat the market over the long run anyway so you pay a shit ton of money for shitty returns.

Another way to look at it is the safe withdrawal rate in retirement if 4% so 1% plus the expense ratios means you are giving up more than 25% of your gross investment earnings to someone who will spend very little time in a year "managing" your investments.

It's better to use the Boglehead approach and invest in a few index funds.

I'm linking to a calculator to show the impact of expenses on investing.

Thank you r33.

I am no expert but people like my grandma are the ones at risk here. She trusts these snakes and I have a bad feeling she is going to get caught up in this change.

She would never talk money with me so I can do is cross my fingers that she doesn’t go broke. I told her the president announced some changes and to please look into it.

[quote] This is going wipeout my grandma. She depends on this to live.

She shouldn't have all her money in the market, assuming grandma's old

No one is going to force people to choose Private Equity as part of their asset allocation.

who edited this article??

do people even understand how 401(K)s work?

[quote] The introduction of 401(k)s in the Reagan era is what spelled the demise of traditional defined benefit pension plans.

And all studies show that the amount of money you end up with a 401K is rarely anywhere near what you would get with a pension. Plus, it's not anywhere near what you need to live on considering people are living longer.

There's going to be a major national realization that America's elderly have run out of money

[quote] No one is going to force people to choose Private Equity as part of their asset allocation.

Sure, no one forces you to do anything, But, people are so financially illiterate, that they depend on financial advisors to give them advice. Just like with whole life insurance, these financial advisors will get tons of kickbacks to move your money into these Private Equity-laden accounts.

I’m going to go with Warren Buffet and this expert over some troll on DL.

[quote]No one is going to force people to choose Private Equity as part of their asset allocation.

They are proposing to tuck these into the target funds. Typically 401k investors are the least savvy of investors and private equity is the most complex investments to understand. This looks like a great way to unload shitty investments (like sub prime mortgages).

My wife's fees in her 403b plan were so high that it negated the tax advantage of the 403b plan. When I explained this to the person responsible for the plan (we carpooled with her) her eyes glazed over. No matter how much I tried to simplify it she either didn't get it or didn't care. Fortunately the (gay) guy that took over the job listened and changed plans. A lot of HR people who are responsible for these plans don't have the background to understand what they are getting and what it costs the employees.

Thank you Lez

It might be a good idea to share this on all the socials.

Bump for granny and gramps

[quote]They are proposing to tuck these into the target funds.

The Forbes article says nothing about this. Source?

r45, I found a Barrons article on it.

[quote]If the investments are incorporated as planned into target-date and target-risk funds—the default investment option for many 401(k) participants—they’ll land in the portfolios of the least engaged investors.

Link doesn't work R46

They’re going in somebody’s 401(k), you can bet on it.

Privatizing Social Security is next if Trump is re-elected. Then it's all over.

[quote] They are proposing to tuck these into the target funds. Typically 401k investors are the least savvy of investors and private equity is the most complex investments to understand. This looks like a great way to unload shitty investments (like sub prime mortgages).

So r40, if you choose an index fund or like a Vanguard fund, are you saying it will now contain private equity funds?

They’re going to shove them anywhere they can.

Get real already.

Sorry, r46. Try this link.

r50, no, it sounds like they are planning to put them into target funds. Pure index funds will not have them.

If they put them in target date funds, and the expense ratios go up, people will see that.

I don't think that many people are even aware there are expense ratios, r54.

“If the investments are incorporated as planned into target-date and target-risk funds—the default investment option for many 401(k) participants—they’ll land in the portfolios of the least engaged investors.

“You’re talking about the investments most likely to be used by the least sophisticated, least wealthy of investors,” Roper says. She advises employers to keep it “plain vanilla” when modeling their plans’ investments, particularly default options.“

^these people are f’d.

Anything for a buck.

Bridgewater’s Assets Shrank 15% in 2 Months. What Happened to Ray Dalio’s Hedge-Fund Firm.

I’m not sure how many deplorables have 401ks but I’m sure they are tired of walking over the boxes at Dollar General.

If they only knew how to connect the dots.

Call your grandparents.

They doN’t care about anybody but their own family.

This is going to affect 401Ks and IRAs, self directed or otherwise.

Secretive hedge fund investments means another 2008 is underfoot.

American banks are currently BROKE. Whether you believe it or not is your thing, however, they are currently operating below normal. Your retirement funds will now be invested in what amounts to paper kindling next to a down power line , buzzing about, in December, during the Santa Ana winds.

This was bound to happen. I’m not surprised and have heard plenty of investment experts predict via podcasts, this was going to happen even before Covid-19, because Trump was already tanking the economy. Most investment bankers are conservatives who vote republican or independent, and discuss money, and policy, not politics. I am throwing that in here because people who are hardcore FOX fans are either in denial or just haven’t a clue what’s up.

Unless you micromanage your cash, you’re fucked. Go into a fixed or CM and consider voting for Biden.

This happened as quickly as it did because of the willful denial and mismanagement of CoVid-19. Now we are in a slow free fall and the MSM is NOT discussing as much or even as urgently as they should, while some are completely not disclosing it on orders from the WH.

Sadly hedge funds own all the media now so this has to be shared through people looking out for one another.

R65, true.

However, analyzing the markets will get you pretty much the to same conclusion, minus a few details, perhaps.

The rebound the market’s or specifically, that Wall Street has been experiencing, these “bounces”, are inexplicable, being the current situation the economy is in.

It’s manufactured and it’s being done with the money belonging to the middle class.

People really should invest some time listening to podcasts about the current market. It would help them understand why this is going on and why it’s true.

The alarm bells were sounding off last August through December. Because of CoVid-19, the situation has been amplified.

Unfortunately, Trump has no clue what he’s doing, and just takes his lead from whom ever, without asking any questions or just a few, and then drops it, and lets whom ever, do what ever they want, with no resistance or even care, about what’s going on. or how this will affect his base.

R66 what podcasts do you recommend ?

R66. Could you please explain:

1. how the inevitable market correction/bear is connected to this hedge fund thing? Anyone with a minimum knowledge of the market knows this bull run has been overdue for a correction/bear.

2. How hedge funds being in people's 401ks is going to catalyze the correction/recession?

3. Unless you are invested in target date funds (and assuming those funds start including hedge funds) or specifically allocate to hedge fund options in your 401K.....why we should care? e.g. if one chooses low cost index funds in broad sectors (e.g. 70% total market equity index fund, 30% broad based bond index fund), this shouldn't have any impact, no?

They are stuffing these in the default settings.

[quote]They are stuffing these in the default settings.

there is no indication of that, just speculation. Care to provide source or elaborate?

R71 read the thread you stupid moron.

“—the default investment option for many 401(k) participants”

R69 can you not just scroll up you lazy git.

[quote] IF the investments are incorporated as planned into target-date and target-risk funds—the default investment option for many 401(k) participants—they’ll land in the portfolios of the least engaged investors.

Do you not understand the meaning of the word "IF" moron at R72?

“as planned”

So what can retail investors do to protect themselves against this? Is there no way of putting the pressure on by agreeing to pull your investment at the same time as the other investors in you pension plan? A kind of "if you try to screw us we'll screw you?"

Don’t forget these other scandals.

Those OP photo's wolves need to start brushing more regularly with Crest.

Crest is probably owned by a blood-sucking hedge fund.