Episode 3: Rescuing Our Retirement Plans — What Your 401(k) Provider Doesn’t Want You to Know

Richard Bradley interviews Tom Zgainer and Josh Robbins of America’s Best 401k

When is the last time you went to the store and bought something without knowing the price? Never? You may have laughed at the absurdity of the question when you first read it — who would buy anything without knowing how much it costs first?

It turns out most Americans do. Over 70% of people who invest in 401(k) plans have no idea how much they pay in fees to their plan providers. That means more than half of Americans are paying to invest in a 401(k), without first knowing the price!

Why are so many Americans unaware of the fees they pay? Why don’t more people ask to review the fees, before agreeing to a plan? Sadly, most people wouldn’t even know what to ask. For over three decades, the companies offering these 401(k) plans weren’t required to provide any information to you about how much they charge you in fees. Even now, when they are legally required to do so, 401(k) providers use convoluted documents to hide their fees in plain sight. How can you ask about the cost of fees for your plan, if you didn’t know there were any fees in the first place?

In Chapter 4 of Unshakeable, Tony Robbins and Peter Mallouk break apart the complicated industry of retirement plans, and the fees they try to hide from you. More than 90 million Americans invest in 401(k) plans. For most of us, it seems like a no-brainer. Your employer takes the contribution straight from your paycheck, which helps you save on your taxes every year — plus you get to save for retirement. Even if you do pay some fees, it’s not that much money… right?

It turns out that paying even 1% more in fees than you need to can dangerously slash your nest egg. Take the example of an average American worker, making $30,000 a year and putting 5% of each paycheck into a 401(k). Over the lifetime of this investment, an extra 1% in fees will result in a loss of almost $154,000 — and that’s not even including what you would have earned, with compound interest, if that money had been invested in your plan. For each 1% in unnecessary fees, you lose potentially 10 years of retirement income. So much for the “golden years.”

Making matters worse, most well-meaning business owners are just as unaware of the fees as their employees. They may think they’re providing the best for their employees, but the convoluted nature of the industry makes it just as difficult for them to see the true cost of fees. When it comes to 401(k) plans, employers and employees are on the same side — as most business owners are also heavily invested in the company’s 401(k) for their own retirement savings.

In this episode of the Unshakeable Podcast, Tom Zgainer and Josh Robbins of America’s Best 401k speak with Richard Bradley, Editor-In-Chief of Wealth Magazine, to shatter the misconceptions in the complicated world of 401(k) plans. Advocating for yourself — and your investments — may be more important than you realized; it may make the difference between thriving or barely surviving retirement.

Legal Disclosure: Tony Robbins is a board member and Chief of Investor Psychology at Creative Planning, Inc., an SEC Registered Investment Advisor (RIA) with wealth managers serving all 50 states. Mr. Robbins receives compensation for serving in this capacity based on increased business derived by Creative Planning from his services. Accordingly, Mr. Robbins has a financial incentive to refer investors to Creative Planning.