401(k) AUM — 401(k) Assets Under Management — AKA
The vast majority of 401(k) providers selling 401(k) administration and investment services to small American businesses are surreptitiously charging plan participants 401(k) AUM fees. “AUM” stands for “Assets Under Management,” and represents your total 401(k) retirement savings. If you have saved $50,000 in your 401(k), a 1.5% AUM would equal approximately $750 per year going into the pockets of financial planners affiliated with your 401(k) provider. That could easily represent one month of your total 401(k) contribution.
Most 401(k) participants do not know they are being charged 401(k) AUM fees. According to the Investment Company Institute, a non-profit organization of all mutual fund providers in the USA, and also reported on CNBC, 401(k) AUM fees for small American companies are about 1.5% annually. Larger companies negotiate lower AUM fees, but small businesses are essentially screwed. Their only recourse is 401(k) participant-initiated litigation, finding a 401(k) plan provider with ultra-low AUM fees, or better yet, no 401(k) AUM fees. We are in the second group of 401(k) providers, with NO 401(k) AUM charges or fees. We have guaranteed no 401(k) AUM fees for the past 35+ years we’ve been in business.
If you do not like the idea of someone skimming off your 401(k) savings and pocketing your money, talk to your HR department, or employer about it. The employer, not the employees, should be the sole entity paying for the company’s 401(k).