Bloomberg Law reports that class action lawsuits concerning 401(k) fees have seen a five-fold increase in the past 12 months! The word is getting out that 401(k) fees skimmed from employees’ retirement savings are a severe problem, and financial advisors pocketing these 401(k) fees are feeling the heat. We think these lawsuits are a good thing and long overdue, just like the lawsuit the government is filing against Facebook for being a monopoly—long overdue!
We expect another five-fold increase in the number of 401(k) fee class action lawsuits in 2021. If the stock market takes a hit, as many financial experts are projecting, the issue of hidden fees skimmed from 401(k) plan savings will get even more exposure and scrutiny.
401(k) fees cannot be justified, and financial advisor-types who have been extracting these fees will be more and more defensive in years to come. Small business owners can always find low-cost 401(k) plans that guarantee that 401(k) fees will never be skimmed from employees’ retirement savings. A 5-minute Google search will yield several low-cost, no fee 401(k) plan providers.