How the Power of Incentives Is Punishing Your 401(k): Bank of America Corp (BAC)

All three of these banks house and manage their own proprietary mutual funds. As with traditional fund companies, the more dollars corralled into their funds, the greater their revenues. Bank of America, JPMorgan Chase, and Wells Fargo offer competitive fees on their 401(k) products to lure employers away from the traditional mutual fund companies. However, it won’t come without a fight from these fund shops. Impressively, Fidelity boasts a 97% client retention rate.

Foolish bottom line
Don’t blindly assume your best interests are aligned with those of your 401(k) trustee. Find out who acts as trustee on your 401(k) plan. If it’s the same investment firm that also manages all or most of the mutual fund offerings in your plan, start asking questions. Politely ask your HR department to explain the reasoning behind their choice of trustee. Consider advocating for a plan with an open platform — meaning one that includes mutual funds managed by multiple fund families. That way the conflicts of interest in your plan will be minimized, and you’ll have more choices.

The article How the Power of Incentives Is Punishing Your 401(k) originally appeared on Fool.com and is written by Nicole Seghetti.

Fool contributor Nicole Seghetti owns shares of Bank of America, JPMorgan Chase & Co (NYSE:JPM)., and Wells Fargo. You can follow her on Twitter @NicoleSeghetti. The Motley Fool recommends Aon, BlackRock, and Wells Fargo. The Motley Fool owns shares of Aon, Bank of America, JPMorgan Chase & Co., Lockheed Martin, and Wells Fargo.

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