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Brightscope Co-Founders Mike and Ryan Alfred on how to assess the quality of your 401(k) plan.
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Ends of Americans participate in 401 case but is anybody bothering to check if your plan for retirement.
Is a winner or loser from many different levels are the -- too high.
But the returns good enough my next two guests trying to crack the code by rating nearly every plan in the united states of action a lot of plants.
-- Alfred and Brian Alfred are the co founders of right -- that they are joining us now from San Diego.
In a Fox Business exclusive -- guys are pretty young guys what.
Gave -- the idea to say let's look at people's retirement plans and rate them.
Action is a pretty lucky break we were sitting in a bar I'm a lawyer here in San Diego drinking whiskey.
And we just -- well this is kind of crazy why is -- four trillion dollars and four K plans but yet it's virtually impossible for the average person to figure out.
Whether or not they're foreign K plan is good whether the fees are higher low whether the investment option offered -- good weather -- is higher low.
We just thought there need to be more transparency into.
These plants and to help people retire faster.
See that's exactly what I would be thinking at a bar in La -- Okay thank you can left don't you ever did outlook quite -- up here again to Brian you talked to me about.
-- how you look at these plans and how you take on such a huge endeavor that's reading all of these for one K.
It certainly is a large endeavor I think you know coming into this we didn't really know how we were gonna do we actually took a trip to Washington Washington DC and walk through the Department of Labor.
And on day one we walked out what about ten -- worth -- debt and hopefully now we process.
You know over 4000 plans worth of data -- how we employee -- we've we've gone from just three of us working on this on this project over forty people now.
Com and we publish all Bahrain's online it -- -- dot com so -- participant can.
Quickly find after planners got across a variety of metrics from an overall rating we -- the -- -- through to how.
How well those plans -- doing on fees and on how competitive the matches as well.
OK so so tell us the three most important things I want to educate our viewers the three most important things people should be looking for in their -- one K plan.
Well I think the -- biggest driver long term over forty year conquerors savings on this probably fees -- -- your path.
1% to 2%.
As opposed to the guy sitting next to -- only paying ten or fifteen basis points of index funds that's gonna make a big dent in your retirement savings over the long term so I think one of the first things you wanna look at is how much in my tank.
-- the second thing you want to determine is whether or not you're companies actually putting in money on your behalf.
Comment how much -- weather compares favorably with other companies in your industry here -- -- competitive peer group.
And then the third thing is you wanna look at make sure you have a diversified menu of investment options.
How a lot of companies offer plans without a small cap option even in 2011.
There's no small cap option in their -- and many are no international option or.
They offer real estate option but it's three times -- category average in fees so it's not necessarily an optional and -- -- sort of three things that.
We tell people look for.
Well then Brian what are the warning signs that's what to look for but then are there some flashing lights weary should say stay away from this plan.
You know there are I think Mike mentioned -- I think one of the big changes are gonna see coming in and next year.
Starting in the second quarter are all participants and 41 K plan should see their -- shop on the participants statement -- it could and believe are not up until now.
Such -- has been the case has been no requirement to disclose fees to participants which is why.
Over 80% of participants currently don't believe they're -- news.
So I think that's gonna be addicting look out for and I think it's may of next year when you start getting those statements.
Common looking at whether those fees are reasonable or not we have a toll on our website called the participant.
-- -- calculator that should help participants understand.
Whether their fees that they see in the statements.
Com whether -- high -- low relative to other plants.
And -- -- also -- and what what let me just throw this out what are say for example like the top 3401.
K plans in the United States.
So 120 tend not top 34 K final list of plans over one billion dollars.
Now we have Saudi Arabian Oil Co.
We had He I think it was Southern California Permanente Southern California Permanente is number two and then.
Number three in Southwest Airlines pilot plant.
Comments all those plans were good for various different reasons.
I'm Saudi Arabian Oil Co.
had a 100% match up to 9% which even compared your great plan like IBM sort of off the charts.
I'm and then in Southwest Airlines case you have the average pilot.
In the Southwest Airlines plan contributing close to 151000 dollars which I mean that's really a goal that we should all be -- -- how do we save more because ultimately.
None of the stuff really matters if you're not saving any money and the vast majority of Americans are not saving enough for the return through.
Pay it gentlemen if you're doing people great service that good for you I think this is terrific and and that you people come look at their own plan hopefully on right scope.
Dot com and then.
You make money because you have some some add -- where you could actually be a subscriber you pay for that correct.
-- -- Mike and Brian Alfred -- -- party with you guys talk more about limited partnerships and apartment homes -- thanks so much good lines in.
