The problem with education is that this will only be yet another reason for small companies to not have 401K plans. I have enough trouble convincing startup CEOs to caugh up the cash for good plans over the cheaper junk plans as it is.

I spent the better part of 3 years working for a company that had FOUR, yet just FOUR mutual funds to choose from. I stayed in cash the whole time. The funds were terrible.

This kind of legislation is based on the “known fact” that most of us are just too stupid to know what we are doing so the government MUST make “experts” available to help us. Yes, some people do make dumb decisions with their retirement accounts. But that’s their business and it’s their money. Is it the governement’s job to rescue everyone from their poor decisions? I don’t think so. Besides, it’s not like people don’t have options to get help if they want it.

Anyway, it doesn’t matter whether the advice in these retirement plans is third party or not. Everyone is after a piece of the action.

This is reality. Consumers earn and save the money; Wall Street takes as big a chunk as it can get.

The real bonanza for these firms is having access to ALL of the assets of each plan participant. These firms will be trolling for other retirement accounts (old employer plans, traditional IRAs, Roth IRAs), education savings, brokerage accounts, and so on. They will be looking to expand their horizons by getting all of these assets under their management, whether that be through a broker or advisor relationship beyond the 401(k) account. Then they will go after related services such as insurance, etc.

Who is going to be able to resist “that nice young man on the phone” when he suggests getting together with an advisor from the firm’s retail division — especically after just “helping” someone sort out the confusing options in the 401(k) plan?

This will be a gold mine for Wall Street.

I have attended “pre-retirement” seminars at work (US Govt.) that were provided by third party, and they did a great job of providing investing advice and info. The Feds have recently stepped up efforts in this area, requiring agencies to provide this kind of training to employees. That is because most employees now are covered under the new Fed. retirement system with a 401k component and Soc. Sec., rather than the old all-inclusive defined benefit retirement system.

But I can clearly see the conflict of interest. Perhaps the bill can provide for safeguards against conflict of interest … maybe a third party could play a role in the “advising”.