Did you know that the investment companies might just be out to make money? Yeah I said it, they really might not have your best interest in mind. Imagine that?
On the Wall Street Journal’s website they have an article title “The 401(k) Rollover Conundrum“.
This is a great example of misinformation in the marketplace. How do investment companies make money? They do it by keeping your money as long as possible and charging you as much as possible. If, as the article states, fees are sometimes lower in a 401(k) wouldn’t the investment companies stand to make more money by retaining your rollover? Also their fear of you rolling it elsewhere is going to make them push you to keep it with them.
Imagine you go to Fidelity’s website and you are looking for advice. You figure that depending on how you answer a serious of questions you’ll get different advice. Wrong! No matter how you answer questions they say the same thing, roll your 401k into an IRA with us. Then other companies don’t even give you all the information. The do an apples to oranges comparison with someone who doesn’t like oranges. Can’t loose there can you? Or at least the company can’t loose.
You would think the agencies that are out there to protect people from this type of practice would step in. I mean where is FINRA when you need them? I’m pretty sure they frown on blanket recommendations. How do you feel about this? How do you feel knowing that Fidelity, Charles Schwab, T.Rowe Price and you can bet there are a lot more, are out there telling you to give them your money regardless of your situation? They will be the first people to help you roll that money right over to their company. Isn’t that how they make their money?
Here’s Fidelity’s ‘rollover evaluator‘ let me know if you can get any answer out of it other than “Roll your 401k into a Rollover IRA”. I tried but they keep giving me the same answer and then next step is always to contact them?
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Rolling over a 401K exposes unsuspecting investors to potential fraud. Most expect IRAs to be relatively safe, but pitfalls abound, particularly in self directed IRAs which are particularly vulnerable to fraud and outright theft with the investor not having a clue to their exposure until it is to late. If a financial adviser recommends a 401K roll over into an IRA account that he or she will manage, be extremely wary and suspicious.