The low fee mantra of Saint Jack continues to find its way into the mainstream, but that progress is not fast enough for Forbes
contributor John Wasik. The cost of fees in 401(k) plans and 529 college savings vehicles are "outrageously" high in Wasick's opinion but ETF commissions are getting lower and lower due to increased price competition.
Fees pile up and ravage mutual funds like zombies, with the highest rates on actively managed funds in retirement plans.
Wasick advocates for legislation similar to what has been introduced in Australia and the Netherlands where commissions on mutual funds dare being banned. He takes down the mutual fund "colossus" by arguing that commissions, back-end loads, revenue sharing and 12(b)1s are not appropriate incentives; they are greed-driven as expenses have fallen over time:
While costs are slowly dropping according to the Investment Company Institute – stock funds averaged 0.77 percent annually in expenses last year vs. 0.99 percent in 1990 — these fees are still far out of line with what institutions are paying (think 0.06 percent or less).
He argues that just eliminating commissions won't solve the issue of overcharging investors. Wasick said investors should get at least 0.10 percent a year on all funds.
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