We do not manufacture publicly sold products as do large investment firms or insurance providers. We
are independent and fully disclose fees as a registered investment advisor representative of both
Investors Capital Corporation and Machtig Advisory Services, LLC.
Corporate Plan.
Important Note:
The information contained herein is presented for educational purposes only
and may not be indicative of actual situations. Each clients situation is different. The information
presented is for concept illustration only.
Protecting Americans’ Retirement Security
A majority of American workers rely on 401(k)-style plans to finance their retirements. Most account holders report that they do not know how much Wall Street middle men are taking from their retirement accounts. Just a 1-percentage-point in excessive fees can reduce a worker’s 401(k) account balance by as much as 20 percent or more over a career.
Workers should have the right to know how much Wall Street intermediaries siphon off from their savings. Provisions included in H.R. 4213 regarding fee disclosure were based on the 401(k) Fair Disclosure and Pension Security Act, which was authored by Chairman Miller and approved by the Education and Labor Committee in 2009. Specifically, these provisions:
Require Simple and Complete Fee Disclosure to Workers- Before enrollment, workers would receive information to help them understand investment options by providing basic investment disclosures, including information on risk, return, and investment objectives
- A worker’s quarterly statement would be required to list total contributions, earnings, closing account balance, net return, and all fees subtracted from the account
- Workers would receive clear information on the name, risk level, and investment objective of each available investment option before enrolling in a 401(k) plan
- Disclosure of fees for each investment option the employee invests, expressed in dollars or as a percentage
- Requires 401(k) service providers to disclose to employers all fees assessed against the participant’s account, broken down into three categories: plan administration and record-keeping fees, investment management fees, and all other fees
- Requires the U.S. Department of Labor to review compliance with new disclosure requirements and impose penalties for violations
- Provides important, but modest adjustments to funding requirements so plan sponsors will not have to choose between making forced cash contributions, freezing plans or cutting jobs
- H.R. 4213 makes simple adjustments to the amount of time a plan can make up losses over time and relief on funding-level restrictions, among other provisions
- Funding relief provisions will save taxpayers $2 billion
Corporate Plan Case Study
Machtig 401k may reduce the overall costs of this plan almost in half – 46 percent. In total, company
and its 401(k) participants are paying $1.2 million in costs. We may be able to reduce plan costs to
$644,000. 
Not all the fees in this example were disclosed by the current provider. The long-term impact of disclosed and undisclosed costs in plan participants’ accounts is significant. When you consider existing plan costs as compared to our proposed plan, the 46 percent cost savings save each company employee a great deal over time.
As you will see in our case study, an employee working at current company for 30 years invested with the same allocation will end up with 16% fewer assets with the current plan as opposed to the proposed plan, just from the added costs. While retired, if that same employee withdraws from his 401(k) to supplement his Social Security, that 16% shortfall would force the retired employee to draw down his asset base more quickly. Based upon the analysis, after thirty years of retirement, the employee would consume most of his assets, leaving only $42,000 as compared to $621,000 in the proposed plan. The difference is in the fees.
Our proposed plan could reduce annual fund management fees from $678,000 to $217,000, cut transaction costs from $427,000 to $185,000, and would raise the combination of advisory, custodial, and plan administration fees from $85,000 (which does not reflect all of plan administrators compensation) to $242,000. The graph below shows how the savings add up:
