January 2018 by James King
1/2/18 UPDATE: Well I got the company to dump Morgan Stanley as our 401K provider! I had my now $15,000 transferred out, as well as close to $450k in other funds for the other employees and principal. It just goes to show that if you educate your employer and HR people about astronomical fees (like those charged by Morgan Stanley), you can effectuate change. Of course, they jacked us all for $25 wire transfer fees, $95 transfer fees, and $50 annual maintenance fees for 2018. The moral of the story seems to be that Morgan Stanley is a good stock to own as an investor, as they screw their customers so hard that they make a fortune! ORIGINAL REVIEW: My company 401k is with this MS branch, and Ben Petersen is my "advisor." My account is new, with only 2 contributions so far. The balance is only $500. With that said, I have significant investing experience and keep the vast majority of my funds in Vanguard and Scottrade accounts. Once my account was funded a bit I emailed Ben to ask what the fees would be to purchase a few low-cost index funds (VOO, VTSMX, and QQQ), as I am a total boglehead and hate to pay fees for services that I don't want or need. Here are the highlights from his response (AND MY COMMENTS): "I'm curious if you have another previous employer's 401k that you can roll into your current plan? The reason I ask, is because you get substantially better fee treatment with a balance over $10,000. Your account currently has some $500. Without a balance increase, you'd pay $50 or so." THAT IS ABOUT A 10% COMMISSION! INSANE! "If, however, you can clear the $10k hurdle, I can charge a fee as a percentage of assets under management. For example: fee= 1.75% and you have $10k with me. You will pay quarterly fees of $43.75, and we can buy and sell at any time without factoring in the impact of commissions on the trades. This is of course hugely beneficial." 1.75% FOR HIM TO "MANAGE" MY PASSIVE INDEX FUND INVESTMENTS? INSANE! "Additionally, we're both on the same side of the table. I'm inclined to make you more because I'll make more vs. some advisors who strictly charge commissions and make money regardless of how the client's portfolio is performing." SO ARE WE NOT ON THE SAME SIDE OF THE TABLE NOW? CAN'T YOU JUST GET OUT OF MY WAY SO I CAN MANAGE MY INVESTMENTS? "Worst case, pay $50 something now and get into good investments. Definitely worthwhile." REALLY? IT DOESN'T FEEL WORTHWHILE TO PAY 10% COMMISSION "Best case, roll over a previous 401k, or otherwise clear the $10k mark, and I can charge as a percentage of assets under management. Let me know what you'd like to do and I'd be happy to help." NO THANKS. I'M GOING TO LOBBY REALLY HARD TO GIVE OUR EMPLOYEES REASONABLE FEE OPTION INVESTMENTS INSTEAD. After I responded to tell Ben that taking $10,000 out of my Vangaurd account (0.16% expense ratio) and putting it into my new MS account (1.75% annual management fee) would cost me about $7,350 over 20 years, Ben just went ahead and called me back, rather than trying to argue an easily defeated point in writing. His message on the phone call was that he had spoken to his supervisor to see if they could just allow me to self manage my account, but that due to the small amount of funds in the account that they could not really do anything for me. So, they won't get out of the way and let me manage my money because I don't have enough money. Instead, I can pick my choice of paying 10% commissions on trades twice a month, or pay 1.75% in fees a year once my account is at $10k. Long story short- These folks are total crooks,, and if you can avoid using them for your accounts you will save a lot of money over the course of your investments. I know that I am already working on getting the other participants in our plan to wake up and stop the fleecing. Morgan Stanley, our relationship will hopefully be a very short one, and as soon as I figure out
