Overheard @: 401(k) matches are 'wasted money'

In a column last Sunday in the Austin-American Statesman, commentator Scott Burns wrote:

"Most employers and workers don't realize it, but employer matching contributions are often wasted money. In the long term, investment expenses gobble up the employer contributions. Basically, those employer contributions don't go to the employee; they go to the financial services industry as fees for managing the money."

Click here to read the entire column and the hypothetical examples Burns uses to make his point.

What's your view? Are 401(k) matches a waste? How can fees be readjusted so that all contributions -- from employers and employees -- are more valuable? Comment and let me know.

Overheard @: Supreme Court to hear case on 401(k) fees

Stay tuned plan sponsors and providers. Fresh off the news that Sen. Herb Kohl (D-Wis.) was taking up legislation on 401(k) fees, here is more legal froth on fees reported by colleagues at EBN sister publication Money Management Executive:

Last year, the U.S. Court of Appeals for the Seventh Circuit ruled that a case three investors in Oakmark Funds had brought over what they alleged to be excessive fees failed to meet the burden of proof, setting an important precedent that protected fund firms against such cases.

But now, the U.S. Supreme Court will hear the case to determine whether the case set too high a bar.

The investors said Oakmark should charge retail investors the same lower fees that it charges institutional investors, arguing that it provides the same services to both investor classes. The investors further charged that as the firm’s assets rose, Oakmark failed to pass along economies of scale. But Oakmark, and other fund companies in the past, countered that retail investors demand more services than institutional investors.