conversation: User (PFthrowaway1234567): "Ok PF, I need some advice. I run a smallish business (18 full time staff) and all the talk on here recently about retirement had me thinking about what we offer our employees. So I met with our retirement guy. He runs his own business and our retirement is through Oppenheimer. \n\nWe currently offer a 2% match whether the employee chooses to invest or not and its vested after 90 days. I talked to him about possibly changing this to be a little more generous, but here is where it got weird:\n\nI asked him about the expense ratio fees on our account and he got very nervous and sort of angry all of the sudden. He said that the fees depend on whether the employee chooses "A Shares" or "C Shares" and that they range from 1.35%(A) to 2.05% (C). Reading through the Vanguard info it sounds like we are getting ripped off pretty good by these people but I wanted to make sure I wasn't overreacting. \n\nWhen I asked him about Vanguard, his face got bright red and he said that I shouldn't just consider funds that aren't actively managed, because even though he couldn't offer returns like vanguard, there were other problems with them. He couldn't name any of the problems, but he said they were there. \n\nAny other small business owners out there want to weigh in? Did I miss something with this guy? Or should we consider switching retirement accounts? \n\nAlso, how would a small business owner set up vanguard accounts for my business? \n\nEDIT: Thanks to everyone who has contributed to the discussion here. Its given me a lot to think about. I recommend check out a couple things: \n\n* [The Truth About Cost](https://personal.vanguard.com/us/insights/investingtruths/investing-truth-about-cost)\n\n* [The Retirement Gamble](http://www.pbs.org/wgbh/pages/frontline/retirement-gamble/) - Thanks /u/demosthenesss"
  Self: "Amazing how many experts we have in handling retirement funds for a small/medium business.  \n\nOP:  Do you feel that you and your employees are getting something for the fees you (and they) are paying?  If he's literally handling everything about the retirement plan, an expense ratio of 1%-2% is pretty standard.  If you're (meaning anyone in your business) is still doing a significant portion of the work around the retirement plan, then I'd say you're not getting what you're paying for.\n\nTo our staff of experts:  Dealing with retirement plans for employees is not rocket science, but does take some knowledge.  This costs money, either you pay an advisor via fees, or pay an employee and most likely lower the match.  There's no free lunch.\n\nAnd to the OP, 2% from the company with a 90 day vesting period is incredibly generous.  You know your business best, but I'd really bump the vesting period up to 6 months or a year.  I haven't had a 'real' job for a while, but my recollection is most matching money from traditional companies had at least a year vesting timeframe.  "
  User (PFthrowaway1234567): "Couple things for me, the expense ratio seems to put all the burden on our staff, we should probably be taking on some of that fee structure as the employer. \n\nAlso, when you look at how these small %'s can multiply overtime, sometimes eating as much as 60% or more of someones potential saving, I don't think its worth it especially when people can't even choose an index fund within our current structure. \n\nSo, maybe we offer at least a vanguard option for people? I'm not sure right now. I just know we want to do right by people and the more I learn about this, the less comfortable I feel that we are. "
  Self: "&gt; Couple things for me, the expense ratio seems to put all the burden on our staff, we should probably be taking on some of that fee structure as the employer.\n\nWell, you're providing a 2% match, which at absolute worst case, cancels out the fee.  From the perspective I'd take, you're already covering al the potential fees.\n\n&gt; Also, when you look at how these small %'s can multiply overtime, sometimes eating as much as 60% or more of someones potential saving, I don't think its worth it especially when people can't even choose an index fund within our current structure.\n\nThere's absolutely no arguing that lower fees are better.  The "eats 60%" figure is more or the equivalent of picking the wort possible times to buy and then sell, and using it to convince people that investing will lose your money.  It sounds like our perspectives are different, as I see what you're doing as already going well above the proverbial call of duty of a small business owner.  Just providing employees with a retirement investment option is pretty good from my point of view.\n\n&gt; So, maybe we offer at least a vanguard option for people? I'm not sure right now. I just know we want to do right by people and the more I learn about this, the less comfortable I feel that we are.\n\nI'd suggest shopping around the major companies, and see what they can offer.  Give Fidelity, Vanguard, etc a call and say you're interested in exploring better options for your employees.  Narrow it down to a couple options, and discuss them with your employees.  "
  pentium4borg (pentium4borg): "&gt; The "eats 60%" figure is more or the equivalent of picking the wort possible times to buy and then sell, and using it to convince people that investing will lose your money.\n\nNo, you don't understand. These are fees that are charged regardless of buying and selling. You should read this: http://www.bogleheads.org/wiki/Effect_of_Expenses_on_a_Portfolio\n\n"
  Self: "No, I understand just fine, honest.  I was using an example in an attempt to say "that's a worst case example".  "
  