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Comment by msmith | Hacker News Reader

I've watched the Frontline piece that this article is based on. It's not quite as hysterical, but it does make the case that the high-cost actively managed funds offered by most 401k plans underperform low-cost index funds, which are not available in many 401k plans. So, you're stuck paying the high fees or losing out on the tax-advantages of the 401k.

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>high-cost actively managed funds offered by most 401k plans underperform low-cost index funds

The keywords are "offered by most 401k plans". Within the universe of funds out there, it was utterly shocking to me how bad the funds offered in your typical 401k plan were. I honestly think they just stick random kids 3 years out of college to run them.

I occasionally read about people's 401K options on the Bogleheads forum [1]. You're right, many of them are shockingly bad. Startups and small companies are especially likely to have poor options.

The solution is for employees to become better educated and demand better plans. This Frontline program does a pretty good job of getting the message out.

[1] http://www.bogleheads.org/forum/viewforum.php?f=1

I'm starting to see a striking similarity between the financial products industry and the social gaming industry. Both sectors (at least traditionally) have a large fraction of their business derived from unsophisticated, unaware customers, whether it be 401k users or social gaming "whales".

"Business" in general seems to be bimodal in making money from (a) providing value to sophisticated players, or (b) gouging the unsophisticated players (long tailing it) with a shitty product.

> "Business" in general seems to be bimodal in making money from (a) providing value to sophisticated players, or (b) gouging the unsophisticated players (long tailing it) with a shitty product.

This is much of the consumer products/services industry these days. See, e.g., Applebee's.

What does the sophisticated Applebee's customer buy?

They order from Applebee's secret menu, which is centered around obscure cuts of locally raised meats that are prepared slowly using sous-vide and finished with pan-searing.

True facts: all Chipotle pork is cooked sous vide, and (last I checked) in Chicago.

The wife and I love Chipotle. I had no idea they cooked the pork and barbacoa in Chicago.

I'm not sure what is left these days. The casual family dining places have all redone their menus for the worse. Longhorns used to have shaved Parmesan on their salads, but last time I went, it was Parmesan powder from a bottle! Applebee's went downhill majorly since the early 2000's as well after their menu redesign.

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