There is an article in today’s Wall Street Journal about a government probe into Fidelity regarding a fee charged to some mutual funds. It’s called an “infrastructure fee,” and is charged by Fidelity Investments to certain mutual fund companies (not Vanguard) to list their funds on Fidelity’s FundsNetwork.
Most funds on Fidelity’s FundsNetwork are accessed through retirement accounts such as 401(k)s and/or 403(b)s. As such, they are governed by ERISA laws which are overseen by the Department of Labor.
The article references a fee of 0.15%, which is misleading because not all companies pay 0.15% and in the case of Vanguard, no infrastructure fee is paid.
The key point that needs to be made, and was not made in the article, is that when it comes to retirement plans, each one is different. For example, GM employees may have a different fund offering than Ford’s, while both plans are administered by Fidelity. And each plan negotiates its fees privately and they are then disclosed in GM’s or Ford’s plan document.
It looks to me like the Labor Department’s probe is a non-starter.
E.J. Smith - Your Survival Guy
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