I recently resigned from a full-time position where I saved for retirement via a 401(k). I'm now self-employed, but I want to make sure my retirement plan stays on track.

I spoke with an investment advisor at my bank about rolling my 401(k) account into an IRA. I want to be able to see my IRA performance along with my other bank balances and I want to be able to easily contribute to it, so using my bank seems like a good approach to me.

Right now, my money is just in a target-date fund. The bank suggested investing in mutual funds. They mentioned some funds as options, but all of them had either a 3% up-front load (paid only when money is contributed) or a smaller, annual load.

Both of these options sounded, ah, suboptimal to me. When I mentioned that, the banker explained that a load is an industry standard and that it's how mutual funds make their money.

Is he right? Is this one of the perks of an employee 401(k) - i.e. you pay no load - and I'll need to get used to paying more fees on my retirement investments? Or should I look elsewhere?


3 Answers 3


Loads may be widespread but they are absolutely not an "industry standard". Almost every major provider of mutual funds has "no load" funds.

  • Fidelity has NTF funds (No Transaction Fee)
  • The vast majority of Vanguard's funds have no purchase or redemption fees
  • Even the ING index funds have no cost to buy or sell.

I'm sure your bank wants you to buy the funds with front loads, but they can't force you to buy those funds (unless you sign such a disclaimer when you open the account).

What your bank can do is charge their own transaction fees for "third-party" funds, and those may end up being as much as or more than the funds' own loads.

I don't know which bank you have, but many banks have their own mutual funds that have no loads or other transaction fees. Essentially you can rearrange your portfolio however you want (within reason) at no cost as long as you buy and sell their funds exclusively. But of course every bank is different, and in many cases those funds will perform poorly compared to investment companies like Vanguard. Of course every mutual fund must report its performance so you can always check that yourself.

If your bank refuses to let you buy any no-load mutual funds (even ones that they run themselves) and/or wants to charge you steep transaction fees in order to discourage buying them, then may I suggest a different bank?

FYI, mutual funds generally "make their money" on management fees. If a fund advertises a load but a particularly low management fee, it may actually be worth buying compared to another fund with no load and a high management fee, if you don't expect to be buying and selling frequently. On the other hand, if a fund has a high management fee and a high load, it's probably garbage.


Do not do investing with a bank. Do investing with a low cost investment company like Vanguard, Fidelity, or Charles Schwab. The lower the expenses of the fund the better.

The additional money your account earns because of lower overhead expenses is so dramatic over the course of your investing it is mind boggling to me.

The lower the expenses, the more of your money you keep, which feeds the power of compound interest.


  • If you want to see all over your accounts in one place I would suggest Quicken, Mint, or similar software. They are well worth the cost/time to set up. Sep 6, 2012 at 0:36

If seeing all of your balances in one place matters that much to you, go to a broker that has an online bank like Schwab, ING or ETrade. If you're not comfortable with online banking, I'd suggest dropping the requirement to see everything on one statement/website.

All of the major brokers have easy ways to transfer money to and from their accounts. I have accounts at Schwab and TD Ameritrade, which both offer online transfer via ACH transactions for no fee. It's just like paying a credit card online.

Investments are a profit center for banks, you pay a higher cost and the guy who signs you up gets points towards his incentive vacation to the Caribbean.

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