Oct. 17, 2006 - A Better Idea at Ford (Almost)

Did someone over in the "Glass House" at Ford Motor Company catch my recent comment about their 401(k) plan?  Probably not, but the timing looks good so let's run with it anyway.

Here is what I wrote on August 2 in my post Gambling with Retirement regarding the Ford 401(k) plan:

"Off topic note to Ford execs -- It has always puzzled me that a company as large as Ford does not have access to some of Fidelity's top mutual funds.  You can and should bargain for better choices."

So imagine my delight to read in today's Wall Street Journal ($ subscription only) that Ford has decided to slim down its 401(k) by eliminating three mediocre mutual funds:  Fidelity Magellan, Domini Social Equity, Morgan Stanley Global Value Equity A.

A fourth fund that is pretty good was also inexplicably dropped: Vanguard Explorer.  This fund merits a 4-star rating from Morningstar (out of 5 possible) and has performed in the top third of its investment category for at least the past 15 years with an excellent expense ratio of 0.41%.  This is puzzling but perhaps there were other reasons it was dropped.  No matter, it's water under the bridge now. 

Dropping some mutual funds, however, is only half a solution.  The fact remains that Ford's 401(k) plan, which is administered by Fidelity, continues to offer some less than desirable mutual fund options.  Even more incredible is that despite Ford employees having socked away nearly $12 billion in this plan, the company has not been able to add some of Fidelity's better mutual funds to the menu of options.

Isn't there even one executive or honcho in HR that can get this issue resolved and give employees the best options available?  This is low hanging fruit folks.  I can't imagine that Fidelity would not balk at such a request when there's $12 billion on the line.

Removing underperforming mutual funds is a good first step but there's a lot more that can be done.  Ford needs to replace the bad with the best.  If they're going to clean house, then go all the way.

Apr. 29, 2008 - Ford 401K plan