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Pensions also allocate some funds in stocks, but overall they invest conservatively. By default, most 401k funds are set to a target retirement date fund and early on those are mostly stocks. These funds also often have significant annual fees. Instead of a single large fund managed conservatively, you have many individual funds that are managed all over the place. The common advice is to invest more aggressively when you're younger, there has also been a huge push toward ETFs which are their own tangled mess and have a potential for trouble in the future, but that's a different topic.
Are the fees of target funds usually that significant? Vanguard Target Funds have an expense ratio of 0.08%. They say the average comparative fund is 0.44%, which is a bit high for my liking, but not terribel compared to other managed funds. https://investor.vanguard.com/investment-products/mutual-funds/profile/vfifx#performance-fees
Vanguard is good with fees. That 0.44% is an average so there are also funds that charge more. I think fees have come down as 1) more attention was brought to them 2) Such funds became more computerized and straightforward to manage. Still, a 0.44% average fee each year is a significant chunk of change.
I fully agree on .44% being high. I raise an eyebrow on anything over .10%. But if you follow the old reddit personal finance prime directive... You should max out your 401k inso far as you maximize the employer match. Then max out your Roth IRA where you hopefully have access to better expense ratio target funds. I have been trying out the 0% Fidelity index mutual funds as opposed to older S&P500 funds to maximize potential there.
I haven't really looked at the robo brokers though. What are fees like for betterment and the like?
Either way, I think people are shooting themselves in the foot for not investing in index funds or target funds out of moral principle. Unfortunately there isn't much other safety net for your retirement, and you're probably going to be forced to spend cash for everyday goods from major corporations. Might as well try to secure some value of those same corporations at the same time instead of letting your savings constantly depreciate over time.