401(k) participants do not have time or expertise. They struggle to improve investment management decisions.
Some individual investors are seeking out independent investment advisors. They realize that they need help navigating their company 401(k) menu. Here are the three most crucial elements of 401(k) retirement plan investment advice.
The first element is a fiduciary level of independent investment advice. No individual investment products to sell. Instead, 401(k) participants receive investment advice specific to their investment goals. And stock and bond market tolerance for risk.
Company 401(k) retirement plan menus are a limited universe. Third-party investment advice helps a 401(k) participant to improve mutual fund selections.
The second element is the full disclosure of annual mutual fund fees and expenses. Compare mutual fund costs to the annual investment performance of the mutual fund.
Many investors own the wrong company 401(k) retirement plan mutual fund options. There is a huge gap. How much does a 401(k) mutual fund costs compared to its investment performance? Independent investment advice closes the gap.
Annual expense and investment performance disclosure are key. This information allows 401(k) participants to choose the best available mutual funds. This proven investment management strategy to preserve and grow a company 401(k).
The third element is the annual cost of the investment advice. That cost is the calculation of the annual investment advisory fees.
Company 401(k) advisory fees are a fixed percentage rate (usually around 1%). The fees are calculated on the value of the 401(k) retirement plan account at the end of the calendar quarter.
Independent investment advisors are on the same side of the table as 401(k) participants. In a rising stock market, the lowest cost and best-performing company 401(k) mutual funds stand out.
Stock market will decline. Investment advisors provides a game plan to preserve company 401(k) principal. Stock market exposure is reduced as current economic and market changes dictate.
Lower costs. Improved investment performance. Principal preservation> These are the key elements of 401(k) investment advice.
Added together, these elements are worth much more than the 1% annual advisory fee. And provide invaluable piece of mind to a 401(k) plan participant.
Ric Lager
Lager & Company, Inc.
