Individual investors are reminded every day about the differences in their lives and the lives of the rich and famous. Private jets, mega-yachts, and private islands abound for those who can afford them. All these perks are on the list of things that the majority of people will never experience.
Not that long ago the investment world was segregated in the same way. Only wealthy individuals and families could access the best private wealth managers and hedge funds.
Those days are now long gone. Exchange trade funds have leveled the playing field by taking away many of the investment privileges that once came with huge amounts of investment wealth.
Today, an individual company 401(k) retirement plan participant with $1000 has the access to the same investment management strategy as a wealthy individual or family with $100 million.
Exchanged traded funds invested in company 401(k) retirement plan account can offer the same access to some of the best stock and bond investment management strategies available.
Many of the best investment management minds in the world now have an exchanged traded fund product. These managed ETF investments can take the guesswork out of a company 401(k) retirement plan asset allocation plan.
ETF’s also provide entry in to the all-important low levels of investment advisory fees. Individual company 401(k) retirement plan investments can now have annual investment fees equal to the largest pools of money in the world.
Mutual funds are the old way to invest your company 401(K) retirement plan account. ETF’s can offer the opportunity for better investment performance and lower investment fees.
The key component to access great investment managers and lower investment fees is the SDBA (self-directed brokerage option) on a company 401(k) retirement plan menu.
Many company 401(k) retirement plan providers carefully hide the availability of the SDBA account option. Your company 401(k) retirement plan provider makes money on the “kick back” from the default mutual funds on the main company 401(k) retirement plan menu. Blame this sales tactic on your company 401(k) retirement plan provider.
In most cases, self-directed brokerage accounts are better for individual company 401(k) retirement plan participants. Why should your company 401(k) retirement plan provider promote them at their own expense?
The SDBA names to look for are Fidelity BrokerageLink and Schwab PCRA (Personal Choice Retirement Account). Log into your company 401(k) retirement plan account online and snoop around. If you can’t find this information, call someone in Human Resources or Employee Benefits.
Access to better investment managers and lower annual expenses are good strategies to improve your company 401(k) retirement plan investment performance in the years to come.
The self-directed brokerage account option is the key. Go look for yours today.
Ric Lager
Lager & Company, Inc.
