You have likely watched the value of your 401(k) account roller coaster ride over the last few weeks.
Most individual investors don’t pay any attention to their 401(k) accounts. They realize their lack the knowledge and experience. With stock and bond market investments. So, they remain 100% invested in one or more target date mutual funds.
Guessing at “what to buy.” Full participation in the “buy-and-hope” 401(k) investment management strategy.
A few brave individual investors have hired a fiduciary, third-party investment advisor. For an independent analysis of their complete default 401(k) mutual fund options. To improve their future 401(k) investment management decisions.
If you do decide to hire an investment advisor to provide advice on your 401(k) account, don’t make the same mistakes. The mistakes I hear about in my weekly individual investor conversations.
Many 401(k) participants individual investors have existing investment advice relationships. With investment advisors outside of their company 401(k) accounts. These investment advisors are financial planners, investment advisors, brokers, agents, etc.
To save money on a 401(k) advisory fee, these investors “leverage” their existing advisors. They send them a copy of a recent 401(k) retirement plan account statement.
The non-spoken agreement is that the investment advisor will “look over” the 401(k) mutual funds. “Once-in-a-while.” To maintain the outside account investment advice relationship.
Question. “How much time during your working day do you spend monitoring daily information for free?”
Me neither. Even the pro-bono work done each year by my lawyer clients is a small fraction of how they spend their time. For only a few hours each year.
This “look over” investment advice relationship reminds me of the old joke. In the form of the following question: “What is the value of free advice?”
The only 401(k) advice to consider should come from a fiduciary investment advisor. One not affiliated with your company 401(k) sponsor (your company). Or your company 401(k) provider (Schwab, Fidelity, Empower, etc.).
A Registered Investment Advisor (RIA) would work best. Compensated by the amount of assets in your 401(k) account.
RIAs are held to the fiduciary standard. They are required by law to act in the best interest of their clients at all times. And they put that information in writing.
Do you want to find out how much your current investment advisor is paying attention to your 401(k)? Then ask him or her the following question.
“If I decide to change jobs or retire, what do you think I should do with my 401(k) account at my current company?”
If the response is “rollover IRA” or “annuity,” the red flag should go up. That response tells you all you need to know. To confirm the investment advice relationship you have with your current investment advisor.
And even more important. How much time they are paying attention to your 401(k) retirement plan account now. Versus waiting for the big pay day later.
Ric Lager
Lager & Company, Inc.
There is no need to continue to guess with your 401(k) mutual funds. All you need is a second opinion. You deserve it.
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