Let us get right to the end of the story. If you answer “no” to any of these questions means you may need to think about a 401(k) advice relationship.
I prospect individual 401(k) participants every day. I gage their interest in a new 401(k) investment advice relationship. After all-time stock market highs in 2024, here is the most company reply I receive.
“Why do I need you to manage my 401(k) account. I am successful doing it myself.”
Over time, I have developed a series of three questions as part of my clear and concise response.
I ask the do-it-yourself 401(k) to provide an honest response to these three questions.
- Do you have the time to manage your own investments?
- Do you have an interest in managing your own investments?
- Do you have the knowledge to manage your own investments?
I receive one or more “no” responses if the prospect is honest. Let’s break each of these questions down. To reveal the potential benefits of 401(k) investment advice.
Do you have the TIME?
I have provided investment advice to individual investors for over 40 years. I have a good idea of the time and effort required to do so. The average investor rarely has the time required to manage their stock and bond market risk.
Do you have an INTEREST?
In general, individuals tend to excel at those activities in which they have an interest. It is not difficult to “buy-and-hold” any 401(k) mutual fund during a historic bull stock market. Or all-time low levels of interest rates.
The investment management world is ripe with artificial self-confidence now. The highflying stock markets will fall at some point. And interest rates will rise. How will 401(k) participants react do the opposite stock and bond market conditions?
Do you have the KNOWLEDGE?
Managing a 401(k) account without formal training and education is easy in a rising stock market. The same goes with falling interest rates.
I do not change the oil on my car. I do not service my air conditioner or furnace. I do not do plumbing or electrical work in my home or cabin.
Why?
My auto mechanic completely inspects my car each time I get my oil changed. My air conditioner and furnace guys do the same. My plumbing and electrical professionals point out minor issues. Before they cost me thousands of dollars.
By nature 401(k) investment management is full of human emotions. Especially for the “do-it-yourself” crowd. 401(k) participants will be challenged to remain calm and collected. During the upcoming Federal Reserve uncertainty and stock market volatility.
There is value in a potential fiduciary level 401(k) investment advice relationship.
Like your lawyer, tax advisor, or insurance professional. A 401(k) investment advisor should be a valued member of your financial services team. There is great peace of mind in knowing that you have someone in your corner keeping an eye on the critical issues.
Yes, there are a few individual investors who may be capable of managing their own money. But I have 40 years of experience making the statement that they very rare. Not everyone has the time, interest, or knowledge.
There is no need to continue to guess with your 401(k) mutual funds. All you need is a second opinion. You deserve it.
Reach out to me on LinkedIn. Or comment below.
Or sign up to receive a well-crafted 401(k) advice newsletter. Delivered to your LinkedIn news feed once a week.
Sign-up here.
