I “jump out of the bushes” in a cold telephone call or an e-mail to a 401(k) participant. Even worse, I ask them right away about how their current 401(k) mutual funds.
I have years and years of personal experience to back up the following statement. No stretch of the imagination necessary.
It is hard for you to talk about your 401(k). After all, your current 401(k) mutual funds reflect you. In a big way.
Do any of these following questions describe you well?
How much time did you spend picking each mutual fund to own? What are the annual mutual fund fees and expenses?
How does your investment performance compare to other default 401(k) mutual funds?
It is easy to get defensive right away. Regarding any or all these relevant questions.
It is challenging to accept feedback or criticism about your 401(k) mutual fund choices. Knowing that any 401(k) mutual fund choice errors are clear. You will find the errors in your 401(k) investment management decisions.
Do you want to own the lowest cost and best performing mutual funds in your 401(k)? If so, questions like these are unavoidable. Like your annual physical. Or renewing your driver’s license. Or passport. You must get it over with.
Most people will call a plumber if they have leaky pipes. They will go to the doctor if they don’t feel well for an extended period of time. And they don’t perform their own root canal.
Most 401(k) retirement plan participants try to manage their 401(k) mutual fund choices. On their own. Another way to explain it is they guess at “what to buy?”
Let’s compound the problem. Did you know that the majority of mutual funds are lackluster at best. Depending on the study you read. I have read that between 80-85% of all mutual funds don’t outperform their stock market benchmarks.
There is a better way. A second opinion. An independent investment advisor can provide the answers you need. And the 401(k) investment management piece of mind you seek.
There are a lot of very smart and successful people. Who have little understanding of their company 401(k) mutual fund menu. They don’t have the time. Experience. Or expertise in picking mutual funds.
Your long-term 401(k) investment management decisions can improve. With an independent, third-party ranking of all your default 401(k) mutual funds.
You could be the worst 401(k) mutual fund “picker” in the world. And I have seen several bad ones. A clear and concise ranking of your default 401(k) mutual funds would be helpful.
There are two important mutual fund characteristics to rank. Annual fees and investment performance. The first time you see a ranking of your 401(k) mutual funds is always a “wow” moment.
It’s fine to own expensive 401(k) mutual funds. Make sure that their investment performance is worth more to you than how much it costs to own that fund each year.
Every 401(k) mutual fund menu has clear “winners” that are outperforming. And “losers” that you want to avoid. The only way to know the difference is from an independent, third-party database.
Also, you want a head-to-head ranking of each of your 401(k) mutual funds. Compared to all your other 401(k) mutual fund options.
You don’t need to turn your retirement plan account into an active trading account. But a periodic review would not hurt. Especially in changing economic, stock market, and interest rate environments.
I have spent the last several years trying to figure out the best way to share my 401(k) advice content. I have tried Twitter, Facebook, company web site, and LinkedIn Groups. I now realize nothing beats a well-crafted newsletter delivered to your inbox once a week.
Sign-up here.
P.S. So, what do you say? Here is my offer for a 401(k) second opinion. With no product to sell. And better 401(k) mutual fund choices possible.
Comment below. Let’s start a conversation. It is very possible a second opinion on your 401(k) mutual funds could be exactly what you need.
