Do you have more free time working from home? Have you been watching online the value of your 401(k) roller coaster ride over the last few weeks?
Most individual investors do not pay any attention to their company 401(k) accounts. They accept their lack of knowledge and experience managing stock market investments. So, they remain 100% invested. In one or more target date mutual funds based on the descriptions they took less than two minutes to read.
A few brave individual investors hired an independent, third-party investment advisor. With the hope to improve their 401(k) investment management decisions.
Improved investment management decisions will improve your 401(k) investment performance.
There is a common mistake when hiring an investment advisor to provide advice on your company 401(k). I have heard this complaint many times in my weekly individual investor conversations.
Most investors have existing investment advice relationships outside of their 401(k) accounts. These investment advisors are financial planners, investment advisors, brokers, agents, etc.
The individual investor provides a 401(k) account statement to the investment advisor. The non-spoken agreement is for the investment advisor to “look over” the 401(k) mutual funds. This activity ensures the outside account investment advice relationship.
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.
This “look over” investment advice reminds me of the old joke. The joke is a question. “What is the value of free advice?”
The only 401(k) investment advice to consider is from a Registered Investment Advisor (RIA).
RIAs are you held to the fiduciary standard. They legally required to act in the best interest of their clients. And they put that information in writing.
How much is your current investment advisor is paying attention to your 401(k) account? Ask him or her the following question.
“When I decide to change jobs or retire. What should I do with my company 401(k)?”
Go to google and look up “rollover IRA” or “annuity.” Your current investment advisor relationship will become clear. And you will realize their lack of attention to your 401(k) retirement plan account now.
Ric Lager
Lager & Company, Inc.
