Corporate executives, doctors, lawyers, accountants, consultants, etc. all use their knowledge and experience to make smart business decisions. Many of those decisions reply on independent, third-party databases.
Whatever your level of stock and bond market investment management expertise, you can easily improve your company 401(k) investment management decisions.
Individual company 401(k) investment management decisions are no different than buying a car, shopping for new clothes, or buying laundry detergent. Depending upon the academic study you read, buying decisions are 80% emotional and 20% logical.
We all think of ourselves as very logical, fact-based decision makers. I call BS. Buying or selling; most individual company 401(k) investors are scared as hell about making the wrong 401(k) mutual fund decision.
Right now, individual company 401(k) participants are very afraid of losing their last several years of stock and bond market gains. Even more concerning is the preservation of their 401(k) contributions and company-matching contributions over the same period.
The reality is that individual 401(k) investors don’t have access to independent, third-party, fiduciary-level investment research. Financial media and self-motivated mutual fund company propaganda does not improve 401(k) investment management confidence. Never has; never will.
Lack of investment management confidence is an emotional issue. When emotions take over, poor investment performance is the result. More reason to seek out company 401(k) investment management logic.
When the stock market declines, individual company 401(k) investors can hold on to the wrong mutual funds for too long. Or even worse, they can decide to “do nothing.”
“What to buy” on your company 401(k) mutual fund menu is always an important investment management decision. What much fund, and how much, can dramatically improve or reduce long-term investment performance.
“When to sell” has been an even more important company 401(k) investment management decision over the last few weeks.
You can improve your company 401(k) investment management decisions with ongoing access to a third-party, independent, fiduciary-level investment advice. That depth and level of information is not available from your company 401(k) plan sponsor (your company) or your company 401(k) provider (Schwab, Fidelity, Vanguard, Empower, etc.).
The default menu of mutual funds in your company 401(k) can be ranked on both annual expenses and investment performance. Those rankings separate the winners and the losers on your 401(k) mutual fund menu.
Independent, third-party, fiduciary-level logic is widely available in order to improve your company 401(k) investment management decisions. Why not use it?
I have existing company 401(k) investment advice clients who would be the first to tell you they don’t know the difference between a growth mutual fund and a target-date mutual fund. And they don’t care. Because they don’t have to know the difference.
They can make informed company 401(k) mutual fund investment management decisions based on their company 401(k) mutual fund rankings.
I e-mailed an updated company 401(k) mutual fund menu ranking to a client last week. Her response was that the 401(k) mutual fund ranking list was as easy as picking her fantasy football players for last week’s NFL games. I had no idea my client was a fantasy football nerd!
She is right. No emotions necessary. Just logic to sort through the independent, third-party rankings. Just like the management decisions you make at your job multiple times each working day.
Which are the best mutual fund players for your company 401(k) mutual fund team right now?
Ric Lager
Lager & Company, Inc.
