What are the most important questions to ask a 401(k) investment advisor? I mean an investment advisor you choose to improve your 401(k) mutual fund decisions.
Most financial services provider polls state the same results. Individual investors would like investment advice. But they are not confident where to find it.
Asking the right questions goes a long way. These questions make it much easier to find the best investment advisor for your 401(k).
401(k) Investment Advisor: How to Find One
Most investment advisors have not expanded their services to include 401(k) advice. Individual investors with existing investment advice relationships may have to reach out. Even they can shop for experienced and qualified 401(k) advice.
The first step is to look for a fiduciary. That is an investment advisor is confined by law to put the client’s interest first. Fiduciary investment advisors are not paid to sell financial products to their clients. A financial advisor who earns commissions is not acting as a fiduciary.
In the case of 401(k) investment advice, there are no products to sell. Your 401(k) monies never leave your 401(k) account. The investment advice relationship is investment advice. How to improve your 401(k) mutual fund selections is the top priority.
Next, find a fiduciary investment advisor with existing 401(k) advice clients. These clients may work at your same company. They are participants in the same 401(k) plan you are. And they must make investment management decisions on the same menu of 401(k) mutual funds.
It is important that a 401(k) advisor have some experience with your company 401(k) default mutual fund menu. Does your 401(k) account allow for a SDBA (self-directed brokerage account)? If so, experienced 401(k) advice is even more critical.
Owning the best mutual funds available in your 401(k) is the main goal of 401(k) investment advice. Find out if a 401(k) investment advisor can construct a mutual fund portfolio with which you can live. In up, down, and sideways stock and bond markets.
There is no single best way to construct a 401(k) mutual fund portfolio. Make a 401(k) investment advisor you hire would invest your 401(k) money in mutual funds you understand.
Ric Lager
