A fiduciary investment advisor can have a drastic impact on your 401(k). Beginning with your awareness of annual mutual fund expenses.
And annual investment performance.
An experienced 401(k) advisor can improve your mutual fund picks. And he or she can help you avoid the worst mutual funds on your 401(k) menu.
The combination of these elements is huge. They can add tens of thousands of dollars to your career-ending 401(k) account balance.
If you are considering hiring a 401(k) advisor, think about the following key elements.
Make sure your 401(k) advisor is a fiduciary
Do not assume any financial advisor is a fiduciary. Make sure the 401(k) advisor will work in your best interest. Unaffiliated with your company 401(k) sponsor (your company). Or your company 401(k) provider (Fidelity, Schwab, Empower), etc.
A fiduciary has a legal obligation. To place client interests above those of the investment professional. And the investment professional’s firm. A fiduciary must “avoid conflicts of interest.”
Find out how the 401(k) advisor compensated
The best advisory fee payments can come from your 401(k) account. The self-directed brokerage account (SDBA) option may provide this feature.
Include a 401(k) “stop loss”
Make sure your 401(k) advisor has a principal preservation strategy.
At some point stocks will fall. And interest rates will rise. A severe double-whammy for all 401(k) account balances.
Most 401(k) investors do nothing. When the inevitable economic or stock market declines occurs.
They can lose the last several years of stock market investment gains in their 401(k). Along with their personal and company-matching contributions.
A good 401(k) advisor helps clients identify the worst mutual funds to own. The funds that can lead the popular stock market averages down. During a meaningful stock market decline.
Those mutual funds at most risk to long-term 401(k) investment management success.
Principal preservation of your 401(k) is underrated. But it can be immensely valuable.
The best mutual funds to own during a stock market decline are clear. You need an experienced 401(k) advisor to get your attention. To the specific mutual funds at the right time.
Make sure your 401(k) advisor measures investment performance
This gets back to fiduciary investment advice. Your 401(k) advisor needs to be incentivized to work on your behalf.
There is no better way to measure that incentive than in the preservation of your 401(k) principal.
Regardless of the stage in your working career. Going backwards in your 401(k) can be disastrous.
Especially when there are a logical, organized, and disciplined options.
Bottom line
Look for a 401(k) advisor who is a fiduciary. Compensated by the preservation and growth of your 401(k) account.
401(k) advice should help you improve your retirement plan investment management decisions.
It is an especially important job. So, interview them carefully. And watch them closely.
Ric Lager
Lager & Company, Inc.
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.
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