While working from home, you have likely been watching online how the value of your company 401(k) retirement plan account roller coaster ride over the last few weeks.
Most individual investors don’t pay any attention to their company 401(k) accounts. They realize their lack the knowledge and experience with stock and bond 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 have thought about hiring an independent, third-party investment advisor to improve their company 401(k) retirement plan account investment management decisions.
It makes sense if you improve your investment management decisions, your annual company 401(k) investment performance would likely improve.
If you do decide to hire an investment advisor to provide advice on your company 401(k) account, don’t make the mistake I hear about many times in my weekly individual investor conversations.
Many individual investors have existing investment advice relationships with investment advisors outside of their company 401(k) accounts. These investment advisors are financial planners, investment advisors, brokers, agents, etc.
In order to save money on investment advisory fees, these individual investors provide a copy of a recent company 401(k) retirement plan account statement to their existing investment advisor. The non-spoken agreement is that this investment advisor will “look over” the company 401(k) mutual funds once-in-a-while in order to maintain the outside account investment advice relationship.
Question: 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 relationship reminds me of the old joke, in the form of the following question; “What is the value of free advice?”
The only investment advice you should ever consider in order to improve your company 401(k) retirement plan account investment management decisions should come from a Registered Investment Advisor (RIA).
RIA’s are you legally held to the fiduciary standard. They are required by law to act in the best interest of their clients at all times. And they put that information in writing.
If you want to find out how much your current investment advisor is really paying attention to your company 401(k) retirement plan account, ask him or her the following question.
“If I decide to change jobs or retire, what do you think I should do with my company 401(k) retirement plan account at my current company?”
Go to google and look up “rollover IRA” or “annuity.” Then you will know exactly what kind of investment advice relationship you have with your current investment advisor. And more importantly, how much time they are really paying attention to your company 401(k) retirement plan account now.
Ric Lager
Lager & Company, Inc.
