The stock and bond market are suddenly and increasingly more volatile. Inflation is on the rise. And new COVID-19 Delata variant has been confirmed among unvaccinated people.
Any one of these issues can cause stock and bond market concern. All three of these issues can lead to a reevaluation of your current company 401(k) retirement plan account investments.
Do you remember the mental process you went through to pick your current investment advisor? You most likely asked a family member, friend, or co-worker for names and experiences. Hold that thought. Let’s take that process to the next level.
Does your current investment advisor have the specialized investment management expertise to help you manage your default menu of company 401(k) mutual funds?
Most investment advisors are generalists. They solicit any investor who will pay them. For another perspective, let’s take a quick look at the medical profession.
Some doctors are general practitioners. The have successful careers and great patient relationships because they specialize in being a generalist; someone who can provide an initial review of the situation, and refer the patient out to the necessary specialists.
A general investment advisor practitioner works the same way. He or she provides a low-cost fee-for-service model. In most cases, this investment advisor refers the client to another higher priced and more specialized investment advisor; a mutual fund, independent, third-party money manager, or maybe even a hedge fund or private placement.
Most individual investors seek out the least invasive and lowest-priced investment advice from as few sources as possible. Investment advisors rely on that fact. They advertise and promote themselves as working with individual investors for a lower price rather than seeking the investment management specialist at a higher price.
At the end of the process, which kind of investment advisors will have the most credibility for being able to solve your company 401(k) investment management problems? The investment advisor who specializes in the precise needs of your participation in your company 401(k) retirement plan now, or a generalists investment advisor who “will be happy to look over your company 401(k) menu and let you know what to do?”
The answer seems clear: the advisor who specializes in company 401(k) retirement plan accounts is a more specialized, trustworthy, competent, expert, and capable of solving your individual 401(k) investment management problems.
Investment advisor generalist are great. I could not do a financial plan to save my life.
As your working career moves along, your company 401(k) retirement plan account becomes a larger part of your overall stock and bond market portfolio. A more targeted, more specialized principal preservation strategy is essential.
Any investment advisor offering to “look over” you company 401(k) account is no longer a differentiator. Any investment advisor can credibly claim to offer that service.
You have options. There are a growing number of specialized investment advisors who are independent of your company 401(k) sponsor (your company) and your company 401(k) provider (Fidelity, Schwab, Vanguard, etc.). These company 401(k) investment advisors are truly more focused, more specialized, and more capable than the competition.
Ric Lager
Lager & Company, Inc.
