It comes as no surprise that individual investors struggled with the investment returns in their company 401(k) retirement plan accounts in 2018.
The awareness of the need for company 401(k) investment advice is rising. That is according to a recently published T. Rowe Price Retirement Savings and Spending 4: Behaviors and Attitudes toward Financial Advice.
The survey was conducted among people who were at least 21, had not yet retired, were eligible to contribute to a 401(k) plan, and had an account balance of at least $1,000.
Saving for retirement through current workplace plans was one of the six financial objectives covered in the study. Over 71% of the individual company 401(k) retirement plan participants surveyed responded with an interest in investment advice.
The survey also revealed that 64% of the respondents across all generations rely on their 401(k) provider “a great deal” or “somewhat” for retirement-related advice.
In my experience, relying on your company 401(k) retirement plan provider for the preservation and growth of your company 401(k) retirement plan account falls into the category of “the fox watching the hen house.”
Your company 401(k) retirement plan provider populates your mutual fund option menu with as many of their own mutual funds as they can get away with. Worse, those same mutual fund managers did not one thing to warn you a few months ago of the investment risks of falling stocks and rising interest rates.
If you want investment advice on your company 401(k) retirement plan account, seek out an independent, third-party investment advisor. Specifically, find an investment advisor who receives no compensation from the mutual funds you choose to own in your 401(k) account.
All the major college sports, professional golf and tennis, and NASCAR have weekly rankings. The investment advice technology available today can provide the same ranking of annual costs and investment performance one each one of the mutual funds available on your company 401(k) mutual fund menu.
Once you know the annual costs and rankings, picking the best company 401(k) mutual funds to own is easy. You will also have the peace of mind knowing that you are receiving the best investment performance that you are paying for.
The annual fee you would for company 401(k) investment advice is a small price to have paid for the early preservation of your 2018 investment gains and annual 401(k) contributions.
Ric Lager
Lager & Company, Inc.
