If individual 401(k) investors want improved investment performance.
Then then they need to do this:
Find out if your 401(k) provides a “brokerage window.”
It might also be called a “self-directed option.”
Then find out if your 401(k) allows the option.
Only about a fifth of companies do now.
The reason you might not know about this 401(k) account option.
Company HR departments don’t promote it. Ever.
And neither does your 401(k) provider (Schwab, Fidelity, Empower, etc..).
There is no reason for them to take money out of their own pockets.
They want to keep you 100% invested.
On your main 401(k) mutual fund menu.
The SDBA (self-directed brokerage account) 401(k) option.
Provides access to thousands of mutual funds, ETFs and bonds.
Most with lower annual costs and the chance for improved investment performance.
Fidelity states the adoption rates of the brokerage window to be around 3%.
The SDBA adoption rate varies among companies.
There may be extra fees for the SDBA account option.
And restrictions on how much of your 401(k) account you can self-direct.
Each 401(k) company provider sets their own rules.
The sad thing is that the majority of individual 401(k) investors.
Stay with their 401(k) mutual fund menu.
Unaware how their 401(k) is being eroded by high fees.
As with all else in the investment advice world.
No guarantees the SDBA 401(k) will do better.
It’s better to KNOW than to continue to GUESS.
Want to make a change in your 401(k) now?
P.S. 401(k) SDBA option allow for lower costs and more options.
