Third quarter 2015 client account statements were awful. But there was an even more powerful emotional investment loss last quarter. Many individual company 401(k) retirement plan account investors lost the last few years of their stock market gains and contributions.
Individual company 401(k) retirement plan accounts are the birthplace of the “set-it-and-forget-it” and the “buy-and-hope” investment management strategy. The company retirement plan principal losses last quarter have again shaken individual investors to the core.
Now is a perfect time to ask current clients for a copy of their most recent company 401(k) retirement plan accounts statements. Many client households now include two working spouses. The combined company 401(k) retirement plan account balances can easily approach the magic $1 million mark in new assets to manage.
In recent months, all the large robo-advisors have announced tools to reach individual company 401(k) retirement plan participants. The custodian firms and brokerage firms can’t be far behind.
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I decided many years ago to aggressively defend my working client and spouse company 401(k) retirement plan assets. The advisor tools that I use recently had a huge upgrade, and I wanted to share the specifics of those tools in this column.
Since mid-August, I have increasingly relied on the most recent generation of the Portfolio Toolkit V2 from the Sherman Sheet. This new tool is the best source of company 401(k) retirement plan menu analysis and management tools that I have found to date. I use this tool in conjunction with the Custom Portfolio Reports service.
The Custom Portfolio Reports shows asset class and sector coverage offered by the client’s company 401(k). Advisors can use this tool to show a client or prospect exactly how many of their company 401(k) retirement plan mutual fund options are in the right place. It also highlights the specific mutual fund options that should be avoided.
The Portfolio Toolkit offers a number of model portfolios. The tool has a very effective dashboard interface. I prefer the STAR Min/Max model for my company 401(k) advice clients.
This model is crafted to operate even in the most restrictive company retirement plan environment. I don’t have to worry about minimum hold time or frequency of trading restrictions. The STAR Min/Max model only uses asset classes that are most likely to be found in a company 401(k) retirement plan menu.