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September 15, 2017 at 07:22 AM
All is not well in your best client’s 401(k) accounts
There is not enough time in the day for most individual investors to careful watch their company 401(k) retirement-plan accounts. Even if they found the time, I often wonder how many individuals would take the time to act in their best interest to improve their annual investment returns.
Who can blame individual company 401(k) retirement-plan participants?
Their quarterly statements go up every quarter. The accumulation of individual contributions and company-matching contributions combine to make the world a happy place by the end of the calendar 2017 year.
There is no need to be concerned about the lack of a logical, disciplined, and organized investment management strategy when buy-and-hope or set-it-and-forget-it has worked so well for so long.
Just Ignore It?
Individual investors are not completely to blame. Their lack of awareness is part of the “do-it-yourself” company 401(k) retirement-plan investor culture.
Target date mutual funds have taken over most company 401(k) retirement-plan account default menus. Those mutual fund choices are promoted to individual investors as investment options that don’t really need their attention.
Individual investors don’t realize that they currently suffer from a very expensive company 401(k) retirement-plan investment management problem. It is up to the investment advisor to calculate how much money the problem is costing their best clients.
Call it problem-solving or problem identification. Either phrase applies here.
Your challenge now is to learn how bring to your client’s attention the dollar cost of their company 401(k) retirement-plan investment management problem.
What to Do
Your individual company 401(k) retirement-plan client needs an independent, third-party, unbiased analysis of their investment management strategy.
Far too many individual company 401(k) retirement-plan participants have no knowledge of mutual fund asset classes. Consequently, they own the wrong mutual funds in their retirement-plan accounts. And they have far too much money currently invested in expensive and poor-performing mutual funds.
The core of my qualifications presentation to an individual company 401(k) plan participant is the identification of this issue: Poor mutual fund choices cost real dollars. The identification of these investment management problems has helped me turn interested prospects into company 401(k) investment advice clients.
I compare a client’s current company 401(k) retirement-plan mutual fund holdings to the other mutual fund options available to them. I then calculate the amount of company 401(k) retirement-plan growth that an individual company retirement-plan participant has “left on the table” over the last few years.
