New Service: 401(k) Account Management

November 6, 2017  | By Kevin Smith

If you have a 401(k) plan through your employer, chances are that it is receiving the majority of your new investments each year. In a lot of cases, it is the BIGGEST investment account in a household.

Until now, we have only been able to advise 401(k) accounts from afar, relying on our clients to implement recommendations and to notify us when the 401(k) plan changes. This has been a very time consuming and tedious process because each plan is different, the information available is often poor, people are busy, distracted by work and family-related issues, and 401(k) plan websites are terribly complicated.

As a result, we find that our recommendations are often not fully implemented, and sometimes incorrectly implemented. Small mistakes can turn into very costly results that compound over time.

Advances in technology opened the capability for us to launch a new optional service that allows us to actively manage your 401(k) account and make sure that this very important asset is well cared for.

Here are some of the common problems we see and the reasons we decided to offer this new service. Each has the potential to cause the loss of tens of thousands, if not hundreds of thousands of dollars in retirement…

• Large sums of 401(k) investments sitting in Cash and earning almost nothing.
• Investments are going into the ‘Default’ selection which may not be appropriate for the client.
• The % of each paycheck directed to the 401(k) does not reflect the % we discussed. This can lead to paying more than expected in taxes and having less than expected saved for retirement.
• The balance between Traditional Pre-Tax contributions and Roth contributions is not set up as we discussed.
• The allocation among the specific investments does not match our recommendation.
• The allocation to investments of new money is unintentionally different from the past investments in the account.
• The selection of a Target Date Fund (ex: Vanguard Target Date 2035) does not match up with the client’s specific situation. One-size-fits-all is good for ballcaps, but not investing.
• Investments have not been rebalanced in years. This can cause the client to take on too much or too little risk.

With direct access to make changes for you in your 401(k) plan, we can help you steer clear of these common and costly mistakes.

How it works:

• You link your 401(k) account to our Orion portfolio management system (we will guide you).
• This provides us with access to login to your 401(k) website, research all of your available options, implement changes for you, and actively monitor your account.
• Your 401(k) account will then be included in our performance reporting alongside the other accounts we manage for you. This will give you a more accurate view of how all of your investments are progressing.
• Our fee for this service is the same as it would be for any account we might manage for you. You will find this fee to be very competitive compared to other independent wealth managers.

Please contact us directly if you want to discuss your 401(k) account and how we can be of further help. Otherwise, we will review your 401(k) as usual during our next meeting. Again, this new service is entirely optional.

Note: this service is also available for most 403(b) and 457 accounts.