Who is Looking After Your 401(k)?

Anyone who has watched the news lately has been inundated with spectacular stories regarding the fluctuations in the stock market.

Anyone who turns on their computer, watches TV or reads a newspaper cannot help but be aware of the market volatility with terms such as “Market Soars” or “Market Plunges.” Most investors do not know what to make of the volatility and are questioning their investment strategy.

Whether you are at the company water cooler, on the golf course or at a cocktail party, there is a good chance the subject will turn to the stock market and your 401(k), 403(b), 457, SEP-IRA, SIMPLE IRA or similar retirement plan. When the market has dropped, the term “201(k)” has been used half-jokingly to describe participant accounts.

The big question that arises regarding 401(k) and other retirement accounts is, “Who is actually watching the investments in your retirement plan?” For many people, their workplace retirement account is one of the largest assets they own. The irony is that very few people actively manage their account, pay attention to investment options and may just let their account sit on “autopilot” until they retire.

Many companies have a representative that may provide guidance on investment choices, but in many cases the information is very general in nature and not tailored to the individual participant. So how do you put together a plan that meets your needs and goals? Here are a few steps you may be able to take.

1. “Do-it-Yourself” — Educate yourself on your particular retirement plan, research your investment options available in the plan and make changes when necessary.
2. “Assistance from the Plan’s Representative” — Contact the designated plan representative to have them provide education regarding the features and benefits of the plan.
3. “Take Control with an In-Service Withdrawal” — If your plan allows for what is called an “In service withdrawal” you can move a percentage of your investments to a self directed Individual Retirement Account (IRA) where you have more control over your investment choices and potentially more investment options than your current plan allows. (Always consult a financial advisor or tax professional before you make any decisions regarding the implications of moving money out of the plan).
4. “Consult Your Current Advisor” — You could ask your current financial advisor to take a look at your current allocations in the plan. However, there is a good chance he or she will shy away from giving you advice on that plan because they do not want the liability if a client loses money in a plan they have no control over and receive no compensation for doing so.
5. “Use a Service to Manage Your Retirement Assets” — There are companies that specialize in taking over the responsibility for the proper allocation of your assets in the plan for a nominal fee. It involves completing a suitability questionnaire that help you set realistic retirement goals, understand the relationship between risk, return, contribution rates and time. Then using the existing investment options in your retirement plan, a diversified portfolio is constructed that is appropriate to your risk/return needs. The portfolio choices are then implemented and strategically reallocated if conditions warrant an adjustment. This service is currently only available for plans that utilizes Internet accessibility and may not suitable for everyone, so consult with your financial advisor how to go about and making sure one of your largest assets is properly managed.

Securities and advisory services offered through SII Investments, Inc. (SII), member FINRA/SIPC and a Registered Investment Advisor. SII Investments, Inc. and do not offer tax advice and are separate and unrelated companies.