401K — Investment Advice

In years past most employees found their employer had either a defined benefit or defined contribution retirement plan of which the employer directed all the investment decisions. However, with the demise of defined benefit plans beginning in the 1980’s and the rise in popularity of 401K plans, most employers have shifted the burden of investment decision making to the shoulders of their employees — but without the tools, i.e. education and without the ability of the employee to invest outside a very small universe.

A recent survey revealed that most privately-held companies install a 401K provider such as a mutual fund family based on ease of one stop shopping. The mutual fund family comes out the first year to enroll the employees and introduce their funds. What typically takes place is selling and not education. The employee finds himself in the position of being given responsibility but without the tools or an understanding of how his decisions will impact his future retirement, and as a result he finds his hands somewhat tied.

The employee quickly finds out first hand that the mutual fund family is not in the education business or the investment advice giving business, and that his employer doesn’t have the resources or incentive to offer support. He finds that there is virtually no other well informed resource for him to seek advice from because there is no economic incentive for anyone to offer their services since he is restricted to a small mutual fund universe.

There is another approach which we think offers the best of all worlds. This approach unbundles the investment education and administration from the mutual funds. We offer the education necessary to allow employees to make responsible and informed investment choices while at the same time offering a bigger investment universe and more services in the administration area. Our experience tells us that you can have more service and better results for your employees at the same or less cost than what you are paying now. How is all this possible? The answer is technology!!! You can have daily record keeping, voice response, and access to the financial universe without having to be General Motors.

Make your 401K plan a plus that not only attracts new employees but keeps current employees happy. This program should bring peace of mind, convenience and simplicity through good communications.