Your browser does not support JavaScript
 

Blog & News

Is Anyone Managing Your 401(k)?
Posted By:  Dave Wilder CFP®, CTFA, MST, AIF®, CEPA
Wednesday, May 24, 2017

Many investors have a 401(k) or 403(b) retirement plan that includes limited investment options and, as a result, fewer opportunities to diversify. In order to simplify the investment decision making for investors and to minimize the costs of administering the plan, most plans offer only 5-10 distinct investment choices. This can be frustrating since the retirement plan is often an investor’s largest asset.blog

A truly diversified plan would allow for more choices, covering broad asset classes, and would allow for investments in areas such as emerging markets, international bonds, real estate investment trusts amongst others. Research has shown, however, that if too many choices are offered in a plan, then an investor is more likely to be overwhelmed, resulting in poor decision making on the investments.    

So what can be done to make improvements?


Assuming the retirement plan is not the only investment and that significant funds are owned outside the retirement account, such as taxable brokerage and IRA accounts, then a great opportunity to coordinate investments exists.  With the use of aggregation tools and software, a diversified portfolio can be structured using the holdings outside of the plan to complement the fund choices within the plan. By downloading all account information into one location, investments can be selected appropriately across all of the accounts to make up one comprehensive investment portfolio, with the ability to capture each and every asset class desired. Plus, within the retirement plan there is no longer a necessity to settle for a poor performing fund just because it is the only fund in its investment category. Instead the best investment choice can be selected to fill each asset class, utilizing the accounts outside of the retirement plan to fill the holes within the plan.

An added benefit of this approach is that more money can be kept in an investor’s pocket by creating a more tax-efficient portfolio. Choices can be made to invest more tax-efficient holdings such as stocks (taxed at lower capital gains rates) in a taxable brokerage account and hold less tax favorable investments such as bonds (taxed at higher ordinary income tax rates) in tax deferred retirement accounts. Downloading and managing each of these accounts for the most up-to-date information is the only way to keep up with the large number of moving targets.

The technology to accomplish this degree of comprehensive portfolio management is a game changer! The cost may be relatively high for an individual but by working with a financial advisor who offers this service, better diversification can be achieved, increasing the potential for improved investment returns.

About the Author: David Wilder

David D. Wilder CFP®, CTFA, MST, AIF®, CEPA – Principal & Chief Investment Officer As Chief Investment Officer, Dave chairs Total Wealth Planning’s Investment Policy Committee and leads and manages the investment management team. He is primarily responsible for investment research, preparing and communicating Total Wealth Planning’s economic and investment outlook. As Principal, Dave is responsible for investment advice, with extensive client contact and client-relationship management. He has a Master’s in Tax Law (MST) from Villanova University and is a CFP®, a Certified Trust and Financial Advisor (CTFA), and a Certified Exit Planning Advisor (CEPA).





 
 
Subscribe To Our Blog

Blog Categories

  • Business Owners
  • Charitable Planning
  • Client Experience
  • College Planning
  • Estate Planning
  • Executive Compensation
  • Firm Updates
  • In the News
  • Investments & Market Updates
    • 07/05/2019 - Quarter 2, 2019 Market Review
    • 04/12/2019 - Quarter 1, 2019 Market Review
    • 03/12/2019 - Dimensional Fund Advisors – A
    • 01/24/2019 - 2019 Annual Limit Changes
    • 01/08/2019 - Quarter 4, 2018 Market Review
    • 12/12/2018 - Why Should You Diversify?
    • 10/29/2018 - Perspective on Recent Market V
    • 10/08/2018 - Quarter 3, 2018 Market Review
    • 08/08/2018 - E+R=O, your reactions determin
    • 07/06/2018 - Quarter 2, 2018 Market Review
    • 05/31/2018 - Bitcoin vs Gold
    • 04/09/2018 - Quarter 1, 2018 Market Review
    • 03/26/2018 - Another Tariff, Another Downtu
    • 02/07/2018 - Professor Jeremy Siegel @ Xavi
    • 01/05/2018 - Quarter 4, 2017 Market Review
    • 10/05/2017 - Quarter 3, 2017 Market Review
    • 07/14/2017 - What is Value Style investing,
    • 07/10/2017 - Quarter 2, 2017 Market Review
    • 05/24/2017 - Is Anyone Managing Your 401(k)
    • 04/05/2017 - Quarter 1, 2017 Market Review
    • 03/01/2017 - Are New Stock Market Highs a C
    • 01/05/2017 - Quarter 4, 2016 Market Review
  • Net Worth
  • Retirement Planning
  • Security & Privacy
  • Taxes
 
 

WE'VE BEEN LISTENING
FOR OVER 25 YEARS

Life brings many transitions. Find the right advisor to fit your needs on a fee-only basis, and take the first step in the journey. Total Wealth Planning's team of Certified Financial Planners® guides Cincinnati families and associates through transition.
 
Total Wealth Planning Associations
WE ARE PROUDLY ASSOCIATED WITH

CONTACT INFO


 

WHAT'S NEW AT TWP


       
CORPORATE EXECUTIVES

WEALTH-BUILDING FAMILIES

RETIREES

BUSINESS OWNERS
ECONOMIC OUTLOOK

BLOG & NEWS

VIDEO LIBRARY

   
4665 Cornell Rd. Suite 160, Cincinnati, OH 45241 4665 Cornell Rd. Suite 160, Cincinnati, OH 45241
513-984-6696 513-984-6696
info@twpteam.com info@twpteam.com
AdvisoryHQ Top in Cincy Ranking 2019
Tuesday, July 9, 2019


SEE MORE >

Follow us on Google+
Blog & News
Follow us on Twitter
Find us on Facebook
DISCLOSURES | COPYRIGHT © 2019. TOTAL WEALTH PLANNING. ALL RIGHTS RESERVED.
GET STARTED
READY TO
GET STARTED?