Guest Article Three Tips to Help You Navigate the Treacherous 401k WatersBy Craig Wear, CFP™ A 401k is the primary retirement-savings vehicle for many Americans. But despite the 401k's importance, the average participant's only investment strategy is to plow money into the accounts, then do nothing. They rarely if ever make changes to the investment selections their plans offer. "I've known people who had the money in the same fund for 20 years," says Craig Wear (www.My401kInvesting.com), a Certified Financial Planner™ and founder of Q3 Advisors and Game Plan Advisors. "That strategy doesn't usually yield good returns." What makes people so passive about how they manage their accounts? "I think they are overwhelmed with all the options available to them," Wear says. "Also, regulatory rules sometimes make it difficult for their financial advisors to provide them with much help. So they pick two or three investment options that their plans offer and stick with those decisions." Getting both financial advisors and plan participants more actively involved in managing the accounts has become a pet project for Wear. He recently launched Active401k, a service that enables any advisor to position him or herself as the go-to person for protecting and growing the 401k part of a client's net worth. The system also is designed to provide 401k participants with non-discretionary investment advice to help them make more informed investment choices within their plan with guidance from a professional investment advisor. Wear says finding a way to loop financial advisors into the process is critical. "Less than 7 percent of 401k participants made changes to their investments last year," says Wear, citing a research report by the Investment Company Institute. "That indicates there's a need for financial advice." Specific financial advice varies depending on an individual's situation. But Wear says there is general advice that could apply to just about anyone with money stashed away in a 401k, including:
"Your ability to retire is highly influenced by your investment performance over time," Wear says. "That's why it's not a good idea to take a passive approach to your 401k." Craig Wear (www.My401kInvesting.com) is a Certified Financial Planner™ and founder of Q3 Advisors and Game Plan Advisors. He has more than 30 years of experience in financial planning and recently launched Active401k, which helps both financial advisors and 401k participants become more active in managing 401k accounts. ### 401khelpcenter.com is not affiliated with the author of this article nor responsible for its content. The opinions expressed here are those of the author and do not necessarily reflect the positions of 401khelpcenter.com. This article is for informational and educational purposes only and doesn't constitute legal, tax or investment advise. | ||||
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