The demands of your work and personal life are many. You spend your working hours focused on increasing your expertise in the field of work you enjoy. When it comes to other fields, such as retirement planning you don’t have the tools or time to gain the knowledge to be an expert.
We believe today’s 401(k) approach is faulted. In most cases it focuses on investing and not saving. Most experts say that individuals need to save between 10 to 15% of their income. This wide range suggests the need for personalized retirement planning. Let’s assume that you need to save 10% given you’re able to achieve an average of 7% from your investments or save 15% if you averaged 5%.
This knowledge allows you to make an informed decision on your trade-off between taking on more risk with your investments and saving more. You have other goals that demand your attention- a child’s education, or private school, home, a boat or other personal financial goals. This demand for saving may necessitate that you take more market risk with your investments for retirement.
Approach to a Quality 401(k)
|Old approach||New approach|
|Save whatever you choose||How much retirement income do you want|
|Invest in what your plan allows||How much would you be okay with (need)?|
|Hope for good returns from these investments||How much money can you save?|
|Hope you’ll have enough at the end to retire on||How many years from now do you intend to retire?|
Retirement Target Date or Target Savings?
Your company and/or their advisor may have auto enrolled you into an investment based on your age. Managers of these types of investments manage your savings in the same way they do for thousands of other people. Their decisions are not based on your needs, but a formula they have decided make sense for the masses. Worse than that, they know nothing about you and are not focused on your future retirement income needs.
We believe in the wisdom of you setting your personal goals and working with a team of professional’s to create a plan and manage its implementation. The plan provides a kind of GPS system for your retirement savings. The plan will guide you in setting a realistic target for your retirement income and then help with its navigation. As you progress towards retirement, you may find it comforting to see familiar road signs when traveling down unfamiliar roads or road conditions. Advisors with the proper tools and knowledge can provide the expertise to you that you provide to your clients when they use your expertise.
Helping owners build their fiduciary duty of loyalty to their employees
If you’re in charge of the decisions made on your 401(k), there are several systems that can embed the Nobel Prize research of Harry Markowitz, Paul Samuelson, and Robert Merton into your plan. This would help you demonstrate to your employees and to the oversight of the Department of Labor that you’re keeping the interest of your employees first when making 401(k) decisions.