Professional Investment Advice for your 401(k)

June 12th, 2008  |  Published in 401K  |  1 Comment

It’s been reported in Money on CNN Money that approximately 25% of employers with 401(k) plans are now offering professional investment advice for their employees for a fee of 0.4% to 1%. What they’ll do is take a look at all of your funds and help you select the right mix given your situation and other investments, according to Money.

It seems to me that, given limited options, having a professional planner take a look at your funds at a cost of 0.4% to 1% is a big pricey. I’m not entirely sure what they offer besides knowledge of asset allocation fundamentals and what you should do based on your risk tolerance, both are concepts you can read from a book. Considering your 401(k) shouldn’t be touched until you retire, it’s not like you have savings goals in the near term (don’t borrow for a house, please please don’t) that you need help planning for.

It seems like a pricey service for 0.4% to 1%, unless you simply don’t want to do it yourself.

  

Responses

  1. Todd says:

    June 12th, 2008 at 12:52 pm (#)

    I agree that .4% to 1% is a ripoff. The problem here is that most people aren’t interested in learning how to invest, or they simply don’t have the time. Therefore most people won’t know they’re getting ripped off, and even the company sponsors who setup this capability probably don’t even realize that 1% is a HUGE level of extra expenses. After all 1% is what some of the better actively managed funds charge to pick individual securities and run a mutual fund.

    My advice: each company should offer to pay their employees $100 for writing a book report on “The Coffeehouse Investor” (or better yet “The Little Book of Common Sense Investing”