5 Ways a Financial Advisor Can Help You Manage Your 401K

You may be among the many who either followed their 401K accounts during 2022 or took a quick glance at the end of the year. Like many workers, your heart probably skipped a beat after seeing just how rough it was for investors. You may be asking yourself “Now what?” Or you may have a more optimistic outlook and ask “How do I make the most of my Retirement Plan?” It probably doesn’t need to be said but as a reminder, you may want to consider contributing at least enough to get the company match (if your employer does match). After all, that is free money being left on the table if you don’t. Also, reviewing your investment selection (especially in a market like 2022) and having a good idea about your fees.

Yes, your 401K has fees and you should probably know what you’re paying for. A couple of questions that may come to mind are “Doesn’t my employer do their homework on these investment choices?” and “Who can help me manage the investment Risk?”

Your employer may do their best to offer you quality investment choices but it’s up to you to watch your account and make decisions about your investments. Making adjustments along the way, based on your goals, is completely up to you.

In the past, you’ve been on your own in making investment selections and keeping up with the changing markets. Many large firms prohibit their Advisor from giving you advice on your 401K selections or the advisors themselves may decline to give advice in that area. The great news is that you don’t have to go it alone.

Provident Oak Financial, LLC is able to offer professional management of your Retirement Plan Assets without having to remove them from your Employer-Sponsored Plan. With technology from Pontera (Formerly know as FeeX), we have the ability to not only see your available investment lineup but also manage the investments based on the available investment lineup and your Financial Plan. So highly respected firms have released studies showing how professional management of your retirement plan can be an added benefit.

Take a Look:

  • “In 2022, we believe the value of an advisor in the U.S. is approximately 4.91%.” – Russell Investments*
  • “Financial advice can add between 1.5% and 4% to account growth over extended periods.” – Fidelity Investments**
  • “Advisors can potentially add about 3 percentage points to your portfolio returns over time.” – Vanguard Investments***

Keep in mind that these numbers do come from differences in methodologies and so benefits such as tax planning may only be available outside of a retirement plan. There are opportunities for an advisor to add value if they truly know you and care about helping you reach your goals.

  1. Rebalancing: Big market swings can offer opportunities to move out of positions or allocations and into more favorable ones. This may help to enhance your overall return.
  2. Fund Evaluation: Fees and risk are only two aspects to consider when choosing a fund, its strategy, its portfolio makeup, its management team, and how it correlates to your other investments are all things to consider when making your investment selections.

Your Overall Risk Profile: 

  1. The amount of risk you have in your portfolio should account for two things
    • Your time Horizon:  This is just a fancy way of saying how long you’re investing for.
    • Your Risk Tolerance: Another fancy way of saying how much risk you’re comfortable taking. 
  1. Overall Risk Of Your Financial Plan: One thing that is easy to overlook is how this compares to your other investments. Far too often I talk with investors who have not included their retirement plan account as part of their overall investment portfolio. This can cause them to be overweight in areas they should either be equal or underweight or vice versa. This changes the overall risk profile of their entire investment portfolio.
  2. Financial Behavior Coaching: One of the most important duties we have as Financial Advisors is coaching. Helping people with the day-to-day decision when it comes to money is just as important as managing investments. Helping people by managing emotions during volatile investing markets can be a benefit by keeping them from selling low and buying high. The opposite of what we all know is the correct way to invest.

So, while all of these can be great reasons for allowing a Financial Advisor to manage your Retirement Plan, there are a couple of things to keep in mind. You’ll more than likely have to pay a fee to the advisor, which cannot be paid from the Employer-Sponsored Retirement Account (it might be considered a premature withdraw if you do). They are also still limited to whatever funds your employer has selected. With all of this to consider and with everyone’s situation different, we’d like to offer some help in deciding if having a Financial Advisor to manage your Retirement Plan Account is right for you. We’re happy to sit with you and discuss your plan and whether or not we can add value to your situation. Regardless of if it’s right for you or not, we’re happy to give you advice either way.

OneAscent Financial Services, LLC (“OAFS”), d/b/a Provident Oak Financial, is a registered investment adviser with the United States Securities and Exchange Commission. OAFS does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by OAFS or any unaffiliated third party. OAFS is neither an attorney nor accountant, and no portion of the presented content should be interpreted as legal, accounting, or tax advice. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly

Studies cited:
** https://www.fidelity.com/viewpoints/investing-ideas/financial-advisor-cost
*** https://advisors.vanguard.com/iwe/pdf/IARCQAA.pdf