Most participants are probably not going to take the time, training or have the inclination to do adequate research on specific fund analysis for performance, expenses, or ranking vs. benchmarks to name a few. The problem is, the advertisers of do-it-yourself investment platforms have promulgated the theory that anyone can be an expert and make educated, intelligent choices about the proper asset allocation for their account and then select the best investment for each category including U.S. and International equities of large, medium and small companies, fixed income, including corporate, government, with various credit qualities and maturity, alternative investments (not usually offered by plans) and cash equivalents. To overcome the worst-case dart throwing or ABC approach, most plan sponsors are now offering age-based allocation scenarios that pre-populate a set allocation based on age, trusting that whomever selected the fund choices are continually providing sound due diligence on those fund options.
An improperly diversified portfolio with too much risk exposure or not enough growth exposure at certain ages can cause under-performance to drastically affect your retirement next egg and the ability to retire as planned. For several years, after seeing our clients struggle with making optimal investments in their plan, our firm has been providing guidance and direction with active portfolio rebalancing recommendations for their specific plan investment choices. After starting with a risk profile evaluation and a written Investment Policy Statement that guides the investment objectives, quarterly rebalancing reports are provided for them to make periodic adjustments after we perform a deep dive analysis into every fund choice offered in the plan.
If you’re concerned that your retirement plan allocations are being made half hazardly without intentional research and careful evaluation, consider having us help guide you in the right direction.
The information contained in this blog does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of author, and not necessarily those of Raymond James. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Individual investor’s results will vary. Past performance does not guarantee future results.