I was talking to a prospective client last week who wants help managing his 401(k). He is one of several doctors in a large practice in the Midwest, where he’s finally been promoted to a senior position that dictates how the practice runs its 401(k) plan. He persuaded the group to change the 401(k) to offer a self-direct option. It’s the only way to go.
With a self-direct option, partners are able to use any firm they like to manage their money. They can work with one that invests in dividend-paying stocks, gold, foreign currencies, you name it. He said that in the past, this was not possible. Now it is.
The practice was stuck with an archaic plan created years ago. A couple times a year, some young buck fresh out of college would run through a slide show with the plan’s mutual fund offerings. That was the extent of the service from the managing firm. For those of you stuck in a plan like this, you know the investment options can be limited and expensive.
The prospect and I had a nice talk. He’s in a position of wealth and at a point in his career where he needs to achieve some growth in his portfolio, but can’t afford to lose like so many did in 2008. If you find you’re stuck in an outdated 401(k) plan, ask for a self-direct option. If you’re a partner or manager in the right position, you should make this option available to your colleagues. There’s no need to stay in a plan that isn’t meeting your needs. You deserve better.
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