Why Should I Have My 401k Managed?

Hand putting Coins in glass jar with retro alarm clock  for time to money saving for retirement concept

Time Constraints: Let’s face it, life is hectic. 

Within our busy lives, it can become impossible to accurately and adequately manage the complexities of your retirement account. When was the last time you logged into your 401K and reviewed your investment allocations? Many of us are constantly managing time with our family, our job, and all those other miscellaneous errands that come up in everyday life. Effective management of your 401K can require continuous expert attention to rebalance allocations and review an ever-evolving litany of fund options.  

May maximize your returns without sacrificing your risk. 

A study from Financial Engines found that, on average, participants who utilized a professional’s advice displayed less volatility in their portfolios. An advisor assists in keeping your investments within your risk tolerance while maximizing your potential to achieve your financial goals. On the one hand, having a disproportionately large number of equities in your portfolio can increase your susceptibility to unexpected market downturns. On the other hand, having too much fixed income can rob you of the opportunity to make the most of your retirement investments. In the ever-evolving reality of market fluctuations, accounts can quickly become over or under-exposed to equities. They should be continuously monitored and rebalanced to maintain the most advantageous allocations aligned with your financial goals. 

A cohesive investment strategy throughout the entire portfolio can be both tax and cost-efficient.

As Benjamin Franklin said, “‚Ķnothing can be said to be certain, except death and taxes.” Uncle Sam collects the money owed, but there are strategies to reduce tax obligations. A proper asset allocation strategy assists in minimizing taxes by taking advantage of accounts with different tax treatments. For example, many plans offer a Roth 401K option. Roth 401K contributions are made with after-tax dollars, the investment continues to grow tax-free, and the withdrawals are not subject to income tax. This may be particularly beneficial in high-income years within retirement.  

Provides a Comprehensive Financial Plan tailored to you.

Having an advisor manage your 401k can provide for a cohesive investment strategy. Allowing the advisor oversight of your complete financial position can assist them in customizing your financial plan specifically for you. Many times, 401k plans offer limited fund options, and a financial advisor can assist in achieving your target asset allocation by filling in specific asset categories that your plan may be lacking. An advisor can also assist in avoiding costly errors such as front-loading 401(k) contributions, not fully utilizing the 401K match, holding too much company stock, or simply ensuring you have selected beneficiaries. With the advisor having a bird’s eye view of the entire portfolio, they can provide a comprehensive financial plan that works together to achieve your financial goals. 

Do not wait until you’re near retirement to ensure you are on track for your financial goals.


1 Help in Defined Contribution Plans: 2006 through 2012, Financial Engines, May 2014


Executive Wealth Management's mission is to help build, defend and advance the investments of our clients, families, and community while providing a legacy of economic well-being.

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