Financial Advisor Valic
401(k) Participants Turn to Pros for Help Managing Their Money
Does it just languish, forgotten, in some dusty corner of your mind? Are you, among millions of others, crossing your fingers and hoping your portfolio will provide?
Thanks to changes in the industry, investors now can get more help managing their 401(k) accounts. In the past, to prevent conflicts of interest, defined contribution plan providers could make only general asset class recommendations. But regulations now allow financial service companies to hire independent, third-party financial advisers like Ibbotson Associates to manage individual investors’ 401(k) accounts.
Those who choose professional help will find that the money in their portfolio will be allocated appropriately to funds in their existing plan, rebalanced regularly and adjusted over time to meet changing life circumstances. And these programs are catching on.
Ibbotson is the independent third-party advisor for 401(k) managed account programs run by AIG VALIC, Fidelity, Great-West Retirement Services, Merrill Lynch, the Principal Financial Group and TIAA-CREF. Although 401(k) managed accounts are only two years old, participation in such programs is increasing rapidly. Currently there is over $10 billion in 401(k) managed account programs, and that number is expected to reach $300 billion in 2010, according to industry research firm TowerGroup.
A major reason for the growth is that many employees don’t know how to manage their retirement plans. Human resources firm Hewitt Associates found that only 16 percent of 401(k) plan participants made any changes to their accounts in 2004. The study also found that, while some employees were not aggressive enough with their investments, others took on too much risk. For example, participants concentrated about 27 percent of their 401(k) assets in their company stock.
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Why does my advisor recommend a traditional IRA?
I am a 23 year old graduate student with a very low income at this time. I want to open an IRA, however, as soon as possible. Everything I have read indicates that a Roth IRA would be better for my situation, but my financial advisor from AIG Valic tells me I should open a traditional IRA instead to take advantage of tax savings now. Is he right?
Because you get the tax benefit now instead of 42 years later.
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Financial Advisor Valic Once you”ve confirmed that the adviser has a good track record, it”s time to delve deeper into his or her personality. Financial Advisor Valic A good adviser will consider all aspects of your financial situation and design a customized plan to help you achieve your goals.