For many people, understanding the retirement plan offered by their employers can be a challenging proposition. Knowing the right questions to ask can go a long way toward resolving this issue and providing employees with a clearer picture of the strategies used to maximize their retirement funds.
Management of 401(k) funds plays a vital role in ensuring the highest possible returns for employees. Most companies outsource their 401(k) investment portfolios to a financial services firm to streamline the process. Making sure that the plans offered by these firms are offering competitive value can help employees ensure the highest returns for their retirement investments.
Here are three key questions you should ask your employer about your 401(k) plan:
1. When Was the Last Time You Benchmarked the Fees for Our Plan to See if They Are Reasonable?
Fees for managing 401(k) plans can vary widely. From time to time, it is essential for companies to check on the fees charged by other firms that provide comparable services. This bit of due diligence could provide employees with added resources to carry them through retirement more easily. Since plan administrators are required to provide quarterly statements for participants that outline the fees charged and the performance of the 401(k) portfolio, benchmarking the fee structure can easily be absorbed into this task. A little field research can pay off for staff members throughout their retirement years.
2. What Is the Process for Monitoring the Risk and Performance of Our Investment Options?
Comparing and monitoring performance and returns on investment for retirement funds can help companies to offer the most practical and financially rewarding options for their staff members. Employees may have different tolerances to financial risk at different points in their careers:
- Younger workers at the beginning of their employment journey can usually afford to take increased risks in return for higher potential returns on their investment, thanks to the longer period of time in which they can adjust their investment strategy to recover from any losses.
- Those at the midpoint of their careers typically take a balanced approach between risk and potential reward to maximize their potential returns without putting their retirement funds in serious peril.
- Employees nearing retirement are more likely to take a conservative approach to the management of their retirement funds to ensure that these resources are available when they need them most.
Employers may look at the performance of their plans as a function of risk vs. reward across a wide range of investment options. They can also compare the performance of plans from a wide range of investment advisors to determine which offers the best risk-vs.-reward for their employees.
3. Do We Have Access to Education and Advice & How Much Does It Cost?
The right recommendations can make a big difference in the funds available for employees at retirement. Some investment plan providers may offer group sessions with a retirement advisor to help workers make the right decisions regarding their 401(k) plans. Others can provide one-on-one appointments upon request. Determining whether these options are available can help employees make more informed decisions regarding their tolerance to risk and the preferred allocations for their retirement investments.
By asking your employer these questions and paying close attention to the answers given, you can ensure that your company is taking the necessary steps to provide the best options for your 401(k) retirement plans. This can ensure that funds are in place for a comfortable retirement and full enjoyment of your golden years.
Quintes is the leading provider for 401(k) plans throughout the Central Coast in the state of California. We offer superior performance, a range of options designed for different risk tolerances and solid educational support for employees in this area. Call us today at 831-759-3402 to schedule a consultation with our experienced investment advisors. We are here to serve you.