The Advised 401(k) Educational eCampaigns – Can Clear the 401K Fog for Plan Participants
Most 401(k) participant education misses the mark. Numerous studies, and our own experience, confirm that.
According to a recent study, 36% of participants in self-directed retirement plans invest in only one fund, 19% are invested in only two funds, and 80% have never rebalanced their account. In another study only 6% feel their employer is doing an excellent job of providing education services.
For plan fiduciaries, this knowledge gap in investments is not without risk. In this litigious society it doesn’t take much imagination to visualize a class-action suit based on participant accounts falling short because of fiduciaries’ failure to educate participants in prudent investing.
The problem is that while participants can hear repeatedly about the importance of diversification and can understand that their plan offers all of the tools for constructing a diversified portfolio, the vast majority of participants do not have the time, the expertise, or the desire to manage their own assets. They want someone to do it for them.
With The Advised 401(k), the investment process is simplified for participants. This allows us to focus our education efforts on helping participants understand the importance of saving for retirement, why they should maximize their participation in the 401(k) plan, and why they should maintain a long-term strategy regardless of short-term market volatility.
Further, if the investment advisor is prudently selected and monitored, the plan sponsor may be relieved from liability for the specific investment recommendations made to the participants by the investment advisor.
Madden’s weekly email campaigns to participants provide the necessary support for our distinctive approach to retirement income portfolio.