Many 401(k) plans in America offer their participants a list of investment choices. Plan sponsors may feel as though offering a list of investments for their participants to choose from 
is the best way to help them meet their retirement goals. Often, plan sponsors work with advisors extensively to find what they believe to be the best list of investments from which their participants can choose.
While this may seem a logical solution, we encourage plan sponsors to evaluate all of the options that may be available to them with their 401(k)s. Could it be that the traditional mode of providing participants a list of investments is similar to giving them all of the parts necessary to build a piece of furniture, but not actually assembling it?
Some plan sponsors turn to 40l(k) plans that come “pre-assembled” with professional institutional asset managers making the investment decisions. This type of 40l(k) structure can be beneficial to the participants and the plan sponsor. The participants no longer need to feel as though they should be investment experts.
Meanwhile, the plan sponsor can transfer some of the fiduciary requirements they face onto the institutional asset management firm. This program, known as the Simplified 401(k), has plenty of flexibility. For those that still want to offer choices to their participants, the open architecture platform allows for that kind of flexibility to make the plan as attractive as possible for everyone involved.
Participants can feel overwhelmed by the choices they face when it comes to their 40l(k) investments. The decisions facing them with the “parts list” often leaves them confused and frustrated. This might be true even if the parts list has everything needed to construct the ideal retirement portfolio for them. Is your 40l(k) forcing your employees to feel as though they need to be investment professionals?
Would you like to explore how this type of plan might stack up against your current plan? We invite you to contact us to find out more and schedule your plan review and analysis.
About The Author
Martin McCann is president of McCann Asset Management and is a practicing financial advisor in Fresno, California. He focuses on retirement plans and wealth management.
Martin can be reached at 559-400-6520 or Martin@McCannAM.com.
Visit the McCann Asset Management web site at www.McCannAM.com