For most, a lifetime income from a pension is something your parents or grandparents enjoyed. Companies have been moving away from defined benefit retirement plans (pensions) to defined contribution plans (401k, etc.).
In the old pension plan, your company made all of the retirement contributions and the investment decisions. In 401k plans and the like, you contribute the bulk of the money (some firms match a portion) from your paycheck (pre-tax) and make the investment decisions from a limited set of options. Typically, it's your employer who decides what types of investment choices are available. These portfolio choices are often poorly selected and very expensive.
Rarely are you given any help making specific investment decisions based on your personal situation. A stockbroker might come by once a year for a mass meeting, but rarely, if ever, are you given sound guidance on the best choices available.
Far too often, funds are chosen for the returns they provide to the product peddler, not the client. Decisions are rarely based on the best and least expensive investment options. The products selected typically come from someone who has an existing relationship with the firm’s executives.
The proof can be plainly seen in most of the 401k and 403(b )choices available to employees. They are laden with expensive, actively managed funds or overpriced (and overhyped) annuity products. If the plan trustees were acting in their employees best interests, the vast majority of plans would contain nothing but funds from DFA and Vanguard (the industry leaders in diversification and low fees). It's the more expensive fund groups that have the budgets (or the commissioned sales force) to market aggressively.
We (Don McDonald and Tom Cock or the radio program “Talking Real Money” and founders of the fee-only investment advisory firm, Vestory) have created 401411.com to help you make the best of, what are often, some bad choices. When you submit your plan choices to us, we research the funds and create suggested allocations based on our belief in massive diversification and low fees.
These are not perfect portfolios, by any means. Nor are they the portfolios we would design for our clients (we would use Vanguard and DFA). They are merely our best efforts to devise a decent retirement plan portfolio. You would be wise to try and improve your overall investment portfolio by adding needed diversification through a Roth, regular IRA, or regular non-qualified investments.
We hope you will help us broaden our plan listings by submitting yours. Please let us know what else might be of help. Enjoy the site and help yourself to a better future.