What Can a Retirement Consultant Do For Your 401(k)?

Business.com / Finances / Last Modified: February 22, 2017

Tackling something as complicated as retirement on your own can be tough and risky. Find out what a retirement consultant can do for you.

Planning for retirement without discussing it with retirement consultants is one of the worst things one can do for their post retirement life. We are talking about your golden years. Nothing should be left to chance and a conscious effort must be made to know about all options that you qualify for based on your projected savings.

This is where retirement consultants come in. These advisors are there to assist people in two ways; to provide the most accurate information concerning retirement and offer sound advice based on that; and secondly to do whatever that can possibly be done to ensure people maximize on their retirement savings when they actually retire.

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401(k) is a great way to secure for the future. However, doing so requires constant interaction and often times discussions with experts in the field. Below we will talk about a few ways a relationship manager can help you with your 401(k).

Provide a Higher Rate of Return on 401(k)

One of the best things a retirement consultant can do is give people a higher annual return on their 401(k). Imagine an 8% return on your savings compared to 5%. This is the advantage professional consultation brings when experts sit down to look at your case instead of individuals. A survey was conducted recently that took a pool of 723,000 workers at 14 large U.S employer between 2006 and 2012. It concluded with some interesting findings. Those people who were properly advised in the handling of their 401(k) had a median annual investment return that was 332 basis points higher than those who didn’t.

The reason for such a big difference between two sets of people is simple. One had access to valuable expertise. They signed up for target date funds, and enrolled in managed accounts. These are complicated steps made easy through consultation.

For those who are thinking how much exactly 332 basis points worth are, consider this. People who start investing at 45 will earn 79% more wealth at 65 when they retire. To further elaborate, a US$ 10,000 401(k) plan at 45 will yield $58,700 at 65 compared to only $32,800 for those who couldn’t avail it because they didn’t know.

Connect You to People Who Can Help You with 401(k)

Many working people already have access to advice yet they are unaware of it. The HR department in your company can very well be the resource you are looking for. Many offer free financial advice to their employees particularly in regards to 401(k) and other retirement plans. If you work for a big company, it is very likely they have a process in place to provide employees with that information and other free services. This includes allocation advice and performance data. These companies might also keep retirement consultants on their staff to give sound advice during open enrolment periods.

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This is of course for large corporations. Those working for smaller outfits will have to dig deeper in search of advice. This involves taking steps on your own accord and seek out retirement consultants.

Keep Your 401(k) Enrolled in Auto-Enrollment

The job of a retirement consultant is to do what’s best for you and your retirement fund. That entails opting for certain features and benefits while you are on the job so you can capitalize on them later. Part of this involves making people re-enroll in 401(k) plans and default them into managed accounts. This offers them more diversity in the long run; a priceless commodity once you retire.

Provide a Sense of Security

Tackling something as complicated as retirement on your own can make even the most stubborn of people shaky. There is simply too much at stake to be left to educated guesses and do-it-your research. We’re talking about your golden years. The time where you get to finally enjoy life without the hustle and tussle of daily work.

Having an expert on hand either through a company or by hiring one independently, individuals are essentially pay for the sense of security and comfort; an investment that more than pays for itself later on. It’s always comforting to know you are in good hands. It can’t be truer in this case.

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