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How We Do It
203 West Franklin Street
Centerville, OH 45459
Phone: 937-434-5697 or 866-401-ADVR
Fax 937-434-6548
Email: twild@The401kHelpCompany.com
Centerville, OH 45459
Phone: 937-434-5697 or 866-401-ADVR
Fax 937-434-6548
Email: twild@The401kHelpCompany.com
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Every 401(k), TSA and IRA is different. Some have only a few investment options while others have dozens,
even hundreds of options. It's no wonder more than 50% of you find this more confusing than choosing your
health plan options.
Instead of going into a bunch of technical talk about how we choose one fund over another, we'll try to explain in
plain English how we do it. We have included a hypothetical investment chart that will give you some idea of the
value we can bring to your or any plan vs. the traditional "buy and hope" philosophy favored by most investment
companies.
We can add value to almost any plan. It doesn't matter who your plan is with. Our clients have holdings at
some of the largest investment firms in the world (Fidelity, Vanguard, Principal, Jackson National Life, Great
West Retirement Services, Transamerica etc.) and are employed by Fortune 500 companies as well as closely
held small businesses. The one thing all our clients have in common is a desire for a more secure financial
future.
When you hire us, we go through a 3 step process manage your funds.
First, we analyze the investment choices you have available to determine which funds we will use in managing
your plan. Once we have that information we use our proprietary computer program to run thousands of
calculations to determine what "mix" of investment options and what "hold period" works best for your plan. The
final step is logging on to your account and placing the trade for you.
EXAMPLE: Lets assume you have 20 investment options available in your plan. You have (or at least you
should have) a mix of stock and bond funds as well as a money market available. Our program analyzes all the
possible options and determines that your choices work best on a 3/60 basis. You don't need to know what that
is, but it tells us that the best way to manage your money is to hold the 3 currently best performing funds for a
period of 60 days. At the end of the 60 day period we re-evaluate EVERY option you have available and invest in
the then best performing 3 funds for the next 60 days.
Right about now you may be thinking to yourself "that goes against everything I have ever heard about investing.
It doesn't seem to be diversified and all that trading must bring more risk." Our research, and our numbers tell
us differently. We think Warren Buffet may have put it best when he said "The only reason to diversify is if you
don't know what you are doing."
Earlier we promised to provide a hypothetical example to show the value we can add to your plan. We put our
system up to the test against a target date fund from Fidelity. Target date funds have really gained popularity in
the 401(k) field because IN THEORY they provide a good mix of investments for people at various stages of
their working lives. The objective of target date funds is to hold a little bit of everything (diversification) at all
times in the HOPE of smoothing out volatility and protect your assets as you get closer to retirement. But do
they?
Following are the results of our system vs. the Fidelity Freedom Fund 2030. The Fidelity Freedom Fund 2030 is
a "fund of funds" that is appropriate (in Fidelity's view) for a person retiring sometime around 2030. (See
www.fidelity.com for information on this fund.)
As of 11/30/2010 the assets of this fund were divided up between 11 domestic equity funds (55.05%), 7
international equity funds (19.95%) and 5 bond funds (24.94%). (Over time, this portfolio would become slightly
more conservative usually meaning more bonds and fewer stocks as you neared the target date of 2030.)
When we looked at the specific holdings of this fund
(http://fundresearch.fidelity.com/mutual-funds/composition/31617R704) we found that 6 of the 23 total funds
held LESS than 1% each of the TOTAL FUND VALUE, with one at .1% of the fund!!! Yes, .1%! More than a
quarter of the funds held only 4.09% of the assets! What value is that? Why would you have less than 1% of
your money in any single investment? (SEE WARREN BUFFET QUOTE AGAIN) Suffice it to say, this IS a
diversified mutual fund.
It looks like the strategy is to hold a whole bunch "stuff" and hope something makes some money. Sound
familiar?
We ran our proprietary program using only the 23 funds available in the 2030 fund. We determined the mix and
hold time described previously. We NEVER had a holding of .1%, and we achieved higher returns with lower
risk by avoiding the worst performing funds and allocating more to those that were making more money. ( Did
we lose you with that sophisticated analysis?) The numbers speak for themselves.
Contact us to see how we could do with your investment options and a free no
obligation analysis.
©2009 401 Advisor, LLC. All rights reserved.
| Follow Bill's blogs at: www.DeShurkoblog.com www.citizen-usa.com (click on 'Financial News') |
| Visit our other websites: www.HowToInvestInRetirement.com www.401Advisor.com |
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Read Bill's Fidelity Interview at "Investing for Income."
So How Does it Work?
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*The above results are from a hypothetical illustration only. While the strategy illustrated is used for current client accounts, no
actual client accounts were managed using the investments shown. Results are shown without a deduction for fees and any
related investment expenses. Since 401 Advisor, LLC charges a flat fee the affects of the fee will vary based on the size of the
account. Potential investors should ask the Advisor about the potential affect of fees on their individual account. Returns used for
mutual fund holdings are from Steele Systems, Inc. data provided by Standard and Poors and are assumed to be accurate.
Returns reflect the reinvestment of dividends. Any investment in the stock market involves risk of loss. While our strategy is
designed to minimize any investment losses there is no guarantee that such objective will be met. Investments are not guaranteed
or insured. Results will vary based on different time periods chosen. Past performance of a hypothetical model should not be used
to assume future results. Results will vary between clients, depending on the investment choices that are available within each
client’s 401(k) plan.
actual client accounts were managed using the investments shown. Results are shown without a deduction for fees and any
related investment expenses. Since 401 Advisor, LLC charges a flat fee the affects of the fee will vary based on the size of the
account. Potential investors should ask the Advisor about the potential affect of fees on their individual account. Returns used for
mutual fund holdings are from Steele Systems, Inc. data provided by Standard and Poors and are assumed to be accurate.
Returns reflect the reinvestment of dividends. Any investment in the stock market involves risk of loss. While our strategy is
designed to minimize any investment losses there is no guarantee that such objective will be met. Investments are not guaranteed
or insured. Results will vary based on different time periods chosen. Past performance of a hypothetical model should not be used
to assume future results. Results will vary between clients, depending on the investment choices that are available within each
client’s 401(k) plan.