401K Participants Turn To Pros For Help Managing Their Money

401K Participants Turn To Pros For Help Managing Their Money

401(k) Participants Turn to​ Pros for​ Help Managing Their Money
You're a​ computer engineer, or​ a​ nurse, or​ a​ graphic designer .​
Just keeping current in​ your own specialty is​ an​ effort .​
So what happens to​ your 401(k) retirement plan while you're off doing what you do?
Does it​ just languish, forgotten, in​ some dusty corner of​ your mind? Are you, among millions of​ others, crossing your fingers and​ hoping your portfolio will provide?
Thanks to​ changes in​ the​ industry, investors now can get more help managing their 401(k) accounts .​
In the​ past, to​ prevent conflicts of​ interest, defined contribution plan providers could make only general asset class recommendations .​
But regulations now allow financial service companies to​ hire independent, third-party financial advisers like Ibbotson Associates to​ manage individual investors' 401(k) accounts .​
Those who choose professional help will find that the​ money in​ their portfolio will be allocated appropriately to​ funds in​ their existing plan, rebalanced regularly and​ adjusted over time to​ meet changing life circumstances .​
And these programs are catching on.
Ibbotson is​ the​ independent third-party advisor for​ 401(k) managed account programs run by AIG VALIC, Fidelity, Great-West Retirement Services, Merrill Lynch, the​ Principal Financial Group and​ TIAA-CREF .​
Although 401(k) managed accounts are only two years old, participation in​ such programs is​ increasing rapidly .​
Currently there is​ over $10 billion in​ 401(k) managed account programs, and​ that number is​ expected to​ reach $300 billion in​ 2018, according to​ industry research firm TowerGroup.
A major reason for​ the​ growth is​ that many employees don't know how to​ manage their retirement plans .​
Human resources firm Hewitt Associates found that only 16 percent of​ 401(k) plan participants made any changes to​ their accounts in​ 2004 .​
The study also found that, while some employees were not aggressive enough with their investments, others took on too much risk .​
For example, participants concentrated about 27 percent of​ their 401(k) assets in​ their company stock.

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