401(k) education now mandatory

An updated study on 401(k) retirement plan returns shows even more convincingly than ever that one-on-one financial counseling sessions dramatically improve results.
A five-year analysis conducted by Aon and Financial Engines of 425,000 401(k) participants concluded that those seeking help – about 30% of the total – earned 2.92% more each year than the more passive employees. A previous study had put the improvement at about 2%.
Yow! That’s a monumental difference in returns, especially in days when a 1% return on certificates of deposit is the going rate. When three points of better performance are compounded over a career, the people seeking professional financial advice will come out way, way ahead.
The differential is so huge that management here at Serigraph decided to make one-on-one advice sessions mandatory. And we did the 15-minute sessions with our financial advisors on company time.
Only a few co-workers commented that they didn’t find the sit-downs beneficial.
The most common outcome from the personal advice sessions was a reallocation between our 12 different choices of mutual funds. Portfolios need to be adjusted regularly as personal situations change and markets behave differently.
Proper diversification is the best tool for better risk-adjusted, long-term returns. Reallocation tends to lapse in absence of annual advisory sessions.