Mike Francis, who offers fee-based investment advice to firms with 401(k) plans, reports that employees can improve their investment performance by two full points if they will just sit down for one-one-one counseling.
Advisors from Francis Investment Counsel visit companies for group meeting on how to manage retirement funds, but they also offer private advice sessions for employees and spouses. A minority of employees take them up their standing offer, but the ones who do see improved performance – about 200 basis points, or two full percentage points.
Those two points can mean hundreds of thousands of dollars in extra retirement monies for long term employees.
That is such a dramatic finding that companies should almost insist on the one-on-one sessions.
At Serigraph, we are going to allow some company time, matched with employee time, to encourage 100% participation in personal sessions with financial advisors.
Most of the improved performance comes from better portfolio diversification among available funds. The split among types of funds should change as employees age. And most under-advised employees are passive when it comes to spreading out their dollars. They might be using three or four funds when they should be in eight to ten.
The two points year-in, year-out is like found money, and it’s not hard to achieve. The same would be true of build-ups in Health Savings Accounts, another form of retirement asset.
