Are You “Mad” At Your 401K

Posted on August 28, 2012. Filed under: Uncategorized | Tags: , , , , , , , , |

As a company we like to keep things lite in the office given the nature of our work so from time to time we follow Jim Cramer. I mean this guy is great entertainment, and always good for a few laughs. One of his recent rants on Mad Money was about the so called scam of 401k’s. (here is the link to the article http://www.cnbc.com/id/48784171 ).

After reading the article, mad man Cramer does make a couple of valid points, that most company plans are not that great given the high fees, administration costs, and sometimes bad choices for investments. However he is quick to point out the tax benefits and possibility of free money from a company match. His suggestion is to contribute to the 401k plan until the company match is maxed out and then make contributions to an IRA where you have greater flexibility with the investment choices.

This sounds great and is fundamentally correct but Mr. Mad Man forgets that most participants in 401k plans will never achieve maxing out the company match let alone funding a separate IRA. But let’s play along with Cramer’s suggestion and the participant is maxing out the company match and starts contributing to an IRA, how many of them will know what to buy in the IRA? His suggestion is dividend paying stocks, again great point but the average American will not do this.

Here is our suggestion, if you are an advisor that works with 401k plans you have the opportunity to bring tremendous value to your client by showing them that you can provide every participant with specific unbiased advice for their 401k plan and also be available for expert advice on outside investments like an IRA. Maybe this time people should really listen to Cramer because in this instance the Mad Man is not too far off.

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You Can Lead A Horse To Water

Posted on April 10, 2012. Filed under: For Individuals | Tags: , , , , , , , , , , , , |

At RJ20 we pride ourselves in being a different kind of financial firm. Most if not all of our counterparts have the clear blue waters of the ocean or a spectacular mountain lake home on their website representing the wealth their clients have. Not us, we are working class guys & gals that know how hard it is to earn and keep a dollar. So, why the opening of this blog with a little jab at other financial companies, simple we are the financial how to video you are looking for on YouTube. What I am getting at is this, I recently read a blog about a gentleman that had a car problem and instead of taking it to a mechanic (aka a wealth management firm) he researched his problem on YouTube and found a video showing him how to fix it himself. Once he watched the video he knew exactly what he needed to do. He then went to the auto parts store and purchased the parts needed to fix the problem. I think it is fantastic that he was able to handle it himself and I firmly believe that more people need to take this approach with their 401k/investments. I equate RJ20 to the auto parts store in the above mentioned story. You have to have the correct parts to fix the job, but you can do it yourself and save a lot of money. So why not get the correct parts with the instructions included and fix the issue yourself? Seems simple to me, I mean you have to buy the parts anyway, right? That is where we (RJ20) come in, we can give you the parts, we can give you the how to video and in the end you can save a lot of money. There is one caveat, you have to want to watch the video and implement the fix yourself.

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To Roth or Not To Roth – That is the Question Part 1

Posted on March 30, 2012. Filed under: For Employers, For Individuals | Tags: , , , , , , , , , , , |

We here at RJ20 like to provide as much information in an easy to understand format for all who want to learn. So with this in mind we are going to start a series on the “Roth 401k” and understanding what it is, how it works and whether it is for you. I recently reviewed an article that discussed the various aspects of the public’s understanding between the differences of a regular or “Traditional IRA” and the “Roth IRA”. Some of the statistics that were referenced in the article, such as 21% of the study believed that Roth IRA’s allowed for tax-deductible contributions or “pre-tax contributions” may be a shock to some but in our opinion does not surprise us and that is because it is very easy to get the rules between the two confused. So you can imagine that when an employer offers the Roth 401k option along with the regular 401k option most people are scratching their heads and we have not even touched on which one is better for that particular person. So what we hope to accomplish with this blog series is to take the complication out of these choices and help you figure out which one is right for you and at the very least give you enough knowledge so that you make informed decisions. The next blog in this series will cover the differences in the Roth 401k vs Traditional 401k.

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The Next Generation

Posted on March 28, 2012. Filed under: For Individuals | Tags: , , , , , , , , |

According to Scottrade’s sixth annual American retirement study 51% of survey respondents reported starting their retirement savings in the age range of 25-34 compared with 39% last year. So what does this mean, well a few things. Number one younger American workers are realizing that it is time in the market, not timing the market. Number  two, given all of the noise around social security and its issues, younger workers are taking notice and making the choices now to insure they have the resources in place for a proper future.

The real question is how these Gen Xers will make the proper choices in their retirement plans to optimize their investment earning capabilities. We feel there is going to be a huge paradigm shift in the way this group and all future groups view and use their 401k plans. A lot of the clients we run across do not care about all of the fancy metrics or industry jargon used to impress, they just want to know what they need to buy now and what kind of outcome they can expect in the future. They also want to know that the advice is completely independent, objective and pertains to their specific goals not broad based general guidelines.

The things we have to remember as professionals and especially the “wealth managers” is that in the very near future these Gen Xers who have 10k in their 401k will be ones with sizeable assets that most advisors will be chasing, so I ask you what can you do to insure they view you as a trusted resource now and in the future, perhaps get them the advice they need now in their DC plan?

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