Is your 201(k) back to a 401(k)?


During the financial crisis one macabre joke among investors was that the stock market’s swoon cut their retirement plans in half, transforming their 401(k) into a 201(k).

Yet less than five years after the S&P 500 hit bottom in March 2009, U.S. stocks are making new all-time highs. Fidelity Investments, the largest 401(k) provider, says average balances hit a record high of $84,300 in the third quarter, up 11% from a year ago. The fourth quarter will likely see a new record as stocks keep climbing.

That’s the good news. The bad news is that many 401(k) participants have no idea how much they’re paying in fees, and high costs can have a significant impact over long periods.

The high fees and conflicts of interest in some retirement plans were highlighted in a FRONTLINE documentary that aired in April called The Retirement Gamble. Some investors are also frustrated with the mediocre mutual-fund choices available in their 401(k) plans.

Now that many 401(k) participants have recovered the losses they suffered in the financial meltdown, it might be a good time to revisit their retirement strategies. Some investors have been waiting to get back to even before reevaluating their 401(k) plans.

At Covestor, we think investors shouldn’t have to endure conflicts of interest and opaque fees. Investors deserve fully transparent accounts, clear performance and risk reporting, understandable language, and no hidden fees. We also believe a financial adviser can help individuals make the right decisions for themselves, including selecting portfolio managers who can help them reach their financial goals.

Learn more about our investment philosophy.

Photo Credit: SalFalko

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DISCLAIMER: Please note that individual situations can vary; therefore, the information should be relied upon when coordinated with individual professional advice. The information discussed herein may not be applicable to or appropriate for every investor and should be used only after consultation with professionals who have reviewed your specific situation.