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Self-Directed Brokerage

One of the dangers of using an employer’s retirement plan is that you don’t get a financial advisor’s help.  In fact, the last day you likely saw your employer’s retirement plan financial advisor may have been your first day on the job.  How many years ago was that?

That means one of your largest assets—the retirement account you’ve been plowing money into every paycheck—may be aimless as far as your retirement needs are concerned.  Without knowing how much you’ll need to save to reach an estimated retirement date, how will you be able to retire?

You might never be able to retire this way.

Like Driving Without a Map
When you drive somewhere distant you check a mapping app.  You need to know how many miles you need to travel and how fast you need to drive to arrive “on time”.  The same is true for your retirement.  There needs to be some financial planning to help you arrive at your retirement “on time”.

So here’s the question:  do you have an estimated retirement date (arrival time)?  Do you know if you’re saving enough (your speed)?  Do you know how your money is invested (what kind of car or truck you’re driving)?

One would think you would have more help given the financial commitment you’ve been making toward your retirement.  But you’d be wrong.

Your Employer Has a Financial Advisor, You Do Not
The financial advisor for your employer’s retirement plan is a fiduciary to your employer, not to you or any of the other employees participating in that retirement plan.  You’re on your own.

That means you could work for the same company for decades, contribute hundreds of thousands of dollars toward your retirement through the employer’s retirement plan, and you’d be doing this on your own with no financial advice provided.  That’s a bad design.

Your Employer’s Retirement Plan May Have Another Option

The Self-Directed Brokerage Account Option
There’s something called a self-directed brokerage option.  The funny thing is there’s usually not much “self-directing” about it because, instead of managing (“directing”) your investments yourself (“self-directing”) many people choose to have a financial advisor do that for them.  That financial advisor can help you with many aspects of your financial life beyond the employer’s retirement plan (planning, insurance, your other financial interests).

Same Retirement Plan Rules
The way the self-directed brokerage option works is money from your plan may be invested using a self-directed brokerage account.  That account offers more investment options than your employer’s plan and comes with a financial advisor’s help.  However, even when using the self-directed brokerage option all of your retirement plan money is still considered part of your employer’s retirement plan.  The same rules apply, including your eligibility for matching contributions.  It’s like an option within your employer’s retirement plan.  Your account login remains the same.

Easy Setup
Setting up a self-directed brokerage account involves some one-time paperwork that creates the account and the formal relationship with your advisor.

3% Added Value
According to Vanguard, using a financial advisor may add or exceed 3% in annual returns.  That is, your investments might perform better, you may be better prepared for your retirement, and you may feel better about the entire financial experience by using the self-directed brokerage option.

So, if you feel as though your efforts to pursue your retirement lack advice, direction, and confidence, the self-directed brokerage option may offer benefits worth considering.

Pursue Retirement With Confidence
It would be a shame to go through decades of working years and find yourself unprepared for retirement when you could have done so much more.  An advisor can analyze your investment strategy, align your comfort and risk levels, and clarify your needs in financial terms that you can understand.  Then, that advisor can show you how to pursue your retirement with purpose—with a plan.

You have options to help you pursue your retirement.

Arriving late?  Well, that’s not an option.

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