How To Give Clients Peace Of Mind This Summer

By Ric Lager

Experienced investment advisors know that it is much harder to hold their clients' attention during the summer months.

When the weather gets warm and the kids and grandkids are out of school, advisors struggle for their clients’ attention. Even the most routine investment management decisions become a bother when “summer mode” takes over.

In Minnesota, where I’m based, summer months include time spent at our world-famous cabins. Everyone in the state has access to a summer cabin. Most native Minnesotans have access to multiple cabins on any summer weekend.

If I had a nickel for every e-mail that I received from a client’s smartphone that stated “at cabin,” I would already be retired. (Of course, I would retire to my cabin.)

My top investment management priority this summer has been to let my clients enjoy their all-too-short summer months with family and friends. And to do that, I provide my clients with investment piece of mind.

The summer of 2018 is fast becoming a high-risk investment environment. Interest rates are rising from all-time lows. Stock markets are struggling to get back to all-time highs. There likely were some surprises when the June 30 company 401(k) retirement plan account statement arrived.

The recent trends on both the stock and bond markets could move company 401(k) retirement plan mutual funds in the wrong direction over the summer months.

Ask your clients for a copy of their current company 401(k) retirement plan account holdings. Spend a few minutes to put in place a logical, organized and disciplined game plan for managing their stock and bond market investments over the next few months.

Stock and bond market investment gains have been hard-earned over the last several years.  The same can be said of company-matching and individual company 401(k) retirement plan contributions. Don’t let those gains potentially slip away over a few short weeks this summer.

All individual company 401(k) retirement plan participants own more than one company 401(k) retirement plan mutual fund that suffers from the two worst possible investment management conditions. That mutual fund is expensive and has under-performed over the last few years.

These individual investors are overpaying for their 401(k) mutual funds. Worse, they are not receiving the investment performance they deserve.

In 2018, no individual company 401(k) retirement plan participant should be paying more than 1 percent annual in total fees and expenses. There are too many lower cost and better performing mutual fund investment options available today.

The most recent Standard & Poor's Indices Versus Active report stated that over the 10-year period ending June 30, 2016, 87 percent of actively managed mutual funds failed to outperform their benchmark index. The largest actively managed mutual funds in the U.S. can be found on several company 401(k) retirement plan menus.

Now is a great time for a company 401(k) retirement plan account review. Find the annual expenses and fees that you pay to own your current company 401(k) retirement plan mutual funds.  Next, check the last 12 months’ investment performance on these same mutual funds.

I am in my 19^th year of providing investment advice to individual company 401(k) retirement plan participants. The current gap between mutual fund annual costs and mutual funds annual investment performance is as wide as the Grand Canyon.

You can grab a large share of your client’s investment management assets by taking the time to ask the tough company 401(k) retirement plan account questions this summer.

Ric Lager is founder and president of Lager & Co., a registered investment advisory firm based in Golden Valley, Minn. He was the co-creator of the “No More Pies” investment series for financial advisors and author of Forget the Pie: Recipe for a Healthier 401(k). Ric may be contacted at [email protected].

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