Over 2 years ago, we stopped offering indirect management of 401(k)s for new clients. We continued to allow indirect management for those who still had it. In 30 days, we’re stopping indirect 401(k) management for all clients for a few reasons:
A variety of options
Every employer-sponsored retirement plan has a different set of plan options. These can also change frequently. This makes it difficult to keep information up-to-date to give you the level of quality and accuracy we expect for our service.
An impact on service
If someone put all stocks in their 401(k), FutureAdvisor would have to balance their asset allocation with mostly bonds. This could make sense from a holistic standpoint but from a fiduciary standpoint it doesn't. Since we can’t we can’t trade for indirectly managed 401(k)s, we can’t provide the level of service we’d like to. In this scenario, our hands were tied.
The trouble in linking accounts
For managed accounts, we have a direct link to the account since we trade for it. For 401(k)s, we use a third party tool that allows the user to de-link/re-link whenever they want. Some users would de-link an account, re-link it, again and again. Each cycle would trigger a rebalance. Essentially the client was churning themselves unnecessarily.
This decision wasn’t easy to make. We know many clients value this service. However, we believe that by removing indirect 401(k) management, we can improve your portfolio management.
A quick note about capital gains
As always, we take into account potential capital gains implications in any rebalance and act accordingly. This can include a review of the trade and potentially reaching out for more information.
Disclaimer: The views expressed are for informational purposes only and are not intended to serve as a forecast, a guarantee of future results, investment recommendations or an offer to buy or sell securities by FutureAdvisor. All expressions of opinion are subject to change without notice in reaction to shifting market, economic, or political conditions. The investment strategies mentioned are not personalized to your financial circumstances or investment objectives, and differences in account size, the timing of transactions and market conditions prevailing at the time of investment may lead to different results. Clients may lose money. Past performance is not indicative of future results. Investments in securities involve the risk of loss. Any tax strategies discussed should not be interpreted as tax advice and do not represent in any manner that the tax consequences detailed will be obtained. Clients should consult with their personal tax advisors regarding the tax consequences of investing. FutureAdvisor does not provide personalized financial planning to investors, such as estate, tax, or retirement planning.