Freedom of Choice: you can get nearly 80% more out of your 401K

More investment options, active management & asset protection for you in retirement.

What Is a Self-Directed Brokerage Account?

As retirement investing evolves, more company-sponsored retirement plans (such as 401(k), 403(b), and 457 plans) are offering participants greater flexibility and freedom of choice. One popular option is the Self-Directed Brokerage Account (SDBA).

An SDBA is a feature within a company-sponsored retirement plan that allows participants to invest in a broader range of options beyond the pre-selected choices typically offered by the plan. This includes access to individual stocks, bonds, mutual funds, exchange-traded funds (ETFs), and more. By leveraging professional money management and these expanded options, participants can align their investments with their specific goals and risk tolerance, aiming to maximize potential returns.

How Does It Work?

For participants in a plan that offers an SDBA, assets can be transferred into the brokerage account without incurring taxes or penalties. Once inside the account, participants have the ability to select from a wider array of investments, empowering them to tailor their portfolio to better suit their retirement objectives. Assets remain in the retirement plan so there is no taxable event.

How Can Tactical Management Benefit an SDBA Participant?

Tactical, active management helps investors take emotion out of the investing process by relying on the expertise of seasoned financial professionals. Market volatility and unforeseen events often lead to emotional decision-making, which can negatively impact long-term investment goals and returns. By working with a professional, participants gain guidance to navigate market complexities and stay focused on their financial objectives.

How Does Risk Management Help Protect Against Major Losses During a Downturn?

Avoiding the worst days in the market can significantly impact an investor’s long-term success, potentially saving years of recovery time. Through fiduciary investment advice and advanced risk management tools, funds are actively managed based on a person's risk tolerance. This approach uses stop-loss strategies and adjusts portfolios as needed, aiming to minimize losses during market downturns. By removing emotion from the equation, tactical management seeks to help participants optimize their retirement investments and achieve their financial goals.

THE FREEDOM GOES BEYOND THE BASICS

A 2014 Financial Engines/AON Hewitt study found that participants who received professional financial help saw an annual median return 3.32% higher than those who did not, net of fees, from 2006–2012. Over time, this difference can significantly impact wealth accumulation, potentially resulting in 79% more wealth by age 65 for a 45-year-old participant working with a financial professional.

Confirm Your Eligibility to Open a Self-Directed Brokerage Account

To determine if you qualify for a Self-Directed Brokerage Account, contact your plan sponsor. You can do this by reaching out to your Human Resources or benefits department, or by consulting your financial advisor.

If you are interested in learning more contact Cory Carlton at c.carlton@BothHandsFG.com.