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The Problem: Americans need to save more for retirement. Small businesses with up to $25 mln in 401k plan assets often are hampered by an unappealing menu of funds, hidden fees and excessive costs. These all conspire to rob employees and key personall of the investment returns they need and deserve to fund their retirement.
The Solution: Professionally managed portfolios from an independent, Fee-Only Fiduciary Advisors (Kaplan Financial Advisors - a 3(21) Fiduciary) partnered with a reputable nationwide 3(38) Fiduciary Investment Manager.
The majority of US employees at small business firms are needlessly robbed of their bottom line return due to excessive 401k plan fees. 87% of $0.5-20 mln 401k plans in this country are managed by insurance companies. Participation in these plans typically costs an employee 2-4% per year in fees!
A rough rule of thumb indicates these plans typically pay approx. 20K/year in excess fees for each $1 mln in investment assets!
Here's how Kaplan Financial Advisors differs:
1. Cost: Our 401(k plans typically cost 1.5-1.8% per year to employees - including underlying mutual fund expense ratios. Other plans (typically run by insurance companies) can cost 4% or more per year! What difference does an additional 2% per year make to an employee bottom line? If an employee invests $5,000 per year for 40 years, that's an additional $578,667 in the employee's pocket!
2. Investment Solutions: Our 401k program offers elegant portfolio solutions (covering the full risk spectrum from 100% fixed-income to 100% equities) that cost employees a mere 0.30% per year in underlying expenses. These portfolio solutions are automatically rebalanced on an as-needed basis.
Small company 401k participants don’t need more choices – they need a higher standard of service. Instead of being asked to build a portfolio from scratch, using a bewildering list of mutual funds, the vast majority of 401k participants want a "one stop portfolio solution" provided by a conflict-free advisor who has 401k participants' best interests at heart.
3. Our Experience: We have 25+ years of investment experience, including success managing over $900 million for a large European mutual fund house. Our 401k plans utilize Dimensional Fund Advisors (DFA) funds. DFA currently has $177 billion in assets under management. DFA portfolios are well diversified, have exposure to niche markets not always found in 401k or other plans (e.g. US micro cap or short-term global bond funds) and generally have a passive tilt that stresses "value" and "small cap" since these areas outperform "growth" and "large cap" over extended periods of time.
4. Our Service: We provide educational seminars to small business employees so they select the best pre-designed portfolio for their needs. We're committed to keeping our 401k clients satisfied.
5. Lessen Fiduciary Liability: We share Fiduciary Responsibility for 401(k) plan with the Fiduciary Investment Manager; our firm is a 3(21) Fiduciary teamed with 3(38) Investment Advisor Fiduciaires. ERISA guidelines specifically recommend plan sponsors use 3(38) Fiduciaires to provide investment optoins but the vast majority of 401kplans leave the plan sponsor (small business) exposed and liable. This allows the small business to concentrate on its core business and stop worrying about the Fiduciary risk it may incur.
Instead of an expensive plan lacking fee transparency, why not embrace a transparent, cost-effective, high-quality 401k plan that delivers to the bottom line?
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