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A
company was referred to Wescott to review their high expense, low
performing series of investment portfolio choices in their 401(k)
plan. Participants dutifully fund their retirement contributions,
but there was a general sense of uneasiness with their investment
selections. We noted either “performance chasing” by some
who put their entire balance in one option which has performed best
most recently or by holding all their contributions in bonds or a
money market fund.
We
worked with the Plan’s custodian to develop a far lower cost
set of well-performing investment options. We developed a series of
investment portfolio models that participants could choose which would
provide guidance with respect to their individual objectives and risk
profile. A workshop was held (and is repeated annually) to educate
participants about investing, the options and the models.
On
a quarterly basis we provide a customized Commentary for the Plan
so participants can review the managers’ performance and any
changes we might be making. Annually, we also provide a performance
calculation for each of the models so participants can see how they
would have fared if they had followed a particular model. We also
provide, annually, a guide which contains Wescott’s original
research on the options in the program.
All
these documents are provided by us in an electronic format so that
they may be posted on the company’s internal Intranet.
Both
the Director of Human Resources and the company’s owner have
remarked how well the Plan investments have been performing and, most
importantly, the overwhelming satisfaction of the Participant employees
with such a well organized and performing investment vehicle.
©2005- Wescott
Financial Advisory Group LLC | Disclosure
