Streamlining 401k Management with PathFinder
A retirement account like the 401k is the largest and most important savings account for most Americans. Management of this asset has historically been done by the individual participant on their own, but more and more people are looking to financial advisors to help them make informed decisions about their retirement money.
However, typical advising methods are unavailable or inefficient for held-away retirement accounts, which are traditionally ineligible for direct portfolio management. A 401k management service like PathFinder offers an alternative method for financial advisors to manage these held-away accounts, review comprehensive financial status, and guide their clients (and earn a fee/compensation).
The Challenges of 401k Planning for Financial Advisors
Financial advisors face a unique set of challenges when navigating 401k planning. With traditional advising methods, you’ll likely run into these barriers.
Limited Visibility
Plan visibility is one of the biggest hurdles financial advisors face in giving defined contribution advice. These employer-sponsored plans are designed to operate outside contributors’ direct control.
Clients select from a list of predetermined investment options curated by their plan administrator without many options for additional strategic management. Financial advisors can’t directly access these accounts either, requiring extensive communication and go-betweens to get a comprehensive picture of the account and give advice.
Compliance Complexities
The compliance landscape surrounding 401k plans is complex. You must remain compliant with evolving regulations, Employee Retirement Income Security Act (ERISA) guidelines, and fiduciary responsibilities. This requires a great deal of ongoing education, recordkeeping, and time investment.
With the added difficulties of manually gathering and analyzing plan information that you might not readily have access to, the process can quickly become overwhelming. This amount of effort doesn’t always match the kinds of returns an advisor sees on 401k investments, as compensation structures for held-away accounts can also be complex.
Client Education
Because held-away accounts have limited visibility and options, client education becomes crucial to investment success. Working with clients in this way takes time and often requires relying on them for actionable follow-through.
For many clients, this is a big barrier to 401k management—they hire a financial advisor because they want the expert to take over the workload, not because they want to learn how to do it themselves.
Want to overcome these hurdles? PathFinder is a game-changing service that enables advisors to compliantly provide advice on, actively manage, and receive compensation on held-away accounts.
How PathFinder Transforms 401k Management
PathFinder changes the game by offering additional retirement solutions for participants in and on their own 401k accounts. Rather than investing money in a held-away account through equity funds or fixed income funds, participants in many of these plans can customize their investments through self-directed brokerage accounts (SDBAs).
What Self-Directed Brokerage Accounts Offer
Self-directed brokerage accounts allow individuals to manage their investments directly, curating custom investments and buying or selling whenever they choose. Through this method, clients focused on money management for retirement can make more informed decisions and customize their investments based on their specific financial objectives.
This option offers financial advisors a path to direct management or oversight of 401k, 403b, 401a, and 457 accounts. You can offer your clients well-rounded financial counsel and direct their most important assets. Additionally, you can increase assets under management (AUM) and fee revenue while creating more meaningful relationships with your clients.
What PathFinder Offers
Building investment portfolios is the most time-consuming part of investment management. Customization offers the opportunity for increased gains, but it comes at a cost. It’s one of the reasons why choices like fixed income funds are so popular for retirement accounts.
PathFinder provides tailored portfolio options and can manage investments through your clients’ SDBAs, all while staying up-to-date on compliance. As the financial advisor, you save time mitigate some liability and gain increased visibility into your clients’ overall financial status.
Clients who trust you with their most important assets are more likely to find value in your input and use more services. They also become a resource for multigenerational relationships and other referrals that strengthen your client base.
Learn more about how PathFinder works to customize client portfolio options and streamline investment management.
Try PathFinder with Your Financial Management Services
Support your clients where they need it most. PathFinder makes 401k plan management easier than ever, with management options for nearly 100,000 defined contribution plans across health systems, academic institutions, and corporations. We offer customized portfolios with full transparency and unparalleled communication.
Whether you want to learn more about our PathFinder platform or discover solutions to your clients’ financial and retirement objectives, contact us today. We’re here to simplify portfolio building and asset management for both you and your clients.