Hey guys! Came across a new tool I think some of y’all will like :)
You know when your HR department gives you a list of funds to choose from for your 401(k) (or 403(b), TSP, 457, etc), but you never know what to invest in? Or how much or what %?
This service I just came across will tell you what to do based on your specific situation. It’s called Smart401k.com, and I wish I had known about them at my old 9-5 ‘cuz I LOVED my 401(k) but hated figuring it out. The only thing I knew was to max out those employer matches to get that free $$$ (best thing ever – you better be doing it!) and the rest I just did my best on before moving along…
If that’s you too – or you like getting 2nd opinions – this post is for you. If you live and breath this stuff and enjoy doing it all on your own, then click here instead ;)
And PS: I got them to waive their yearly fee of $199.95 for any BudgetsAreSexy reader interested in checking them out. So not only is their service helpful, but it’s FREE!
More About Smart401k
I took this off their site ‘cuz it sums it up perfectly:
You don’t need to spend hours researching the funds available in your retirement plan at work. Smart401k Investment Advisers do the work for you, analyzing fund performance, manager track-record, expenses and style fit as a part of the fund selection process.
- Detailed: Your advice is tailored to the funds available in your retirement plan.
- Professional: Smart401k uses a proprietary fund evaluation strategy, incorporating Modern Portfolio Theory and adviser oversight to create your recommendation for your retirement goals.
- Easy to use: Use the list we’ve prepared to make changes to your account.
Smart401k is an independent provider of retirement investment advice. We’re not paid by fund companies to sell their products. We’re a flat-fee, Registered Investment Adviser operating solely in your best interest.
That last part is the key, and my personal favorite: They only recommend funds from the list your employer offers! Because that’s all they CAN do, haha… And they don’t get paid on commissions or anything – just the yearly fee to use them (which again, is waived for those of you reading this).
Now in a perfect world your employer would offer AWESOME kick-ass funds to choose from making their job even easier, but unfortunately that’s not always the case. So the short list of funds can be a double edged sword.
Also – it’s important to note that Smart401k doesn’t have *access* to any of your accounts. They only recommend what to do with the funds available, and then it’s up to YOU to take action. This too can go both ways: Yay for privacy/security, Boo for meaning you have to do more “work.” But fortunately this work will literally take a minute or two :)
Other quick facts: They’ve helped more than 25,000 individual investors so far, advised on over 10,000 different company retirement plans (which is good because it means they might already be familiar with yours), and they’re rated A+ by the BBB (Better Business Bureau).
How Does Smart401k Work?
It’s actually relatively simple and easy:
- You sign up online (use this link to get the free year): Smart401k signup
- You take their “Investor Profile questionnaire” (14 questions)
- You tell them what funds your plan offers
- They shoot you back a recommendation!
- You make the changes (if you want to)
They say it usually only takes 10-15 minutes to sign up online, but I’d give yourself at least 30-40 when you have a nice window and can take your time. It’ll go much faster if you have your list of funds handy too when sitting down.
Once submitted, it takes 4-5 business days to get your recommendations (a real life person/adviser reviews everything) and then it’s emailed over and updated in your account online. Every 3 months they’ll review it and pass along any changes they feel should be done, as well as anytime your plan – or life situation – changes too. Though you’ll have to remember to tell them so because unfortunately they’re not mind readers ;)
The only con I can really think of since the $200 cost is waived for y’all (woop!), is that the forms are rather annoying to fill out. And the 14 question profile questionnaire is too. But I really don’t know how you can avoid it since it’s all pretty important things to know or else an adviser can’t advise, haha… And you really do want them to have this info! :)
So in cases like these you just have to suck it up once for 20-30 mins, and then pat yourself on the back for getting it done. And really, in the grand scheme of things, your retirement investments are a pretty damn important thing to lock down. So you’ll be glad you did. (And maybe some of you will actually enjoy it like you did our financial personality quiz?)
UPDATE: I’ve heard that advisors from their parent company – The Mutual Fund Store – will call you to try and get your business in other investment areas of your life too. This doesn’t affect your free 401k recommendation, but it might annoy you if you’re not looking for help in those other areas. The trade off of getting all this for free, I suppose :)
What Does it All Actually Look Like?
I got on the phone with them to be walked through it all, and in the process they gave me a dummy account to log into and poke around. I took screenshots of what the important areas look like so you know what to expect.
Here’s the one you care about the most – the recommendation part: (this is front and center as soon as you log in – you can’t miss it)
Below this they show you the next steps that need to be taken, along with any additional notes to consider. And again, remember that you’ll have to actually make the changes yourself in your plan since they don’t have access to it.
Here’s one of the additional notes I liked that was in my dummy account:
- If your plan offers company stock, we encourage you to hold 10% or less of your total portfolio. (<– Good advice!!) Please note that we do not analyze company stock or include it in your recommendation.
There’s also a tab/page for your “asset allocation”
And then a tab/page for your “investor profile” (ie risk profile):
Below this they share information on your investment strategy, your calculated risk level, and then your time horizon to retirement. There’s also an area to change your questions to your profile questionnaire if you’d like to adjust it.
And lastly, this is what the main area of your account looks like:
That’s really all there is to it, it’s fairly simple. There’s a forum you can poke around to check out and ask questions, a retirement education center to read up and learn more about investing/retirement, and then some other links with informational stuff too. But the main areas of interest are those three sections above.
You shouldn’t need to spend a lot of time in here once you get the goods :)
Oh, they also make it super easy to talk to a real life human being/adviser too which I LOVE. Their # and email are listed everywhere (1-877-627-8401, firstname.lastname@example.org), and they have a quick “chat box” area too which is what I usually prefer. There’s also no additional fees for talking with them and getting advice! It’s all included in the flat yearly fee which is waived for you for the first year (when the year is up, they’ll ask you if you want to continue or not – you won’t be automatically renewed or charged or anything like that – don’t worry! They won’t even ask for c/c info when you first sign up…).
And That’s That!
So, in a nutshell…
- If you have no idea what to choose in your 401(k), or want a 2nd opinion, Smart401k can help
- As well as with 403(b), Thrift Savings Plan, 457 and small business retirement plans
- You fill out some info once and you’re done (unless changes happen on your side later)
- They shoot you back recommendations to take action on (as well as follow ups every quarter)
- It’s free for a year, but only for BudgetsAreSexy readers :)
You can try it out here if interested: Smart401k service
Questions? Comments? Concerns? Drop them below and I’ll have someone on their team answer any I can’t myself. Again, it’s not for everyone – like those who love researching and thinking/doing stuff on their own – but for the majority of people it’s a great service to consider. I’d sign up myself if I could, but sadly they don’t work with self-employed programs… And they’d probably freak out anyways when they see I’m fully invested in one index fund – hah!
Anyways, hope this helps! If anyone’s used them before, or others like it (are there others like it?), please do share your thoughts with us… I’d never heard of this service before and I think it’s genius :)
PS: Whether you try the service out or not, do make sure you’re contributing at least up to your employer match to get that free money!! It’s one of the main things I did to grow my own net worth, and a helluva easy way to turbocharge your investments for doing something you should be doing anyways. Do whatever you can to take advantage of these benefits!
ALSO NOTE: As with most reviews of companies I like and trust here, I get compensated when people sign up through my links. But please don’t do that if it’s not a service you want to try out. While I’ll never promote a company I don’t like or find helpful myself, it’s important to do your own due diligence.