Out-of-the-Box Thinking for Investing in Scary Times

I find that Americans are asking more and more often, “Are there ways to protect our assets from market volatility and still make a competitive rate of return?”

Many firms in our marketplace continue to use strategies that were developed over 20 years ago like stocks, bonds and cash. In a dynamically changing world that is currently going through the microprocessor revolution, old strategies seem to no longer be able to keep up with the times. When 911 happened, we began to look at solutions that could reduce market volatility and help protect retirees’ principal no matter what may be going on with the stock market or the economy.

When you work with a retirement specialist, it’s important to make sure they use alternative methods and strategies to safely meet the above-mentioned goals. After the Enron scandal, that lost billions of dollars to Enron employees and investors that stretched across the globe, there were many regulatory changes designed to help protect investors’ assets. Those regulatory changes were significant, and many people are not aware of them when they’re planning for their Golden Years.

First, before the Enron collapse, most corporations only matched in corporate stock on their matching contributions. It was good for the companies, but left the employees exposed to sever risk, which became painfully obvious during the Enron debacle that lost billions of dollars to employees and investors.  The government made changes to 401k and pension programs that allowed employees of firms to self direct those matching corporate contributions and the company had to offer choices, instead of only offering corporate stock.

Second, the regulation made changes that allowed employees in certain plans to be able to roll out funds of existing 401k programs and similar plans to safer or less risky investments, even if they continued to work and contribute to their existing 401k plans. This was never an option in the past, and the investor was limited to only the options to invest that were provide in their plan document.  Because of these changes, there are opportunities that may be available to investors to dramatically reduce their portfolio volatility and risk even with their current 401K programs.

Third, the regulation specified that certain 401k and pension plans had to allow an employee who had an investment advisor to be able to put their advisor into the plan and be able to advise them directly on how to invest their 401k assets. Instead of having to wait for the annual meeting where a representative would show up and give broad based information regarding investments in their plan, an employee can now actually have their own personal investment advisor give them constant advice on their plan as needed.  They no longer needed to rely on what the office pool was saying they needed to do with their money, they could now make educated and goal-oriented decisions for their future with their professional investment advisor.

It is critical to your retirement that you work with a licensed and reputable financial advisor who will review all three areas mentioned above with you. You may be taking unnecessary risk with your portfolio. Find the best retirement strategy for you and your family.