Don't Blame Your Company for a Poor 401(k)

There seems to be a trend in personal financial matters to blame a third party for investment decisions and financial outcomes that don’t work out well for individual investors.

In recent weeks, I have sat down with more than one Minnesota company 401(k) retirement plan participant who has voiced their frustration with the lack of investment returns in their individual company retirement plan account over the last few years.

It seems that the company 401(k) retirement plan sponsor, the company retirement plan provider, or the mutual fund menu are all to blame for the lack of investment returns in company retirement plan accounts over the last few years.

When real estate prices got in trouble a few years ago, the subsequent collapse in real estate prices was blamed on the mortgage brokers.  The banks were also blamed for making the mortgage loans in the first place. The real estate agents were then blamed for advising their clients to buy homes at all-time high prices.

The mortgage brokers, banks, and real estate agents are all experts in their fields.  They all work in highly regulated and controlled industries. I am sure that they all advised their clients to the best of their abilities at the time.   

Maybe I am a little bit old-fashioned, but whatever happened to taking personal responsibility for your investment management decisions?

The investment management responsibility for your individual company 401(k) retirement plan account is your own.  If you choose to make the investment management decisions on your own, you should take the responsibility for them.

If you don’t have time to watch your individual company retirement plan account, then hire a professional to do it for you.  If you feel that you don’t have the knowledge and expertise to make the necessary investment management decisions in your company retirement plan account, then hire a professional to do it for you.

Blaming a third party when investments go bad is easy. That is what the majority of real estate investors have done in the past few years.

It is no surprise that blaming the other parties involved in real estate investments has not improved the real estate market.  The same will hold true with individual company retirement plan accounts.

The next big stock market correction that erases a large amount of your individual company retirement plan account principal is going to be your responsibility.  Just like the last one was too.

Ric Lager
Lager & Company, Inc.