Robin is a long-time client and is retiring at the end of this year. In a recent meeting she asked if she should roll over her 401k retirement plan to a self-directed IRA. For many people, their retirement plan is one of their largest financial assets, along with their home, and any decisions regarding it should be carefully considered.
However, there are several factors that can help shape this decision.
If you manage your own investments, one factor to consider is breadth of investment choice. Most retirement plans have a limited investment choice available to participants. This is not inherently good or bad, but it is a constraint you will have to accept if you stay with the plan.
If you want to outsource your investment management, it might be a moot point. Most investment advisors can only manage assets on their custodial platform. So, you will have to decide what is more important to you: utilizing a specific investment advisor or staying in
the plan.
Finally, the backdrop to both factors is cost. Dr. Kamershen, my econ professor at the University of Georgia always would say, “There’s no such thing as a free lunch.” And it is true. Each choice, staying in the plan, managing the funds yourself in a self-directed IRA, or using a third-party investment manager, costs money. Understanding the costs associated with each option puts you in a better position to make an informed decision.
Securities and advisory services offered through LPL Financial, a registered investment adviser. Member FINRA / SIPC.
This is a hypothetical situation based on real life examples. Names and circumstances have been changed. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments or strategies may be appropriate for you, consult your advisor prior to investing.