How do you choose a Financial Advisor/Investment Company

I'm looking for a place to manage my 401K when I retire. How do you decide who to go with? What do you look for? I have looked at Fisher and Fidelity. 

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Periodic Contributor

My bank offers me one as part of my $20 monthly service charge, I am amazed at how knowledgeable and proactive my advisor is and even more amazed that I don't have to pay out an annual percentage of my money to have her! Sagewell Financial is their name, they were created to cater to us retirees. 

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Bronze Conversationalist

@RodneyT831440 I do not believe there is a simple answer to your first question. I think the answers you may receive will vary from person to person. Some may be financial, some social, and some may be more of a referral. Regardless of the various answers, you need to determine if the Financial Advisor (FA) is honest and trustworthy. Also, does the FA have direct and/or indirect experience with issues (i.e., lifetime income, principal protection, growth, etc.) that are important to you? Does the FA provide strategies and solutions that have documented success or are they best guess?  Most 401 K Plans are Participant Directed as opposed to Trustee Directed (pooled). With a Participant Directed Plan, the Plan Sponsor (generally your employer) has fiduciary responsibilities to select investment options and provide education (i.e., asset allocation,etc.). Some employers are not the best with regard to the above. However, if you work for a large employer, that employer may have an Administrative Committee that ensures compliance with the above fiduciary responsibilities required by Law (ERISA). You may have been using such Plan resources and managing your account already.  Moreover, some 401 K Plans are offering Self Directed Brokerage Accounts (SDBA) as an additional investment option. With the SDBA, you can invest in stocks, bonds, Treasuries, CDs, Mutual Funds, ETFs, etc. You can manage yourself or use the FA approved by the Plan's Administrative Committee. Generally, those FA have fees significantly less than an outside FA. It should also be noted that your 401 K account is a Defined Contribution Pension Plan under ERISA. So, your 401 K account is protected from creditors. An outside FA will recommend an IRA Rollover which may not have the same creditor protection. Using an outside FA will probably require you to elect a Rollover to an IRA and lose the protections of the 401 K Plan and ERISA. So, why do you want to use an outside FA to manage your 401 K? Lastly, if your 401 K Plan offers an S & P 500 investment option, approximately 85% of investment managers including outside FAs under perform the S & P 500 over the long run. Hope this helps.

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