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Should I Pay To Have Someone Manage My 401k?

Proper 401k management is a critical piece to your retirement plan. Gone are the days where you could just allocate a specific percentage of your paycheck each pay period to your 401k, and by the time you retire, you’ll have enough money to sustain your quality of life.

401K management is becoming increasingly more important considering inflation, the rising cost of health care, and the number of years we stay retired. Not only is 401k management becoming increasingly more important, it’s also becoming increasingly more challenging.

Hiring a 401k management company can help ensure you’re on the right path at all times. If you don’t know where to start don’t worry, we’ve done the hard work and isolated the best 401k management companies below. 

Quicklook: Best 401k Management Companies

  • Charles Schwab – Best for Low Fees
  • ADP – Best for Combining Everything HR Related Under One Roof
  • American Funds – Best for Business Flexibility
  • Future Capital – Best for Long Term Investing
  • Fidelity – Best for the Self Employed
  • TD Ameritrade – Best for Combining 401k With Full Broker Support
  • Employee Fiduciary – Best for Small Businesses
  • Vanguard – Best for Mutual Fund Investing

Table of Contents:

8 Best 401k Management Companies

Let’s start by reviewing the best 401k management companies. 

Charles Schwab

Best For Low Fees

Charles Schwab

Charles Schwab is a well known and respected financial company. They have a deep history, and has earned a great reputation for phenomenal customer service and an incredibly low fee structure. If you’re looking for strong 401k management options, but want to keep your fee structure low, consider working with Charles Schwab. 

How It Works: You can open a 401k account with Charles Schwab from the comfort of your own home. They offer both individual 401k accounts and 401k options for businesses. 

Management Fees: The fees are dependent on your individual needs and investment options. 

Tradable Assets: There is a wide range of investment vehicles with Charles Schwab. You’ll be able to invest in; stocks, bonds, ETF’s, CD’s, options

Standout Features: Without question, the low fees is the most appreciated standout feature. 

Benefits:

  • Low fees
  • Plenty of investing options
  • Outstanding customer service 

Disadvantages:

  • There isn’t much available information on pricing for this option. You will need to reach out to a consultant at Charles Schwab to ask about the additional costs associated.
  • If you own a business, the 401k isn’t part of an overall payroll or benefits package.

ADP

Best For Combining Everything HR Related Under One Roof 

ADP is a fully robust human resource company. Not only does ADP offer 401k options, they offer everything your business may need from a human resources perspective. From payroll, reviews, 401k management, and recruiting, ADP does it all! 

How It Works: ADP offers a variety of 401k options, and individuals will have the opportunity to select which option is right for them. There are target date funds, high growth options and income producing options. 

Management Fees: Each fund will have its own fee structure. Although the fees are not as low as Charles Schwab, they are still rather competitive. On average, customers pay roughly 1% in fees. 

Tradable Assets: ADP is not a brokerage, so its trading options will be limited. However, you can invest in stocks, bonds, options, and CD’s. 

Standout Features: The best feature is how well ADP integrates with all the other HR needs your business has, such as payroll. 

Benefits:

  • There are numerous fund options
  • The fee structure is about average 
  • ADP integrates with all other HR needs 

Disadvantages:

  • ADP is not an investing company, trading options will be limited 
  • Considering how robust ADP is, it could be overwhelming for a small business owner 

American Funds

Best For Business Flexibility

American Funds from the Capital Group offers a wide range of 401k options. What people enjoy most about their 401k products is how diverse they are. No matter your business size or investing goals, American Funds likely has a 401k option that will fit your needs. 

How It Works: Employers choosing to partner with American Funds have no problem integrating the software/management tools. Employees can contribute a portion of their paycheck directly to the 401k, and can have complete control over what fund the money is allocated to. 

Management Fees: Each plan within American Funds will have their own fee structure. Generally speaking, their fees are competitive. 

Tradable Assets: Tradable assets include mutual funds, stocks, and bonds. 

Standout Features: Their best feature is simply how diverse their product offerings are. 

Benefits:

  • The fund is managed by professionals at an accredited firm
  • The product offering is divirse 

Disadvantages:

  • There are no ETF investing options 
  • The expense ratio is on the higher end 

Future Capital

Best For Long Term Investing

Future Capital is nearly two decades old. This is a relatively small company, so getting outstanding customer service is well within its nature. Also that given, this option is great for those wanting a more personal experience.

How It Works: You can connect your 401k or 403b directly on their site. This is done in just a few easy to follow steps. 

Management Fees: The management fees with Future Capital are straight forward. The fees will be displayed once you select which fund option you want to go with. 

Tradable Assets: Future Capital invests for the long term, and they’ll invest in various stocks, mutual funds, and equity classes. 

Standout Features: Considering how small of a company this is, the standout feature is how personal everything feels. Future Capitals customer service is greatly appreciated by their existing clients. 

Benefits:

  • Their software/website is easy to use
  • Integrating their 401k with your existing 401k is easy

Disadvantages:

  • Some people love the fact that Future Capital is a small company, whereas others want to leave their retirement with pros that have been doing it for 50+ years! 

Sign up here with Future Capital

Fidelity

Best For the Self Employed

Fidelity

Fidelity is another well known and respected name in the financial world. Their 401k options are worldclass, and are a fantastic option for the self employed. 

How It Works: Simply select which plan is right for you, and begin contributing money to the plan! Signing up with Fidelity is easy, and you can do so directly online. 

Management Fees: Each plan will have its own management fee. Fees on the high growth plans tend to be higher than the more conserative plans. 

Tradable Assets: Individuals can invest in stocks, target date funds, mutual funds, bonds, and ETFs. 

Standout Features: Fidelity is more than just a brokerage. They will also go the extra mile and teach their clients details about picking the right investment options to fit their needs. 

Benefits:

  • This option is great for the self employed 
  • There are a wide range of options to choose from 

Disadvantages:

  • Fees, on average, tend to be on the higher end 
  • Fidelity does not integrate with other payroll or benefit options 

TD Ameritrade

Best For Combining 401k with Full Broker Support

TD Ameritrade

TD Ameritrade is a world class brokerage platform. Not only does TD Ameritrade offer an endless amount of educational support, they also have minimal fees. Their full service brokerage is suitable for any investor or trader. 

How It Works: A small business can set up a solo 401k with ease. Contact a TD Ameritrade specialist online or over the phone to begin the integration process. 

Management Fees: The overall fee structure is certainly on the lower end. Their 401k management fee is less than 1% on most 401k plans, and if you want to trade or invest in stocks, expect to pay $0 in commission! 

Tradable Assets: TD Ameritrade allows you to invest in stocks, bonds, currencies, ETFs, and mutual funds. 

Standout Features: TD Ameritrade is a world class brokerage firm. Without question, if you’re a beginner or advanced trader/investor, the TD Ameritrade platform is a great option for you. 

Benefits:

  • You can combine your 401k and investing account all under one roof 
  • TD Ameritrade offers countless hours of educational support 
  • The fees to trade are $0 

Disadvantages:

  • TD Ameritrade does not integrate with other HR needs, such as payroll and health benefits 

Employee Fiduciary

Best For Small Businesses

If you’re a small business, you’ll fully understand the importance of saving money. Employee Fiduciary is a great 401k option with low fees. Employee Fiduciary allows you to open accounts with as little as $500. 

How It Works: Simply meet the minimum account balance requirements and you can open an account directly with Employee Fiduciary online. 

Management Fees: Employee Fiduciary is well known and respected for their low fee structure. All of their fees are 100% transparent on their website.

Tradable Assets: Investors can invest in stocks, ETFs, and index funds

Standout Features: Their low fees is by far their most standout feature. 

Benefits:

  • Incredibly low fees
  • Low account minimum requirements
  • A great option for a small business 

Disadvantages:

  • The investment options are limited, there are other 401k providers that have a wider range of investment options available 

Vanguard

Best For Mutual Fund Investing

It’s hard to talk about investing in a 401k without talking about Vanguard. Vanguard has been a stable investing company for many years, and has a history of providing great services to their customers. 

How It Works: There are numerous 401k plans you can choose from. Each plan has its own list of unique benefits, risk exposure, and investment vehicles. 

Management Fees: All in all, the management fee and 401k fee depends on which plan you select. However, Vanguard is known for having transparent fees and these fees are typically on the lower end. 

Tradable Assets: Investors can invest in stocks, ETFs, and mutual funds. 

Standout Features: Vanguard has countless mutual fund options that offer great diversification

Benefits:

  • There are numerous plan options you can choose from
  • The mutual fund options provide tremendous diversification

Disadvantages:

  • The only service Vanguard provides is financial services 

How Does 401k Management Work?

Before you pick the best 401k management company for yourself, we should review exactly how 401k management works. 

Properly managing your 401k takes a lot of work! Not only do you need to take a lot of variables into consideration, such as your; risk tolerance, required income for retirement, and overall lifestyle goals but you’ll need to do your research on the underlying investments as well. 

When your 401k is managed by a professional, they take on the burden of doing this work. 

What Is 401k Management?

401k management is a complex puzzle. A 401k is used as a retirement plan. The sooner you start contributing to this plan, the better off you’ll be.

401K management looks at the variables addressed above, and rebalances your 401k accordingly. For example, if you’re retiring in the next few years, you’ll want to have less risk in your overall portfolio as you can’t afford to lose money.

Whereas in your younger years, having a riskier portfolio can help you generate a greater rate of return. If the investment happens to go in the opposite direction, you have plenty of time to earn back that money! 

How Much Does It Cost to Manage a 401k?

You can either manage your 401k yourself, or pay a 401k management company to do so on your behalf. There will be a fee associated with professional 401k management.

This fee typically costs between 0.50% on the low end and 2% on the higher end.  

What Is the Best Way to Manage 401k After Retirement?

In your retirement years, 401k management is more about capital preservation and consistent, predictable income. You’re likely going to want to reduce the overall risk of your portfolio and stick to the safe investment vehicles.

If you need additional income throughout your retirement years, a high dividend paying portfolio may be best suited for you. 

Can I Change Who Manages My Investments?

There are plenty of 401k management companies. You absolutely have control over what company you could use for 401k management. 

How To Calculate Management Expenses on 401k

Unfortunately, the 401k fee structure is a bit confusing. Unlike paying for other services, 401k fees are not paid upfront.

Instead, they are deducted from your overall account, and are usually a percentage of your total account size. A good 401k management company will clearly outline what these fees are, and what the expense ratio is. 

Be sure to factor in the fees when comparing the yearly return of the 401k management company. Fees can quickly erode profitability. 

Reasons to Use 401k Management

There are a few main reasons why one would want to use a 401k management company. These reasons include:

  • A professional is trained on the numerous variables that must be taken into consideration for proper 401k management
  • You simply do not have the time to properly manage your 401k 
  • A professional can take an unbiased approach to your investments, and can strictly focus on the facts 

Reasons Why You May Want to Avoid 401k Management

With that said, the following reasons are why you may not want to use a 401k management company:

  • There are fees associated with using a 401k management company, and these fees can reduce your overall profitability 
  • You genuinely enjoy managing your 401k, and have a strong understanding of investment management, risk tolerance, and tax implications 
  • You are concerned about putting something so meaningful in the hands of someone else

401k Management is too Important to Do a Part Time Job Managing 

Proper 401k management is a key step in ensuring you have enough money to really enjoy your retirement years. Far too often do people take a passive approach to their 401k management, and are left disappointed, or short of money in their retirement years.

Working with a financial advisor is also a great way to ensure your 401k is being properly managed at all times. Financial advisors will take an unbiased view at your 401k and help determine if you are overpaying for management fees, maximizing your returns, and investing in investments that fit your risk tolerance.

Of course, financial advisors are not free, but this is often a small price to pay for the tremendous value they provide.

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