company or self-directed 401k

[Amy[_2_]]

hello, have a question on what to consider if allowing company to manage
401k funds or pick a self-administered brokerage arrangement and manage
myself the 401k funds

background: have worked for company over 20 years and their 401k management
(the internal vs. outsourced management) has gone through multiple hands and
multiple companies. in all this time, the funds have grown between 5-12%
every year, amounting to about 500k

now company has announced a major change in how they match funds, how much
can be invested into each of the categories and also the option to choose a
self-directed brokerage account where you would pay for each trade but it's
all under your own control

the difference of course is that the company managed (or the outsourced
management for the company) has access to institutional funds where an
individual would not have access but they also charge very high fees from
the funds, often 1.0 to 1.5 percent and I think I may be able to pick mutual
funds that would charge only 0.5 percent or less and maintain same diversity

some examples of the funds are various SSgA funds, Boston Company domestic
and International funds and pools of these (blends of various funds)

of course I can just park the 500k into a money market type also but I have
to make a pick to allow them to manage it for me (and pay 1.5 percent or
more) or pay per transaction but pay much less if I self-manage

[PeterL]

On May 29, 12:16 pm, "Amy" > wrote:
> hello, have a question on what to consider if allowing company to manage
> 401k funds or pick a self-administered brokerage arrangement and manage
> myself the 401k funds
>
> background: have worked for company over 20 years and their 401k management
> (the internal vs. outsourced management) has gone through multiple hands and
> multiple companies. in all this time, the funds have grown between 5-12%
> every year, amounting to about 500k
>
> now company has announced a major change in how they match funds, how much
> can be invested into each of the categories and also the option to choose a
> self-directed brokerage account where you would pay for each trade but it's
> all under your own control
>
> the difference of course is that the company managed (or the outsourced
> management for the company) has access to institutional funds where an
> individual would not have access but they also charge very high fees from
> the funds, often 1.0 to 1.5 percent and I think I may be able to pick mutual
> funds that would charge only 0.5 percent or less and maintain same diversity
>
> some examples of the funds are various SSgA funds, Boston Company domestic
> and International funds and pools of these (blends of various funds)
>
> of course I can just park the 500k into a money market type also but I have
> to make a pick to allow them to manage it for me (and pay 1.5 percent or
> more) or pay per transaction but pay much less if I self-manage

Personally I have always like the self managed route. I don't know
which brokerage is available to you. But in general you get a much
broader selection of funds, and of course you can pick funds with low
management fees.

[joetaxpayer]

Amy wrote:
> hello, have a question on what to consider if allowing company to manage
> 401k funds or pick a self-administered brokerage arrangement and manage
> myself the 401k funds

Given what you described, I would lean toward going the self-managed
route and choosing a number of ETFs or very low cost index funds.
The difference between .20% and 1.5% is a huge difference over time.
With $500K on the line, it's worth learning how to properly diversify
the account to maximize your returns.
JOE

[BreadWithSpam@fractious.net]

joetaxpayer > writes:
> Amy wrote:
> > hello, have a question on what to consider if allowing company to
> > manage 401k funds or pick a self-administered brokerage arrangement
> > and manage myself the 401k funds
>
> Given what you described, I would lean toward going the self-managed
> route and choosing a number of ETFs or very low cost index funds.
> The difference between .20% and 1.5% is a huge difference over

It depends on more than just that. What she probably
has is a "mutual fund window" through her 401k which
lets her invest - via a specific brokerage - in a
specific subset of funds, usually limited to a few
families. She may well not have access to ETFs or
to the lowest-fee fund families through that "window".

Truth is, Amy needs to do a bit more research and post
the specifics here for any response to be especially
good beyond basics or platitudes.

--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

[joetaxpayer]

wrote:

> joetaxpayer > writes:
>
>>Amy wrote:
>>
>>>hello, have a question on what to consider if allowing company to
>>>manage 401k funds or pick a self-administered brokerage arrangement
>>>and manage myself the 401k funds
>>
>>Given what you described, I would lean toward going the self-managed
>>route and choosing a number of ETFs or very low cost index funds.
>>The difference between .20% and 1.5% is a huge difference over
>
>
> It depends on more than just that. What she probably
> has is a "mutual fund window" through her 401k which
> lets her invest - via a specific brokerage - in a
> specific subset of funds, usually limited to a few
> families. She may well not have access to ETFs or
> to the lowest-fee fund families through that "window".
>
> Truth is, Amy needs to do a bit more research and post
> the specifics here for any response to be especially
> good beyond basics or platitudes.

You may be right. The ones I am familiar with allow you to move cash to
the brokerage side of the 401(k) and then choose any publicly traded
stock you wish, as well as pick from a huge number of no-load funds. I
hope to see her post back with the missing details.