Are Private Funds in 401(k)s a Good Idea?

Regulators recently approved a change that allows 401(k) plans to offer private equity and other private funds. Many people see this change as a big step forward because it gives retirement savers access to investments that were only available to institutional and high net worth investors in the past.

This change raises an important question: Will the addition of private funds improve outcomes for the average 401(k) participant, or will it just make things more complicated without offering any real benefits?

Is a “Coin Flip” a Good Retirement Plan?

When I do retirement plans for clients, one of the basic elements is to model how often a portfolio similar to theirs will last at their planned spending levels. Intuitively, most people want to hear that there is a 100% chance their plan will succeed. When I tell them it’s less than that, they usually aren’t pleased. After all, who wouldn’t prefer certainty when it comes to retirement?

Do You Need a Financial Advisor? Maybe Not. But You Might Want One.

There’s a common message in the financial industry that everyone needs an advisor. I don’t believe that.

If you take pleasure in managing your own finances, have the time to remain involved, and possess the discipline to make confident decisions, you will likely be just as successful as someone who hires an advisor. There are plenty of capable, self-directed investors.

In fact, an advised portfolio will almost always be pricier than a self-managed one. And when all things are equal, it’s unlikely to outperform. But all things aren’t always equal.

ATX Portfolio Advisors, LLC is a State of Texas Registered Investment Advisory Company. 

Please consider the investment objectives, risks, charges, and expenses carefully before investing in Mutual Funds. The prospectus, which contains this and other information about the investment company, can be obtained directly from the Fund Company or your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.

Asset Allocation and/or Diversification do not guarantee a profit or protect against a loss in a declining market.  They are methods used to help manage investment risk. 

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