Ignoring Your Old 401k or IRA After a Pandemic Job Change?

Ignoring your old 401k or IRA after a career change can be costly. Vanguard recently published a research paper on the value of working with an advisor on holistic investing and financial planning. Their work concluded that advisors can add about 3% in net returns over time.

If you are skeptical about professionally managed portfolios outperforming the market – you should be. There is no evidence that most professionals are better stock pickers than anyone else. However, it is important to remember that total returns for your portfolio come from  a variety of areas beyond market performance and “beating the market.”  Vanguard’s results found that advisors add value by building appropriate asset allocations, reducing fees, rebalancing, promoting consistent investment behaviors and reducing taxes. For example, In today’s environment, we often find clients are contributing too much to traditional IRAs and not enough to ROTH IRAs or ROTH 401Ks for their tax situation. That can have a material impact to after-tax returns over the long-term. Further, the types of assets you should buy in each type of tax advantaged account are different. Assessing this is sometimes called “asset-location.”

So leaving that old account floating around might be costing you more than you think every year. But, investing and financial conversations are uncomfortable and finding help is challenging. We get it, we hear that everyday. We work with clients to make investing simple and intuitive, all while caring for all of the issues above that add value over the long-haul. Don’t try to figure out asset allocation, taxes and fees alone. All you have to do is schedule a call with us – and we will make the rest of the process super easy.

Source:

“Putting Value on your Value, Quantifying Vanguard Advisor’s Alpha,” Vanguard Research, 2019. https://advisors.vanguard.com/iwe/pdf/ISGQVAA.pdf