Special Topic: The Self-Directed Option in Retirement Plans

In accordance with the Pension Protection Act of 2006, many 401(k), 403(b) and 457 retirement plans now offer a Self-Directed Option (SDO) in addition to a list of "approved" mutual fund choices. The SDO allows you, the participant, to manage a portion or all of your plan assets yourself. Usually, the SDO offers a brokerage account where you can buy and sell a much broader selection of investments. With the SDO, you are not limited to the plan administrator's fixed menu of investment options. The SDO allows you to actively manage your own retirement account.

Is this a good idea? That depends on the answers to the following questions:

1) Do you have your retirement plan goals and objectives clearly defined?

2) Are you confident that the level of risk you are taking with your current investment choices is appropriate for your time horizon and goals?

3) Do you have a target asset allocation model to follow for each investment objective?

4) Do you have the time and skill to make competent choices?

If you did not answer yes to all 4 questions, working with a professional third-party investment manager may be the right choice. There are very few firms that offer discretionary management for SDO assets. We believe Tactical Asset Allocation is the most effective approach to investment management, and we have established relationships with firms have proven their ability to significantly outperform managing SDO plan assets. Contact us to explore this exciting option.