Over the years, many investors in mutual funds, 401(k)s, and other company-sponsored Retirement Plans find that their investment didn’t have the same performance rates as the Plan, fund or insurance company reported.  Oftentimes, that is true. Some investors, however, may have actually had even better returns.  To an extent, the comparison is like the proverbial “apples and oranges”.  The linked column from the Economix Section of the NY Times is as follows:

A qualified plan sponsor generally would report the weighted-average return of the various investment options available in the Plan, as compared to how much is invested in each option.  Mutual funds and annuities report the average returns provided, by a fund or annuity over a, let’s say, one, three or five-year period.  But, if you move your money around within the various investment options, or are involved in a program of either making regular contributions (“accumulation”) or withdrawals, those actions will make your performance different than what was reported.

Be alert not to put too much faith in three-to-five-year performance.  Past performance can never be representative of future results.  But also, the Financial Markets have gone basically upward since March of 2009.  So, good historical performance might reflect the direction of the Markets, more so than the Investment Management’s expertise.

I have found, in over 39 years in Financial Services, that many people just throw their hands up, roll their eyes or simply shake their heads–rather than do their homework.  Hey, it’s your Retirement!  If you don’t understand your investments, find a friend or trusted advisor, ask lots of questions and make sure that you know how your money is invested.  And, does it truly meet both your risk tolerance and your future needs.

As 10,000 Baby Boomers are scheduled to be retiring–each day–for another 18 years, banks, brokerage firms and insurance companies are, no doubt, bombarding you with TV, magazine and newspapers ads, and direct mailings.  If you notice, each and every one of them: continues the myth that you will never understand it; they have a “Plan” and just Trust Us (because they are well-known).  Well-known for what?  Says who?

Part of my message in these Blog Posts is meant to, hopefully, provide some ideas, maybe convey a little knowledge and, perhaps, suggest some questions to ask–and be sure that you understand the answers to.  Firms seem to prefer to encourage their Reps to suggest a Plan, and not get involved in providing any education to clients.  There are some great Financial Advisors and Insurance Agents in the business; but, the Firms seem to prefer to have them Speak, rather than Listen. That’s dangerous!



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