“Both Employers and Employees need to wake up”

By Mark Folgmann

Most of us get only one shot at retirement so therefore we really need to pay attention. I am continuously amazed at how much trust and faith employers place with their financial salesperson. I talk to companies each and every week that are blindly following recommendations by someone who gets compensated to sell them products. Wake up employers; these “advisors” whom want you to believe they are on your side are really in the business of marketing products – not creating wealth for you and your employees. As stated in previous articles; it is not ok to be down 50 -60% in your retirement accounts and if you are, look for a second opinion from someone who is not paid to sell products. The criteria for selecting a retirement plan provider should not be the place where we have our checking account or where we buy our life insurance. It should be someone who specializes and understands the unique problems that surround the issue of assuring my employees will be able to retire and their families will be financially secure. This is the definition of a financial fiduciary.

Employees it’s your money and retirement; you can’t bury your head in the sand and hope the problem will go away, it won’t. At some point your 401k will turn into your monthly check for the rest of your life and if that monthly check is reduced by 40% because you did not pay attention to fees it will be a very sad period for your family. Your life is not too busy to take a couple hours educating yourself about your own retirement. Dalbar conducted a survey over a 20 years timeframe where they determined the S/P 500 return was in excess of 11% but the average investors return was only 4.28%. How could this happen? I’ll tell you how, the financial service industry took 30- 50% of the return in fees and the investor made investment mistakes managing his portfolio which cost him the rest. This is why it’s important that we build low cost 401ks (less than 1% in annual fees) and make available model portfolios for employees to choose instead of individual mutual funds.

Employees managing their own 401k are equal to asking you to land a 747 in mid flight, it really does take training. My firm is in the process of helping a local company rebuild their 401k and so far 100% of the employees have selected model portfolios over individual funds. This gives them great relief because they don’t feel comfortable managing their own investments and realize they have not been trained to do so. Our next article will be our 12th and last article on 401ks. Next time we will provide you resources to educate yourself so you can take charge of your family’s retirement.

Could your 401k Win the Kentucky Derby?

By MARK R. FOLGMANN

I’ve spent the last nine articles discussing a lot of problems with 401(k)s, which may lead you to believe I don’t like them. The truth of the matter is I love them and spend the majority of my working hours helping companies fix their plans.

I was on vacation last week in Asheville, North Carolina watching the Kentucky Derby and was amazed when “Mine that Bird” came from last place and blew by the field like they were standing still to win by six lengths.

I thought to myself wow that is what a great 401(k) should look like. It would leave all other 401(k)s in its dust especially as we recover from this horrible downturn in the economy.

Most 401(k)s look like those horses that we thought were standing still. They have a 300 lb. jockey, no regular training program and suffer from malnutrition. We know real quickly when a racehorse is out of shape because they race periodically, not so with your retirement plan. We tend to close our eyes and hope we will be all right at the finish line (age 65). Our race tends to last 30 or 40 years.

I believe the 401(k) is the absolute best vehicle to assure America’s retirement, but we must race now and then. We must review fees, conflicts of interest and make sure our fiduciaries are truly acting in our best interest. If we keep our 401(k) in top shape, we will be in position to win the race.

I am extremely proud to announce on April 28 my firm, Ark Advisors LLC, was endorsed by Matthew Hutcheson as one of only 17 firms in the United States that truly embraces a “Participant First” approach to delivering retirement plan services.

Matt in my opinion is the foremost expert with regard to 401(k) plans and fiduciary responsibility in the nation. He is currently working hand in hand with both the Department of Labor and Congress to identify fiduciary firms and solve the country’s retirement dilemma.

Matt was the key figure within the Bloomberg Report on hidden fees and recently participated in both the “60 Minutes” and “CBS Evening News” segments covering the same subject. We were required to go through a rigorous screening process before being selected as one of the nation’s select few who strive to create the best possible retirement outcomes for employees.



Mark Folgmann is president of Ark Advisors LLC in Traverse City. He has more than 25 years of experience within the financial service industry. This is the 10th in a series of columns discussing topics related to 401(k) planning. To contact Folgmann, call (231) 668-4118 or mark@arkadvisor.com.