One of the perks of being an employee is having access to a 401(k). Yet many employees are ill-equipped to manage their 401(k), and are left with a lack of information in regards to what type of funds they should choose. Which funds should you pick? How much?
Whether you are a new employee or a veteran, you may feel like picking out the right investment options for your 401(k) is a bit like playing eeny-meeny-miny-moe.
But instead of choosing your investment options at random, there’s a service that can help you choose what funds are right for your situation.
Smart401k is designed to help employees maximize their retirement benefits and make sense out of their options.
What is Smart401k?
The service is under the umbrella of The Mutual Fund Store, a nationwide registry of investment advisors, and currently has an A+ rating through the Better Business Bureau.
Essentially, Smart401k helps take the leg work and confusion out of picking out funds from your employer’s retirement account. It’s unlikely you’ll get professional or reputable advice from your employer, so Smart401k can help fill the gap and offer information on where to get started.
Their website states that,
“You don’t need to spend hours researching the funds available in your retirement plan at work. Smart401k Investment Advisors do the work for you, analyzing fund performance, manager track-record, expenses and style fit as a part of the fund selection process.”
Unlike other services available today, real human advisors create a personalized asset allocation of the funds available in your retirement plan.
How Does Smart401k Work?
Getting started with Smart401k is fairly easy, and their website claims it will take less than 5 minutes to get started — but after filling everything out, it can easily take more time than that.
You start by filling out your personal information, employment information, as well as contributions. You will then be asked 14 questions to help determine your investor type. These questions will create your investor profile. This includes things like your risk tolerance, investment goals, and time horizon.
After you’ve completed the questionnaire, it will take a few business days to receive your 401(k) recommendations. Remember, even though everything is online it is reviewed by an actual advisor. The recommendations show you exactly what funds you should choose and how much.
Features and Pricing
Even though it’s called Smart401k, the service works with other employer-based retirement plans in addition to the 401(k). It also works with the following plans:
- Works with Multiple Types of Retirement Plans – 401(k), 403(b), 457, Thrift Savings Plan, SEP IRA, and SIMPLE IRA.
- Low Annual Costs – Regardless of your portfolio size, the service costs $199.95 for an annual membership or $59 dollars each quarter, which comes out to $236 per year.
- Uses Modern Portfolio Theory – Smart401K uses Modern Portfolio Theory to guide their recommendations and encourages investors to rebalance throughout the year.
- Direct Contact with an Advisor – If you have any questions about their recommendations, you can contact one of their advisors via phone, chat, or Email.
- Free Mobile App – The mobile app is free and is mostly used as a retirement calculator.
A somewhat refreshing feature of Smart401k is their pricing. Most services charge based upon how much assets. The more assets, the more the services costs. Smart401k is a flat quarterly or annual fee.
If you consider the hours you may pour over researching investments, or the amount of time you’ll waste trying to get financial advice from your employer, the cost may be worth it in the long run.
Smart401k does have a mobile app, and is available for Apple’s iOS or Google’s Android platform. Though the app is used more as a lead source, rather than as a support for current customers. The mobile app is marketed as a retirement calculator.
As I mentioned, it looks like it doesn’t necessarily sync with your current account but is a free app that acts as a lead generator for their paid service. Reviews of the app have mentioned receiving calls about the paid service shortly after using the mobile app.
- Flat Rate Fee - Regardless the size of your retirement account, Smart401k charges the same fee.
- Get the Best of Both Worlds - Using a service like Smart401k gives you the best of both worlds. You get similar advice to what you’d get from a robo-advisor, but you also have access to a real life investment advisor.
- Simple Recommendations - The recommendations are easy-to-understand and it seems that the Smart401k staff is very accessible -- which I like.
- Connect With a Real Person - If something goes wrong, I want to know who I can contact immediately.
- In-Depth Information about Investments - Smart 401k provides in-depth information on what sort of asset class you should be using.
- Retirement Education Center - They also have really helpful tools such as the Retirement Outlook tool, which helps you see if you are on track for retirement, and a Retirement Education Center with a forum for additional resources.
- Manual Changes to Your Asset Allocation - You must change your investments in your retirement account manually. Smart401k cannot do this for you. Granted this is a limitation of all 401(k)s and most of the services in this space cannot adjust your account.
- Does Not Support Multiple Retirement Accounts - If you and perhaps your spouse have multiple accounts Smart401k does not support a holistic asset allocation of all of your investment accounts.
- Focus Only On Accumulation Phase - Smart401k's service will not assist in helping you pair down your assets when you are in retirement.
- Calls To Upsell Service - According to app review and other reviews of this service, you should expect a telephone call about upgrading to their paid service.
- Simplified Website Design - As someone who does the majority of their work online, I was surprised by their website. It’s easy to use and navigate, but the design and feel of it felt very similar to the nineties era websites. Sure, I sound petty, but a website is like an online business card and my first reaction was that I was not impressed. But as I mentioned, it is easy to use which I think does win some points as well.
I’ve worked out an exclusive promotion with Smart401k for readers of Investor Junkie. Get the first year for free at Smart401k.
This promo code isn’t available anywhere else and is worth $199.95. You must enter promo code INVESTORJUNKIE to get this offer when ordering with Smart401k.
Overall, Smart401k is a useful service if you want to get your employer-based retirement account straight. There’s definitely a need for this service and it’s great that they provide advice from an actual advisor.
However, given the limitations of the service, it might not be a fit for your specific needs.
Disclosure: Investor Junkie was provided with a demo account by Smart401k.