Few Americans receive unbiased, third-party help with their 401(k) plans, and some even mistakenly believe that their employer actively manages the plan for them. A new tool, however, could help 401(k) holders maneuver toward the retirement they have always dreamed of.

Most people still manage their 401(k) plans through the decades-old “buy and hold” strategy, leaving them exposed to today’s faster-paced financial world.

“The buy and hold strategy was great decades ago when the stock market and investments were less impacted by news cycles, and they were really more impacted by market fundamentals and consumer buying habits,” said Matthew Jackson, a partner at 401(k) Maneuver, a new online tool aimed at improving account performance. “But in today’s 24-hour news cycle, and with changing trade policy, changing tax policy, and consumer buying power changing on a dime because of a bad tweet, the buy and hold strategy just isn’t as effective today as it was decades ago.”

Few Americans, moreover, receive independent, third-party help in managing their 401(k) account. Investors often find themselves adrift with no support and underperformance. Jackson added.

Mark Sorensen founded 401(k) Maneuver and along with partners Matthew Jackson and Brian Neff, created an online tool where investors could receive the help they need to actively manage their 401(k) accounts. The 401(k) Maneuver platform is open to employees with a 401(k) regardless of what company they work for, Jackson said. The 401(k) Maneuver team rebalances enrolled employee accounts quarterly and works to reduce downside risk, he added.

The vast majority of Americans with 401(k) plans fail to periodically rebalance them, meaning to move around the investment allocation within their account so that it better matches their risk tolerance and financial goals. A 2014 analysis by human resources consulting firm Aon Hewitt found that of 138 defined contribution plans—which represented 3.5 million potential enrollees—only 15 percent rebalanced their portfolios that year. That number climbed slightly once target date funds and other premixed options were excluded, but still only amounted to 19 percent.

“I can’t blame them if they are not rebalancing, because people were taught over decades to buy an investment and hold it, and it will grow,” Jackson told Advisors Magazine during a recent interview. “And that’s true in some cases, but research shows that’s not always the most effective way to invest.”

Jackson and partners officially launched 401(k) Maneuver October 2017 after years of seeing investors struggle to manage their own plans.

“People’s workplace retirement accounts are generally their largest asset and usually the asset they get the least help with,” Jackson said. “We began to talk about the 401(k) industry and the lack of help that was provided to people. We started to do a lot of research and we found that there were some problems we thought we could help fix.”

Rebalancing 401(k) plans was one area investors needed help, but the partners identified others. The widespread use of target date funds also may leave many investors with mediocre results. Target date funds are premixed allocations—including, stocks, bonds, and cash—that become more conservative as a target date, usually retirement, approaches. The funds are run by professional wealth managers and designed to help those with little investment knowledge or skill, but the one-size-fits-all approach can fail to take into account each investor’s unique financial situation.

“I am not blaming my industry for purposefully coming up with a product many think is subpar, the target date fund. I believe our industry is trying to do a service by offering target date funds, because they do offer that rebalancing,” Jackson said. “A target date fund can be better than a buy and hold strategy, however, the problem with the target date funds is that they treat everybody exactly the same. A target date fund manager’s philosophy does not bend if you’re a doctor in Seattle, a nurse in Key West, or an engineer in Boston. If all of those people are age 60 and plan to retire at 65 then they’re treated exactly the same and they get the same mixture of asset allocation no matter their personal tolerance to risk, no matter their capability to save.”

The larger problem, however, remains that the average 401(k) holder receives no third party coaching they can rely on. Without independent advice, the buy and hold strategies of last decade become the default.

“That’s where we at 401(k) Maneuver feel the American public is being done a disservice,” Jackson said.

That disservice might be costing investors big money. Studies have found, for example, that periodic portfolio rebalancing may improve 401(k) performance by up to 3 percent annually. The 3 percent most 401(k) holders potentially leave on the table could amount to tens of thousands of dollars, or even more than $100,000 over a lifetime of saving. Enrolling in 401(k) Maneuver may help employees take advantage of those rebalancing gains and make up for lost time.

Investors sign up for 401(k) Maneuver online and never need to attend a face-to-face meeting. But that does not mean the tool is automated. The 401(k) Maneuver team reviews accounts quarterly and rebalances when necessary, and works with clients to address their concerns. The platform team adheres to the fiduciary standard as well, meaning that clients’ best-interests come before the firm’s bottom-line.

The online platform allows participants to access the team from anywhere. Jackson has used online tools in the past to help investors, and clients often find it valuable to have easy access to their advisor.

The 401(k) Maneuver platform also works with other defined contribution plans such as 401(a), 457 plans, 403(b) plans and the government’s Thrift Savings Plan; the tool was named after the 401(k) due to its predominance in the market, Jackson said.

Employees across the wage, age, and industry spectrums often fail to take full advantage of their 401(k) plans. Several studies have found that employees almost never contribute the recommended amount to their 401(k) plans and those who do tend to take the hands off “buy and hold” approach described by Jackson, leaving potential returns unearned. With pensions few and far between, investors who fail to engage their 401(k) account risk falling short in retirement.

“It’s pretty scary; this is a system where people are increasingly on their own,” Enrichetta Ravina, visiting associate professor of finance at Northwestern University’s Kellogg School of Management, said referring to a study she led on the widespread underfunding of 401(k) plans. “This is something they need to know about.”

Financial literacy often lags among investors. Investors who know their own 401(k) well, tend to be rare due to the complex, legalese disclosures that accompany them. Plan holders need to understand how their money can work for them in order to make decisions aligned to their financial goals.

“Financial literacy is important because it helps the consumer buy financial products rather than be sold financial products,” Jackson said. “I don’t believe that any of my clients should ever have to take my word for it because I know best.”

The 2008 financial crisis shook many would-be investors’ faith in the market. Even today many hesitate to commit money to their 401(k) plans or other investment tools.
“People are more doubtful and hopeless that the stock market and their investments will give them the type of retirement they’ve always dreamed of, and people are biting their nails worried over the next 2008,” Jackson said, referring to the economic downturn that devastated the country a decade ago. “The change in their mentality has been that they’re still waiting.”

The financial media does not make matters any better. The constant drumbeat of contradictory information and sensational headlines can leave investors frustrated and anxious. For many, making a decision on where to put their assets is difficult.

“When we look at the talking heads on TV, you have someone making half a million dollars telling you why the next market crash is going to happen tomorrow. And in the next breath you have another person making half a million dollars telling you why there’s going to be another increase in the market that it will be the greatest market run in history,” Jackson said. “It creates a lot of confusion, and confusion causes paralysis. And paralysis causes investors in America to invest less, become less hopeful, and become disconnected with the type of retirement they’d always hoped for.”

For many investors, funding their 401(k) is the first step toward retaking their financial future back. The 401(k) Maneuver platform allows investors to get the support they need to potentially maximize their account, and to reach the retirement they dreamed of.

“We’re like that turbocharger you would bolt on to the engine of a car,” Jackson said. “Our goal is to help 401(k) participants squeeze the most out of performance during good markets and minimize loss during bad markets.”

For more information on 401(k) Maneuver, visit: 401kmaneuver.com

401(k) Maneuver is offered by Royal Fund Management, LLC which is registered as an investment adviser with the SEC and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability. Royal Fund Management, LLC, is not affiliated with or endorsed by NASDAQ.