The right insurance from day one®

Search Our Site

A 401(k) plan is a retirement savings plan that is established by an employer for eligible employees. Employees who participate in the 401(k) plan can make contributions to their accounts with both pre- and post-tax dollars—up the annual limits set by the Internal Revenue Service (IRS). Employers can also contribute funds to their employees’ accounts, and many will ‘match’ the deposits their employees make up to a certain amount.

Depending on the details of the 401(k) your employer has set up, your investment options may be limited to a small menu of mutual funds or include a vast array of mutual, stock and bond funds. While the plan administrator, who is designated by your employer, will handle transactions, recordkeeping and reporting for the 401(k), it’s up to you to determine how to allocate your assets and rebalance them as necessary. Some people hire a financial advisor or fund manager to help them with this. Others elect to use a do-it-yourself approach and manage their own plan. Of course, each option has its pros and cons.

The Pros of Managing Your Own 401(k)

If your 401(k) plan has a ‘brokerage window’ or ‘self-directed option,’ utilizing it can give you access to a wider range of investment options including exchange traded funds (or ETFs) and individual stocks and bonds as well as other non-traditional investment opportunities including real estate. If you prefer mutual funds, you’ll have more options in that regard as well.

A self-directed approach to 401(k) management can be particularly beneficial if you are knowledgeable about investing and have the discipline necessary to avoid panic in a down market and make sensible decisions that are not based on emotion.

The Cons of Self-Directed 401(k) Management

When you choose to manage your own 401(k), you have to worry about more than just which investments to choose. You must also concern yourself with various IRS rules and regulations that would not be an issue if a professional were managing your 401(k). Additionally, your investment fees are likely to be higher. Too frequent trading, for example, will take a bite out of any gains you may make.

A lack of experience can be seriously detrimental to the success of your investments if you choose to manage your own 401(k) plan. Doing the research required to make sensible choices also takes a good deal of time. You’ll need to abreast of financial news and the current financial health of the companies in which you’ve invested.

The Bottom Line

In short, if you’re at all confused about your investment options or unsure of your financial expertise, you may not be comfortable managing your own 401(k). Carefully access your investment knowledge, risk tolerance and time available for research before electing to go it alone. And if you’d like to learn more about professional 401(k) management, give us a call today.


500 East Main St.
Suite 200
Branford, CT 06405


Friday: 8am-4:30pm
2022 Summer Hours



FAX 203-483-1891