how to choose 401k investments

This 401k Plan is a Joke! – How to choose 401k investments

I have been in the investment advisory business since the mid-1990s. I am a CFP (Certified Financial Planner) and I co-founded a wealth management firm from scratch to over $500 million of client portfolios. Despite all of this experience – when I look at this fund menu of 403b investment options below even I can’t figure out what most of these fund choices are!! What the heck is “VEEDOT” or “VALUE”? Prime Money Market sounds good but Premium Money Market sounds even better. What about Global Gold – is that better than cheap old US Gold?

My point here is this. If someone with almost 2 decades of in-the-trenches investment advisory experience can’t tell what the heck some of these 401k options are – why in the world would we expect the average person to be able to decipher these choices? Don’t forget, their future ability to retire will largely rest on the performance of their retirement savings. With all of this at stake – THIS mess is the best we can do for the Baltimore Public School employees on how to choose 401k investments!

On one hand, seeing this is infuriating to me. On the other hand, this mess creates opportunity and is a large reason is why we have invested hundreds of thousands of dollars of our own money and the past 2 years of our lives into creating blooom. This confusing mess is exactly why there is such a big need for companies like blooom. Companies that can swoop in and alleviate the burden of having to figure out what in the h$ll “VEEDOT” is! There has to be a better way for you to choose 401k investments and funds.

Since launching blooom, we have had a front row seat and a backstage pass to look at hundreds of different 401k and 403b fund menus like this one. Although we put this one under the spotlight, we could have picked almost any one of dozens of employer sponsored retirement plans. Most of them are woefully behind the times in terms of simple, easily understood user-interfaces.

Maybe this post will draw some much needed attention to the problem that few people are talking about and maybe motivate some of these companies to clean up their acts when it comes to providing platforms to America’s retirement savers. How to choose 401k investments should be simple, transparent and be in the investor’s best interest.

Chris Costello

Chris Costello is the CEO and Co-Founder of blooom - one of the nation’s fastest growing robo-advisors aimed at helping millions of underserved retirement savers. Chris has earned the prestigious CERTIFIED FINANCIAL PLANNER™ designation and has been working with individual clients and building portfolio allocations for over two decades.

Prior to blooom he co-founded another investment advisory firm that grew to manage over $500 million for clients. At blooom, Chris leads the company in building innovative financial services to reach a brand new audience of under-served Americans. Blooom has been named one of the world’s most innovative companies by Fast Company, and Chris was selected as “Ten to Watch in 2016" by WealthManagement.

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