401k Management Requires Dissection

What Do an Appendectomy and 401k Management Have in Common?

Picture this. You start to feel a dull sense of pain around your belly button that shifts to your lower right abdomen. Within just a few hours the dull pain has escalated to a sharp pain that can no longer be ignored. When you move, the pain gets excruciating and if by chance you need to cough or sneeze – you’d better be gripping onto something!

At this point, you realize you need to get your butt to the ER. After what seems like a million bumps in the road on the way to the hospital, you check yourself into the ER. The ER doctor then begins the examination. After just a few moments of probing your lower abdomen — she is confident that you have appendicitis.

The doctor explains that if appendicitis is not treated quickly, the appendix can rupture. When that happens, it releases bacteria into the abdomen and potentially leads to other, life-threatening infections.

Because of this danger she explains, appendicitis is considered a medical emergency. It typically needs to be removed within 24 hours of the condition being diagnosed. Given the amount of pain you’re are in, surgery sounds like the least of your worries. So, you tell her, “Let’s do it! Get this thing out of me. Nobody even knows what the heck an appendix does anyway!”

Then comes a response that you were not at all expecting. Instead of starting the process to prep you for the appendectomy, she instead asks you just about the …

Strangest Question You Would Expect a Doctor to Ever Ask

“I would love to perform this appendectomy, but before we can proceed, I need to know how much you have saved for your retirement?”

You are thinking … WTF!  What in the world does my retirement saving have to do with this emergency surgery? But given how much pain you are in, you will answer just about any question if it means getting you closer to the pain meds.

“I have about $70,000 saved up in my 401k,” you answer proudly. Still, you hadn’t seen the 401k management questions in the admittance form. What’s this about?

Her reply leaves you totally dumbfounded. “That is great but, unfortunately, you don’t have enough saved for ME to perform the appendectomy you badly need.”

After picking your jaw up off the floor you stutter … “what do you mean?”

“You see, to qualify for me to perform your appendectomy, I require that my patients have at least $1,000,000 in their retirement portfolio. But do not panic (she hands you a huge, heavy American Medical Journal). If you will spend some time studying up on appendectomies from the information in this journal, I am confident that you can operate on yourself and perform your own appendectomy.”

Clearly this fictional story is ludicrous and played for emphasis. Something as important as your health — especially emergency surgery — is not something you have to “qualify” for based on your net worth. Or, more specifically, not qualify for based on how much you have saved for retirement.

Unfortunately, It’s the Typical Advisor’s Stance on Account Size, 401k Management

So I ask. For something as important as your personal financial security, why has the financial system in the U.S. assumed that every American (who doesn’t have a big enough net worth to “qualify” to work with a professional financial advisor) should be expected to perform their own “appendectomy equivalent” of managing or investing one’s own savings? Now don’t get me wrong. There is a small subset of the population of U.S. savers who do indeed have an affinity for AND the knowledge for managing their own investments. But let’s be real — this is a very, very small subset of the population.

The overwhelming majority of Americans don’t have the desire, time, comfort, or willingness to spend the time studying, researching and managing their own retirement portfolio.  We take it for granted when this comes to our health. But why should financial services, specifically 401k management, be any different?  We understand that, for most humans, good health is generally at the very top of the list of life’s most important considerations. But let’s be honest, the importance of financial security shouldn’t be that far behind.

Candidly, all of us at blooom don’t believe this is how it should be!

Our mission is to bring professional 401k management and personal financial advice to as many Americans as possible. The aim is to especially help those who don’t “qualify” to have a financial advisor.

We want to help those who don’t want to be forced to DIY and hope for the best on the journey to retirement. We have accomplished this by creating radically simple online 401k software that can be used by anyone — regardless of the size of your 401k balance. That way no one has to operate on themselves when it comes to their personal financial security.

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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