One of the big parts of our mission when we built Two West was to help people reach retirement on their own terms. We understand there are many different routes to retirement, and often, you have the best shot of reaching retirement when you're as in control of the journey as you want to be.
In the past, there were really two different groups of people we served in getting to retirement: the do-it-for-me crowd and the do-it-myself group. But now, as technology has expanded and new financial tools have become more accessible, a third group has emerged: the do-it-with-me crowd. Let's talk about the 60-10-30 percentage breakdown and the different ways folks can reach retirement on their own terms.
The Big 60: Do It For Me
One of the nice things about working with financial advisors is you generally can let them do a lot of the work for you. When it comes to retirement, the majority of people know they need to set aside a certain amount of money into their plan, but they know little about the investment world or their portfolio's lineup. That's where they let the advisor take over.
Generally, this means an advisor will default them to with low-cost, well-diversified target date funds that are easy to understand. The participant will be put on a glide path that will automatically take care of asset allocation, diversification, and risk management, and this is a very comfortable spot for this group of people to ride out their career. And if they're good about saving for retirement and setting aside money regularly, these people will generally be able to meet their goals.
The Small 10: Do It Myself
About 10 percent of people want to do it themselves. Usually these are people who have some sort of training or knowledge about the financial industry—whether that's a degree in finance or experience in investing or accounting. These folks generally want full control over their retirement plan.
For this group, we'll put together a core lineup of low-cost, well-diversified funds and help them find certain investments that suit them. They'll do the asset allocation themselves and make adjustments as they go along. We'll provide education and materials for these folks, but otherwise, we're just here on an as-needed basis.
The Emerging 30: Do It With Me
This group of people – about 30 percent and growing – doesn't want someone to do it for them, but also may not have the knowledge or experience to completely do it themselves. However, these folks want to understand and learn more about their retirement options so they have a say in the planning process. I always say money is getting smarter. More people are getting involved in the process and want to see how their money is performing and what they can be doing to reach a more secure retirement. We're obviously big fans of lifelong learning, so working with this group of overachievers is always kind of fun for us.
For the do-it-with-me folks, it's all about putting together tech tools and educational materials that help them understand what they can be doing to reach positive retirement outcomes. Sometimes, this involves playing card games to introduce certain terms and explain the different facets of their retirement plans. For others it means engaging them through new technology to help them map out a path to retirement. Blooom is an example of a tool for these folks. Blooom does a great job of simplifying the 401(k) and allowing people to make adjustments as they see fit. And we're always on the lookout for new technologies and toolboxes that continue to make the retirement journey simpler and more accessible.
Where Do You Fit In?
The great part about planning for retirement? No matter which group you're in – 60, 10 or 30 – a wide range of tools and materials are available that can benefit you. From new technology, online articles and smartphone apps, there really is something for everyone.
You should be able to reach retirement on your own terms. Just let us know how we can help.
Marko Ungashick is co-founder and CEO of Two West Companies and is a big believer in working hard, relaxing hard, and simplifying the complex for his clients.