We often talk about retirement as being a journey. We even founded Two West with the notion that two people riding in the same direction have a better chance of reaching their destination than someone going it alone. What we’ve found over the years is just how important it is to be surrounded by people who will support you in getting to your retirement destination. This group of people includes your family, your friends, your financial advisors and other professionals. But did you know this group also includes your co-workers? In fact, the people you work with are some of the most important people when it comes to achieving the retirement goals you desire.

Let’s talk about the importance of rolling in—not out.

Working Together

Whenever I sit down with a group of plan participants, I always ask them how much money they think is in their plan all together. When you add up all the money participants have contributed to the plan, it’s a big chunk, often anywhere from $5 to 10 million or more. In the financial industry, the more money you have, the better fees and services you’re able to get. So when you’re looking at your own 401(k), you may have only contributed a few tens of thousands of dollars, but because you’re part of your company’s plan, you’re actually being treated (and charged fees) as if you’re an investor with $5 to 10 million total. This is why we always advocate for making the maximum contribution to your company retirement plan. The more people and money rolled into the plan, the better the deal every participant gets.

Why You Don’t Want to Go It Alone

We understand why some people might want to have more control over their retirement plan than simply rolling it into their workplace plan. There are some who would like to find their own advisor, form their own plans and so forth. While it might feel nice to be a bit more independent this way, it’s actually a bad idea in most cases.

If an investor were to roll out of their plan and take their, say, $30,000 to a new broker, that broker is going to treat them as though you’re a $30,000 client instead of a $5 to 10 million client. This means the investor is going to get stuck in the commission world. The broker is going to invest their money, charging them anywhere from a 5 to 10 percent commission fee up front, which in turn causes the fees charged to the account to be quite high. The monthly contribution the investor puts in each month isn’t making the broker a whole lot of money, and eventually, these investors find that their brokers have more or less forgotten about them because their chunk of money isn’t paying the broker much anymore because they took the majority of their feed up front.

It’s always unfortunate when we find the system taking advantage of people who had the best of intentions for their retirement plan. As my friend Ryan Rink says, we’re all a little better off together.

Getting Roadside Assistance

Rolling in and not out is just part of the bigger picture for investors when it comes to fees, active and passive management, asset allocation, and all the other facets of retirement. There’s a lot of complex information out there, but we’re doing our best to simplify it. Look out for more posts from Ryan, Vern and me in the coming weeks!

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.