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What’s your 401(k) plan’s investment philosophy?


Many small business employers are not aware of the need for an Investment Policy for their 401(k) plan. Employees typically have no idea what it is even when one does exist. Yet, this statement can mean more to helping you and your employees meet your goals than just about any decision other than that of deciding to save.

An investment policy simply states the philosophy on which the plan will be monitored and run to meet your employees’ needs. We believe there is one philosophy that stands above others, and it is why all ShareBuilder 401k plans are built on this philosophy. In fact, each of our customers' plans are automatically established with the ShareBuilder 401k investment policy.

We believe focusing on the things an employee can control like costs and diversification are the backbone for a good 401(k) plan. We base our philosophy on three tenets:

  • Diversification is critical for success: Studies have shown how much you hold in stocks, bonds and cash is the most important decision invesors’ make.
  • Cost Matters: Low-expense funds are the one cost every investor can control. Higher cost does not mean better performance in investing. Historically, index-based funds have outperformed the vast majority of actively managed funds which typically have much higher expenses.
  • Investing is a long-term proposition: Trends and trying to time the market are not a philosophy – they are guesses at best.

This philosophy led us to offer low-expense, ETF-based 401(k) plans. Our Investment Committee proactively manages and adjusts the fund line-up and model portfolios for our customers in line with our investment policy. This offers additional benefits for customers too. This design coupled with our investment committee support simplifies a company’s management of its retirement plan responsibilities and limits fiduciary risks too.

Here’s to helping your money work harder!

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