A small Atlanta registered investment advisory firm is hoping to drum up business by offering personalized 401(k) advice, but analysts warn that drilling down to offer investment advice to retirement plan participants could be more trouble than it is worth.
Kring Financial Management has just launched 401k ProAdvisor to offer retirement plan participants personalized advice on their 401(k), 403(b) or other retirement plans on a quarterly basis.
William Kring, the co-founder of the Atlanta-based advisory firm, said the company introduced the platform because investors want to proactively manage their 401(k) plans, but don't know where to start. "Everyone is concerned about the market and their retirement,” he said. “We want people to realize they are still in control and to give them the tools they need to manage their 401(k) or similar retirement account."
Clients must provide a summary of how their 401(k) money is invested, as well as information about their financial goals, time horizon, contributions and risk tolerance. Using that information, the 401k ProAdvisor service analyzes each available fund and provides specific recommendations on what funds and amounts the client should buy or sell quarterly.
"We study technical and fundamental factors, and use research from several sources before developing our recommended list,” Kring said.
At the end of the day, the main difference in 401k ProAdvisor is that it offers forward-looking advice, using the most relevant data to help the employees grow their 401(k), while, at the same time, minimize losses. "We want people to be proactive with their 401(k) on a regular basis, but we know it has to be easy for them. We give clients the advice to make the changes they need," Kring said.
As a federally registered investment advisory firm, the 401k ProAdvisor service is available nationally.
But, analysts said they are skeptical of Kring’s strategy. One said it is difficult to generate a profit by providing advice to small 401(k) accounts. Most small registered investment advisory firms focus their business on affluent customers because it is easier for them to generate revenue from a smaller list of wealthy customers than a large list of retirement accounts.
Burton Greenwald of BJ Greenwald Associates in Philadelphia doesn’t think this platform will generate revenue, but a small advisor could use this type of service to develop new relationships.
“I think it will be hard for an advisor in Atlanta to generate national attention or face-to-face contacts with this type of service,” he said. “It is hard to wrap your arms around someone’s total financial picture with just information on their 401(k) account.”