Brokerage window of opportunity

Most people don’t know they have the choice in their defined contribution plan to self-direct their retirement investments using their employer’s brokerage window.

Many employer 401(k) defined contribution plans offer a self-directed brokerage window. Per Aon Hewitt, in 2011, 29% of employers across various industries offer them, an increase of 18% since 2007.**

open your brokerage window to retirement

Open your brokerage window to retirement

Key terms for new investors

Brokerage window — A trading platform that allows individual participants in a defined contribution plan to buy and sell a wide range of investments, in some cases from among thousands of funds and securities, depending on how the window is structured.

Why use a self-directed brokerage window?

A February 2013 study, from the National Bureau of Economic Research, determined that due to poor mutual fund options in 401(k)s, retirement savers might be losing up to 3.6% annually due to high fees and poorly performing funds.

You have an alternative. If your company has a brokerage window (you’ll need to ask your HR Department or in-house retirement contact to find out), you can select your mutual funds on your own.

Many employees aren’t even aware of this option or ignored it because employers did not think employees were capable of selecting mutual funds on their own or would be taken advantage of by unscrupulous advisors. Not On My Nickel provides investment options for you to choose from so you don’t need to spend time researching investments. You can start investing in superior, actively managed mutual funds today.

Ron Lieber, “Your Money” columnist for The New York Times, suggests this approach in his July 8, 2011 article*:

“In this weekend’s Your Money column, I suggest that people who are unhappy with the investment options that their employer offers on the menu in their 401(k) or similar plan put in a request for something called a brokerage or mutual fund window.”


* Source: Ron Lieber, the New York Times, July 8, 2011, How to Use Your Brokerage Window

**Source: Joanne Sammer and Stephen Miller, CEBS, August 2, 2012, 401K Brokerage Plans Get a Reprieve

Comments are closed.