Our Expertise is Balanced Portfolio Management
Our performance track record reflects our four principles for managing our Balanced Portfolio Strategy for company 401k Plans.
Our Four Investment Management Principles
To achieve all four of our investment management principles, at Deane Retirement Strategies we avoid investment extremes. We avoid chasing stocks that provide high returns, but come with extreme price volatility. These type of investments jeopardize principal protection and your sleeping at night. We equally avoid investments with extremely low price volatility that inevitably produce extremely low returns. These type of investments prevent hedging inflation…which could result in your reduced lifestyle in the future.
To achieve our portfolio investment management goals, we use a Balanced Portfolio Strategy that blends high-quality stocks with high-quality bonds and cash. Using multiple asset classes allows us to make appropriate asset allocation shifts to potentially avoid excessive portfolio volatility and to reduce risks. We use a Balanced Portfolio Strategy exclusively; we do not manage portfolios consisting of only stocks or only bonds.
Our expertise is Balanced Style Portfolio Investment Management. We are an excellent fit for managing your company’s 401k Plan investments if you and your employees appreciate the value of working with professionals who blend the long-term growth of quality stocks with the stability of principal and income provided by quality bonds. Our ultimate management goal is that everyone participating in your company 401k plan sleeps at night, knowing that their retirement savings is strategically working for them.
Why A Balanced Portfolio For All Plan Participants?
How can only one investment portfolio style, our “Balanced Style”, be appropriate for all of your 401k plan’s participants, regardless of their age or stage of working life?
Myth says that younger investors should be very aggressive, because they have years to make up their portfolio losses. While they will earn more when stocks do well, they will also lose more when stocks decline. If an investor loses 50% in a bear market, they will have to earn 100% on the remaining assets to erase the loss, provided they haven’t bailed out of their aggressive strategy prior to the market rebounding. By comparison, if losses can be contained to 10%, only a subsequent 11% gain is needed to erase the loss. Uncontrolled, aggressive investing potentially becomes the “wrecking ball” of their portfolio’s value.
A very aggressive investing strategy is also frequently, but disastrously, used by near retirees who have failed to save adequate retirement money. In an effort to play “catch-up,” they panic and adopt a gambler’s “all or nothing” philosophy, hoping to earn maximum returns quickly. This reckless, aggressive investing strategy almost always ends with further diminished investment returns.
The flip side of the coin is the near retiree who believes in the myth that older investors should only invest in ultra conservative investments. While their goal is to eliminate the possibilities of near-term losses, they negatively subject their portfolio to the long-range, debilitating effects of inflation that will reduce their standard of living over time. Our Balanced Style portfolio provides capital gains and dividends from quality stocks, along with interest payments from bonds. These three sources collectively provide future, sustainable retirement income, along with portfolio growth to hedge against inflation.
Our Balanced Portfolio Investment Management Strategy appeals to company 401k plan participants of all ages who are seeking reliable growth, reduced volatility, protection of principal, and peaceful nights’ sleep. Deane Retirement Strategies’ investment management principles are reflected in our Balanced Style’s investment return track record that speaks for itself.
We Do Not Use Mutual Funds – Why Not?
Deane Retirement Strategies does not use mutual funds in your 401k plan portfolio, thus avoiding your plan participants being charged with each mutual fund’s annual 0.50% – 2.00% average internal fund expenses, such as trading costs, management fees, advertising expenses, broker/advisor compensation, etc. Mutual funds’ internal expenses are annually reoccurring and are passed along to each of your plan participants “behind the scenes.” This is called their “expense ratio.” Even no-load and institutional funds pass along their fund’s expenses to you. So, for example, if you’re paying another financial advisor 1.00% and own a portfolio of mutual funds with an average 1.00% expense ratio, adding together the two fees, your effective total annual portfolio fee is 2.00%. These fees are over and above any additional cost to purchase or sell a mutual fund. Please note that while we do not use mutual funds in our portfolios, we do use ETFs that also have internal fees. However, ETF internal fees are generally substantially less than mutual fund internal fees.
Additionally, we do not use mutual funds in your 401k plan portfolio because we are prevented from performing thorough due diligence on funds’ portfolio holdings. Mutual funds only disclose their investment holdings quarterly, rendering them blind investment pools for months at a time. This lack of transparency often encourages fund managers to purchase investments in the fund that are inappropriate, presumably in an attempt to enhance performance results, only to return the portfolio to a more marketable, “window dressing” status, just prior to disclosing their quarterly holdings. Lack of holdings’ transparency also exposes your portfolio of funds to the probable, but undetectable, overlapping of individual securities among the various funds; this dilutes portfolio diversification that can lead to unnecessary volatility and under-performance of your portfolio. Using fund overlap software provides analysis that is only valid four days a year, the exact days on which funds’ holdings are reported.
We do not use mutual funds in your company’s 401k plan portfolio, thus avoiding additional plan participant costs over and above our advisory fee. Avoiding mutual funds in our investment strategy also eliminates the issues of due diligence and duplication that compromise volatility, risk, and performance.
401k Plan Trustees and Employee Education
Your company, as 401k plan sponsor, is NOT required by the Department of Labor to provide investment education to your plan participants when an ERISA 3(38) registered investment advisor, such as ourselves, is discretionarily managing your company 401k Plan’s investments. Why? Participants are not selecting their own investments and your plan trustees are not selecting the investment options to be included in your plan. Hence, providing “participant investment education” is not legally required, and your company is relieved of your fiduciary liability to do so.
Deane Retirement Strategies believes that everyone should be prepared for retirement. As a value-added feature of our managing your plan assets, all plan participants whose individual plan balance is greater than $500,000 are entitled to an in-depth, customized, written financial retirement plan that includes projections and recommended solutions to their current and future retirement needs. We provide our professional financial retirement planning to your eligible plan participants at no cost to either the participant, your plan, or your company.
Our value-added, professional planning service helps you reward your employees and executives by providing an incentive and reward for their either being or becoming conscientious, aggressive savers toward their financially comfortable retirement.
When your plan’s assets are collectively managed by Deane Retirement Strategies, an ERISA 3(38) Registered Investment Advisor, your plan participants no longer have to be frustrated by spending their valuable time researching, selecting and monitoring their 401k plan assets (often with amateur performance results), and your company is relieved of its fiduciary liability to provide participant investment education.
Plan Record Keeping and Asset Custody
We are extremely proud of our firm’s investment performance track record for company 401k plans, but we know that your requirements to sponsor your company’s 401k plan extend beyond just investment management. You require the expertise and services of both a third-party plan administrator (TPA) and a professional ERISA approved custodian to hold your plan’s assets.
Our recommended 401k Third Party Administrator (TPA) is a national, actuarial and employee benefits consulting firm. You can elect to continue working with your current TPA, provided either their plan document or your own custom-made plan document allows collective, discretionary management of plan assets. If not, we will help you easily transition to our recommended TPA, who will design a plan document to fit your company’s needs. The TPA will also provide ongoing plan administrative services to keep your plan in compliance with ERISA and the Department of Labor. Your TPA will provide your plan’s trustees with monthly or quarterly plan statements, and also provide each of your plan’s participants with individualized statements.
We utilize Charles Schwab & Co., a full-service, national financial firm, ERISA approved, to custody your 401k plan’s portfolio assets; execute your investment trades, per our instructions; process and record your plan’s deposits and withdrawals; and provide you with trade data and monthly account statements, either online or in paper format. Your plan assets are insured through Charles Schwab & Co., up to $152 million aggregate, by SIPC, FDIC and private insurance coverage against fraud and the custodian’s financial collapse, but not against asset value fluctuations. In addition to Charles Schwab & Co. insurance coverage, Deane Retirement Strategies maintains E&O insurance coverage/fiduciary insurance and a fidelity bond on each company’s 401k plan.
All three professionals combine their expertise to optimize your Company 401k Plan’s Investment Results and Operational Results.