Trust >>> Higher Balance >>> More Trust

When trust is not growing, neither are investment balances.

In my last email, I stated a simple fact: Most investors don’t trust capital markets and as a result are reluctant to contribute to their own investments.

Let me give you an example of something that happens rather consistently for us as we take over a new company retirement plan. This should illustrate both the reason for the reluctance and the answer to that dilemma.

When we come into a company to provide work-plan investment services, we do at least three things that the participants have never experienced before:


  1. We tell them what they can expect in the long term and in the short term given the kind of choice they make for their investment mix. No surprises will be coming around any corners in their investment balances as a result of stock-market volatility. They know what can happen.

  2. We show them every dollar they pay every quarter in cost to us and to others – the last page of their statement is dedicated to communicating all fees. Nothing is hidden.

  3. We offer education on-site twice per year (quarterly off-site as well for all clients and smaller companies), and we call each participant three or more times per year to make sure they don’t have questions or discomfort about anything having to do with their investments.

As a result, after a year or so of working with us, the participants contribute more money than they had previously. This, along with sound investment management, increases the sum of the total investments. In turn, this reduces fees and further increases the participant’s incentive to contribute.

Seems like a rather obvious positive cycle, but you really need to experience it to understand it fully.

When investors are taken seriously, they appreciate it and contribute more.

If your employer’s investments provider has not done the above for you, consider attending our next event. Feel free to bring your HR representative or the CFO of your company (large or small).



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