Whether you're just starting out or well into your career, your 401(k) is one of the most powerful tools for building long-term financial security. Yet many people overlook it, setting it and forgetting it, without realizing how much opportunity they may be leaving on the table.

Today we celebrate 401(k) Day – which is about more than just awareness; it’s about action. Market volatility, changing tax laws, and evolving financial goals all impact your retirement strategy. That’s why staying engaged with your 401(k), and seeking professional guidance when needed, can make a meaningful difference in your future.

Strategic tax planning

By helping clients manage held-away assets, advisors can provide guidance around advanced wealth management strategies. Regardless of the size of your portfolio or what’s happening in the markets, strategic tax planning can help make a definitive difference in your retirement. An advisor can help design your portfolio with tax diversification in mind.

Logical decision-making

As we all know, fear and anxiety can cloud our judgment and hinder our decision-making abilities. Studies have shown that the fear of losing provokes a stronger emotional response than the thrill of winning (1). This is called loss aversion, and it can cause people to take irrational actions like pulling out of the stock market when there’s turbulence. This is where a financial advisor can add value. Your advisor can help you maintain a disciplined, long-term approach instead of making knee-jerk reactions during moments of volatility. For this reason, investors who work with professional financial advisors often earn better returns on average than do-it-yourselfers.

A sense of perspective

Volatility is uncomfortable, but it’s important to keep in mind that it’s a normal—and temporary— part of the market cycle. No one knows the best times to jump in and out of the market. Time and again, we’ve seen that the markets go up in the long term. People who try to time the market have a significantly reduced rate of return when compared to investors who stay in for the long haul. It’s hard to predict when the markets will rebound, and it often happens quickly after a downturn.

According to research from Franklin Templeton, investors who missed out on the top 10 trading days from 2005-2024 would see their returns reduced by 63%3. And from 1937 to 2024, average returns for the S&P 500 were positive 76% of the time (3). A financial advisor can help to remind you of why you’re invested the way you are – with a long-term mindset, a disciplined approach, and regular contributions that optimize available employer matching.

Holistic planning

Each part of a financial plan has a ripple effect that causes wide-ranging impacts now and far into the future. It can be impactful to work with someone who understands this complexity and can create a plan that takes a comprehensive, strategic approach. Retirement savings are a key part of many investors’ overall wealth, accounting for a third (34%) of all household financial assets in the U.S. at the end of December 2024 (4). Retirement savings are too important to leave up to chance.

Here are some key benefits of working with a professional financial advisor to manage your 401k:

Asset allocation: It’s always a good idea to maintain a diversified portfolio that’s balanced based on your investment goals, and a professional financial advisor can help. They can review your investment options and asset allocations and make changes on your behalf.

Holistic wealth management: An advisor can also provide holistic wealth management across your various financial accounts, helping to ensure everything is working together in service of your personalized financial plan while constantly monitoring for tax efficiency and opportunities to improve.

Greater clarity: A financial professional can help you understand exactly what you’re invested in, providing clarity around your current and future asset allocation decisions. A clearer understanding of your investment framework can help you feel more confident about your portfolio during periods of market volatility.

You don’t need to go it alone. If you have an employer-sponsored retirement account at a current or former employer and want to explore how an advisor could help, schedule time for a free consultation.

Sources:

1 https://www.psychologytoday.com/us/blog/psychology-money-and-happiness/202403/how-emotions-impact-your-financial-decisions?msockid=359523748ee2651132bc36d28ff4645b   

2 https://www.dalbar.com/Portals/dalbar/Cache/News/PressReleases/QAIB23PR.pdf   

3 https://www.franklintempleton.com/forms-literature/download/COSTM-B   

4 https://www.ici.org/statistical-report/ret_24_q4   

Diversification and asset allocation do not ensure a profit or guarantee against loss. Investing involves risk, including possible loss of principal. Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes, and potential illiquidity.  

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