Self-directed 401(k) brokerage windows are very popular with my clients.

When I returned home from my daughter’s high school Homecoming football game last Friday night, I turned on my computer to check the news. What I found was a financial industry web site article that really got my blood pressure to rise.

The opinion piece was titled, “ Slamming brokerage windows closed .” It was written by Greg Carpenter, founder of Employee Fiduciary in Mobile, AL. I found a link to the same article on the company web site.

Greg has a very impressive accounting, finance and fiduciary advisory background. I am sure that I can’t compete with his experience and industry knowledge of small business 401(k) retirement plan establishment and administration.

I can however compete with any fiduciary or investment advisor in the area of providing investment advice to individual company 401(k) retirement plan participants.

Most company 401(k) retirement plans do not have well chosen mutual fund options. The majority of company plan participants are in no position to tell their company sponsor to get new mutual fund options.

Individual company 401(k) retirement plan participants have to live with what they get regarding their company 401(k) retirement plan menu. They literally have to make lemonade out of their company 401(k) retirement plan menu lemons.

The brokerage window option is a savior to many of my individual company 401(k) retirement plan clients.

As Greg states, “only a tiny fraction of 401(k) investors have the financial experience and savvy to benefit from a brokerage window.” I totally agree.

That same tiny fraction of individual company 401(k) retirement plan participants are smart enough to understand that they don’t have the time, inclination, or expertise to make sense of the default mutual fund options on their company 401(k) retirement plan menu.

Most individual company 401(k) retirement plan participants who utilize a brokerage account window work with professional investment advisors.

If the 401(k) brokerage window option is a fiduciary challenge, then why do the biggest Fortune 500 companies, law firms, doctors groups, non-profit organizations, and consulting firms in the United States offer it to their company 401(k) retirement plan participants?

Good luck to the Department of Labor putting the brokerage window genie back into the bottle.

Ric Lager

Lager & Company, Inc.