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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: substancep who wrote (49701)1/6/2002 4:39:17 PM
From: diver913  Read Replies (2) of 54805
 
RE. Assumption about your employer and 401k

Bryan,

Please don't assume that your employer feels you aren't "worthy of the responsibility" to select individual stocks for your 401k. There's more to this decision than meets the eye.

Our small company has offered a 401k plan for our employees for over 6 years, through T. Rowe Price. As one of the owners, I was eager to offer the opportunity for employees (and me!) to buy individual stocks. I detest the fees charged by actively-managed mutual funds, and I feel restricted with an index fund.

But as one of the people who's held accountable for ensuring people are fully informed and educated, I backed off my initial enthusiasm after spending hours researching our options. Our conclusion: Too much risk. As owners, we're liable for employees' education about potential stock purchases. That means we'd have had to cover ourselves by paying a financial consultant to give advice, since none of us is a "certified" expert. The costs and risks were higher than we were willing to pay. This is just an overview of our rationale - don't want to take up too much space with this topic, but it's near and dear to my heart.

I don't know what circumstances are at work in your company, but I know it wasn't a matter of not trusting our employees in our case, and it may not be in yours. It's worth asking your management to find out the reason for their current structure.

Meredith
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