Can I Hire a Financial Adviser to Manage My 401(k)?

If your employer offers a self-directed brokerage account as an option, you can. But then the question becomes: Should you hire an adviser to oversee your 401(k)?

A financial adviser sits at a conference table and smiles while talking to a couple.
(Image credit: Getty Images)

Managing your 401(k) plan can be time-consuming and intimidating for employees, especially if you lack the expertise and time to oversee your investments effectively. Typically, 401(k) plans provide a menu of investment options curated by the employer, which can limit the employee's investment choices. As a result, many workers are considering hiring a financial adviser to manage their 401(k) accounts.

In this article, we will explore the benefits of hiring a financial adviser for your 401(k), as well as when and how to make the most of this professional assistance.

Introducing self-directed brokerage accounts (SDBA)

An increasing number of employers are offering employees the option to open a self-directed brokerage account (SDBA) within their 401(k) plan. An SDBA provides employees with a broader range of investment options, often including individual stocks, bonds, exchange-traded funds (ETFs) and a more comprehensive selection of mutual funds. Employees can manage their SDBA independently or hire a third-party investment adviser to oversee their retirement account, depending on how their employer sets up the SDBA.

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If your employer offers an SDBA within your 401(k) plan, you can access a broader range of investment options. Hiring a financial adviser can help you navigate these choices and construct a well-diversified portfolio.

The benefits of hiring a financial adviser for your 401(k)

There are several advantages to hiring a financial adviser to manage your 401(k) account, particularly if you have access to an SDBA. A financial adviser can provide personalized investment advice tailored to your unique financial situation and goals. This can include optimizing your asset allocation, selecting appropriate investments and ensuring your portfolio is appropriately diversified to minimize risk.

A financial adviser can help you develop a comprehensive financial plan that considers all aspects of your financial life, including other investment accounts, Social Security strategies and retirement income sources. This holistic approach ensures all your assets work together toward your financial goals.

Understanding your risk tolerance is essential for building a successful investment portfolio. A financial adviser can help you assess your risk tolerance and structure your investments accordingly, ensuring that your portfolio aligns with your financial objectives and risk preferences.

Assessing the cost of hiring a financial adviser

While hiring a financial adviser for your 401(k) may be an added expense, it's essential to consider the value they can provide compared to the fees you're already paying on your 401(k) plan.

Most 401(k) plans charge management fees, which cover the costs of the plan's investment options and the services provided by the plan's registered investment adviser. These fees can sometimes be quite substantial, significantly impacting your account's ultimate value.

Financial advisers typically charge an annual fee based on a percentage of the assets they manage, usually between 0.5% and 1.5%. While this may be an added cost, it's worth noting that it typically covers much broader services than the fees you already pay on your 401(k) plan. Additionally, with the right adviser, the personalized advice and improved performance they can provide may outweigh the cost of their fees over time.

Finding the right financial adviser for your 401(k)

When searching for a financial adviser to manage your 401(k), finding someone who understands your unique financial situation and goals is essential. Consider their experience managing retirement accounts and working with clients in similar financial situations.

Ensure that the financial adviser you choose is a fiduciary, meaning they are legally obligated to act in your best interests when providing investment advice and managing your 401(k) account. Also, understand the financial adviser's fee structure and ensure that their fees are transparent and reasonable for the services they provide.

Working with a financial adviser who communicates effectively and understands your financial goals and risk tolerance is essential. Look for someone you feel comfortable discussing your financial situation with and who is responsive to your questions and concerns.

Hiring a financial adviser for your 401(k)

Before hiring a financial adviser, review your 401(k) plan to determine if it offers an SDBA and the terms. Understand the investment options available, whether you can hire your own adviser and how the adviser's fees will be paid.

Conduct thorough research to find a financial adviser who meets your needs in terms of experience, credentials and compatibility. Check their records with the SEC or FINRA to ensure they are reputable and have a clean history. Then, meet with potential financial advisers to discuss their approach to managing 401(k) accounts, investment philosophy and fee structure.

Once you've selected a financial adviser, establish a working relationship by discussing your financial goals, risk tolerance and investment expectations. Provide them with access to your 401(k) account and any other relevant financial information.

They should regularly review your 401(k) account's performance and discuss any changes or concerns with you and confirm that your investment strategy remains aligned with your financial goals and risk tolerance over time.

Hiring a financial adviser to manage your 401(k) account can be a wise investment in your financial future. They can help you maximize your 401(k) and achieve your overall financial goals by providing personalized investment advice, improved long-term performance and comprehensive financial planning. Take the time to research and choose the right adviser for your needs and enjoy the peace of mind that comes with knowing your retirement savings are in capable hands.


This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Renée Pastor, AIF®
Founder, Wealth Manager, The Pastor Financial Group

Renée Pastor is Founder & Wealth Manager at The Pastor Financial Group, a comprehensive financial planning and wealth management practice headquartered in New Orleans. The firm specializes in retirement planning and 401(k) management for families and individuals nationwide. To learn more, please visit