Many of the 52 million workers who participate in 401(k) plans are not good at making their own investment choices, experts say.
Studies show that, overall, workers who get investment advice from any source do better than those who receive no advice.
The difference can be more than 3 percent a year on returns, or up to 80 percent more in an account over 25 years, according to a recent study.
So where can employees turn for guidance?
Start with your human resources department: If you work at a big company, you might be one of the 600 clients of Financial Engines (which manages 401(k)s for some Newsday employees). Their free services include allocation advice and performance data.
Other companies may employ consultants to give advice during open-enrollment periods or give access to calculators and other advice through the website of the 401(k) provider. Employees at smaller companies might have to venture further to get help.
Get free advice on the Web: The Web offers a lot more these days than standard retirement calculators. You can obtain detailed advice on allocating funds in your specific retirement plan from several providers.
At Kivalia (kivalia.com) and FutureAdvisor (futureadvisor.com), to name two, all you have to do is type in the name of your company and the system will generate a sample portfolio. You have to implement that allocation advice on your own.
Pick managed funds or target-date funds: If you do not want to get too involved in the process, your company will typically offer some kind of managed fund or target-date fund, a diversified fund linked to a future retirement date that gradually gets more conservative as you age, in their mix of choices.
When you allocate your money into these types of funds, you are buying the management expertise that comes with them, timed for a retirement date in the future. Sometimes that comes with stiff fees, so check the fine print.
Pay to have somebody manage it for you: Financial Engines has 800,000 subscribers who pay a percentage of their assets under management to monitor their 401(k) accounts and make changes accordingly. Others are GuidedChoice (guidedchoice.com), which offers its services through providers such as ADP, Schwab, and Morningstar, which reaches 99,000 different plans.
Do not opt out of auto-enrollment: Some companies are making workers re-enroll in 401(k) plans and defaulting them into managed accounts to get them to diversify.