PARTICIPANTS, we've made 401(k) as easy as 1, 2, 3!

1 ::Take the Risk Capacity Survey
(NOTE: CHOOSE ANDREW ORR AS ADVISOR AT THE END OF SURVEY)


2 ::Select a Portfolio of Index Funds



3 ::Enroll in the 401(k) Plan


In their own words:

"If we could choose only one family of funds for the ideal 401(k) plan, it would be Dimensional Fund Advisors. We believe DFA's institutional index funds are the best, and employees whose plans include them are fortunate...In 2001, a portfolio of DFA funds weighted equally among the asset classes we listed above would have appreciated by 1 percent. Doesn't seem like much but it's much better than the 12 percent loss in the Standard & Poor's 500 Index and the 23 percent decline by the average large-company growth fund."
- Paul Merriman, CBS Marketwatch, A world-class menu of 401(k) choices
Jan 16, 2002

[In the article,] he continues to advocate ending the current brand recognition contest and replacing competing fund choices with pre-built portfolios at different levels of risk. Those portfolios, in turn, would be constructed with large doses of index and enhanced index funds combined with smaller doses of proven active managers. The combination would result in a dramatic cost and risk reduction -- and make our largest and most successful savings vehicle less of a lottery.

- by Scott Burns, "What Your 401(k) May Look Like." Both referring to a paper by M. Barton Waring, "It is 11pm, Do You Know Where Your Employees Assets Are?" Call us toll free at 888-643-3133 to obtain a copy.

"Low-cost indexing is the magic ingredient to creating a model 401(k) program." Lynn O'Shaunessy, What’s wrong with your 401(k) -- and how to fix it. www.msn.com, 4/1/02

"The typical fund company services [401k plan] participants in the same way that Baby Face Nelson serviced banks." - William Bernstein, Riding for a Fall, The 401(k) is likely to turn out to be a defined-chaos retirement plan.

An examination of plans sponsored by five leading financial services firms reveals that from 1995 through 1998, none had returns that matched a simple index of 60 percent stocks and 40 percent bonds. Although these companies offer investment advice to the public, the investment choices of their own employees underperformed the market index by 3.2 to 10.5 percentage points.
Recommendation: Premixed Portfolios and Professionally Directed Investments. Since index funds and the managers of defined benefit pension plans have historically produced higher yields on investments, companies adopting the American Freedom 401(k) plan would have to agree to include in participants' options premixed efficient portfolios - ones that give the maximum rate of return at different risk levels - or a professionally directed investment option or both.

Source: NCPA Policy Report No. 248, December 2001, Brooks Hamilton and Scott Burns