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Shake your 401(k) haze
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September 11, 2000: 5:58 a.m. ET
401(k) investors are going online for more choices and advice on funds
By Staff Writer Jennifer Karchmer
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NEW YORK (CNNfn) - Your 401(k) plan is a jumble of funds and you just don't know which ones are right for you. And you're lucky if your plan offers you more than a handful, since many companies lack the right choices.
But the face of 401(k)s is changing as investors can access their company-sponsored accounts on the Web. On top of that, more employers are offering online alternatives to the traditional 401(k) that is typically managed by a large fund company like Vanguard Group or Fidelity Investments.
Persumma Financial, for example, announced today it will launch in October a 401(k) plan for companies that allows investors to choose any mutual fund they want. Persumma argues it will also offer more objective advice than a plan with a big fund family that may subtly, or not so subtly, push its own products.
"The Internet is the median of choice for most people," said Spencer Williams, founder and CEO of Persumma Financial. "You can do it on your time, log in and immediately see on your home page the value of all your retirement accounts."
Williams said employees will be able to choose from virtually any mutual fund out there, except for maybe load funds and municipal bond funds that aren't typically offered in company retirement accounts.
Get your 401(k) online; get more choice
If you have a 401(k) plan at your job, chances are you have only about a dozen different funds to choose from, most commonly large-cap equity funds, according to Hewitt Associates, a human resources consulting firm. While this number is up from an average of eight fund options in 1997, about 15 percent of companies surveyed by Hewitt offer fewer than six mutual funds.
And while investors are probably happy about socking away their pre-tax dollars and getting matching funds from their company, Williams said their retirement plans are being held back by what they pay in fees every year. He said the fees generally run about $513 for the average investor.
Persumma investors will pay a flat monthly fee for the service. (The company declined to say what the fee will be until the launch in October.) They may also pay less in fund fees because they will have a much wider choice of funds and can choose less expensive options, according to Williams.
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So maybe you're a 25-year-old dot.com worker with hopes of retiring early with millions in the bank. Or you're a 50-year-old executive much closer to retirement, ready to do some volunteer work and enjoy the grandkids.
Either way, you'll want advice that is specific to your goals -- and you'd like to know what mix of stock and bond funds, international, value and growth investments are right for you.
"Generation X and Generation Y are into the investment game already by age 20," Williams said. "Maybe their parents opened up a Roth IRA for them. But I don't want to make demographic differences," he said, adding that investors of all ages will find the Persumma tools useful.
Using the Persumma tools online, 401(k) participants can access news about their investments, track their portfolio's performance and receive alerts on their funds when there's been a drastic change in price.
MPower, another online provider of 401(k) plans, offers users advice and a variety to tools to manage their account and check the progress as often as every day.
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Whether it's Persumma or mPower, investors can access these plans only if their employer is signed up and offering the plan to participants. An employee can't access these online providers on his or her own. (Persumma said it can't reveal the companies that have signed on until it launches next month.)
An easier job online
Many investors are finding that going online makes it easier to choose funds for their 401(k)s.
Lauren Patti, for example, learned a lot about retirement investing online after she started a new job at a San Francisco public relations firm this year. She didn't even know what a 401(k) plan was before she started. Lauren, like many 20-somethings, was overwhelmed thinking about retirement savings, since it's so far away.
"The first day the benefits manager told me that the 401(k) was available to me, I just didn't really think about it," she said. "I was more focused on setting up my desk and my first computer."
But she started using the online tools that her company offered to find out what mix of funds was right for her considering her age and retirement goals.
"To, me the money coming out of my paycheck for retirement is like one less (cafe) latte," she said. "But it's hard to start out and get yourself in an apartment in a new city, and get your life in control. The last thing you want is a deduction from each paycheck." 
-- Staff Writer Jennifer Karchmer covers news about 401(k)s for CNNfn.com. Click here to send her e-mail.
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