David Reichert • Murray, UT
Reichert Wealth • LPL Financial
For many financial advisors, the workplace retirement plan has long been a missing piece in the client relationship. We may build a detailed financial plan, manage taxable assets, oversee IRAs, and guide major portfolio decisions, yet the client’s 401(k) often remains parked in a limited menu of options with little strategic attention. That gap matters, especially when the workplace plan represents a significant share of the client’s long-term assets.
That is one reason I have become increasingly interested in the self-directed brokerage account, or SDBA. For eligible clients, the SDBA can provide access to a broader investment framework inside the workplace plan, including professionally managed, risk-aware strategies through a third-party investment manager. For advisors who want to bring more coordination and oversight to a client’s total financial life, that can be a meaningful opportunity.
In my practice, this has become a growing part of the business over the past year. It started with a client who was unhappy with his 401(k) and wanted to explore alternatives. He and his wife had saved a substantial amount, and they wanted a better way to manage those assets. After doing some research, I found a third-party manager approach that made sense and recommended it. Since then, we have added a meaningful amount of assets to that approach. Interest from other clients has followed.
What resonates with clients is the idea that their 401(k) does not have to remain on autopilot. Many participants are defaulted into target-date funds or conventional diversified allocations and effectively told to set it and forget it. That may be acceptable in some cases, but it is not always ideal, particularly when market volatility is rising or when investors are approaching retirement and are more exposed to the damage a large drawdown can do. Traditional diversification can help in a normal pullback, but many clients want something more responsive when markets become more difficult.
That is where a tactical third-party manager can add value. When I explain the concept to clients, I focus on the difference between a static allocation and an actively managed one. A tactical manager is not simply holding a fixed allocation mix and waiting for conditions to improve. Instead, the manager monitors markets, follows a disciplined process, and adjusts allocations as conditions change. Depending on the strategy, that can mean reducing exposure, shifting among asset classes, or moving more defensively when risk indicators warrant it. For clients, that often makes intuitive sense. They understand that markets change, and they appreciate knowing someone is paying attention and responding rather than leaving their retirement assets fully exposed.
Related Article: What is the real key to retirement fulfillment?Just as important, the SDBA conversation is really about integration. When an advisor and outside manager work together, the 401(k) can be considered within the context of the client’s overall goals, risk tolerance, time horizon, and broader financial plan. That is a much better framework than asking the client to make occasional investment decisions from a plan menu they may not fully understand. One of the biggest benefits is that it removes much of that burden from the participant and replaces it with coordinated guidance.
The SDBA is not right for every client or every plan. Eligibility, plan design, cost, and suitability all matter. But for the right client, it can turn the 401(k) from a largely neglected account into an actively managed part of a broader retirement strategy. For advisors willing to lead that conversation, the SDBA can help create stronger alignment, more complete planning, and a deeper client relationship.
Disclosure: Securities and advisory services offered through LPL Financial, member FINRA/SIPC, a registered investment advisor.
This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own, separate from this educational material.
All investing involves risk, including loss of principal. No strategy assures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Photography by Glen Ricks
