Non-Traditional Asset Options in Employer-sponsored Retirement Plans Grow in Appeal

401(k) plan providers can improve diversification, minimize asset correlation by allowing investments in real estate, franchises, employer stock, horses, tax liens and other choices

PORTLAND, Maine (Aug. 29, 2011) – Employers who provide 401(k)s and other employer-sponsored retirement plans are wisely looking to offer choices beyond the traditional stocks, bonds and mutual funds, according to Laurie Bachelder, chief compliance officer of NUA Advisors, LLC, based in Portland, Maine.

“By making available investments in non-traditional assets such as real estate, franchises, employer stock, horses, tax liens and other participant-driven possibilities, employer-sponsored plans can minimize asset correlation for participants and help them achieve true diversification,” Bachelder said. “Participants are free to invest in what they know and understand, all within the boundaries of their tax-deferred retirement savings.”

Forward-thinking private employers also could benefit by boosting morale among appreciative employees by offering investment opportunity in their private company stock.

Since the enactment of the Employee Retirement Income Security Act (ERISA) in 1974, Americans have been able to utilize their tax-deferred retirement assets for the purchase of a wide range of assets – including non-traditional assets – under the ERISA and the Internal Revenue Code (IRC). But while individual investors are permitted to control their own investment choices within the scope of an ERISA plan, the choice of providing those investment options is left to the employer sponsoring the plan.

Unfortunately, she said, most financial institutions and brokers that provide Employer Sponsored Plan services and investments limit participant choices to traditional assets - commission-based stocks, bonds and mutual funds.

But studies show that 401(k)s with non-traditional investments included give participants more control over their nest eggs and help them achieve the goal of a diversified, low-correlation portfolio.

“Diversification among many traditional asset classes may not be effective during bear markets because those assets become highly correlated, more so than they do during bull markets,” Bachelder said. “One effective way to maintain low correlation of assets is to invest in non-traditional assets. Savvy individual investors have discovered they can maximize their own individual areas of expertise in real estate, livestock, and other pursuits to create ongoing businesses or income-producing ventures that could allow their retirement funds to grow at an exponentially higher rate than traditional investments offer. But with 401(k)s and other employer-sponsored plans, it comes down to whether administrators of those plans will make that option available. More and more, they are, and that’s a positive sign.”

NUA Advisors (www.nuaadvisors.com was founded to meet the need for low and non-correlated assets inside retirement plans. As an RIA, the firm works with a company’s existing retirement plan and advisor to help incorporate non-traditional investments into employer sponsored plans, as well as provide access to the third-party administration that is needed to support both traditional and non-traditional assets. For additional information, contact Ms. Bachelder at laurie@nuaadvisors.com.

About NUA
NUA Advisors, LLC is an independent investment advisory firm that is bridging the gap between traditional and non-traditional investing. The firm, which was named a 2010 Five Star Wealth Manager by Crescendo Business Services, an independent research firm, is unique in that its team of experienced and knowledgeable professionals specializes in alternative investments within a Self Directed Retirement Account (SDRA). NUA advises clients on traditional securities investments such as stocks, bonds and mutual funds, as well as non-traditional investments. NUA serves clients in New England and throughout the nation. For more information contact NUA at info@nuaadvisors.com or visit NUA online at www.nuaadvisors.com.

# # #
NUA Advisors Disclosures: There is risk associated with all investments, both traditional and alternative investments. Not all investments are for all investors, and appropriate portfolio planning, whether traditional or alternative is required prior to making any investments. Classification of risk for an investment is based on many factors, some of which is inherent in the investment and some of it is based on the portfolio and plan of the investor. Please seek professional advice prior to planning any investment whether traditional or alternative. Nothing in this article implies, either explicitly or implicitly, that NUA or the authors of this article is soliciting investors for any type of investment, nor is NUA or the authors providing any form of investment advice through this article. Not all information contained within this article may be applicable to all readers, and NUA shall not be held responsible or liable for any use of the information with or without seeking knowledgeable professional advice.

Here is more information about NUA Advisors