In this article, we describe a hypothetical investor who would be well-served by Peloton’s Core Growth Strategies – one of our four investment strategy and management service offerings

The Need

Jen is a saver. She enjoys living below her means and putting money away for future needs. Between college and graduate school, Jen worked a couple of different jobs where she was eligible to save in 401(k) accounts. Today, Jen works at a large company, where she’s earned a few promotions and raises. The new company has a 401(k) but she’s not sure how good the investment alternatives are. Jen lives frugally, but she’d like to know how much she will need in retirement. Should she keep the old 401(k)s in her prior employers’ plans, or do something else with them? Jen feels that if she chooses to work with an investment advisor, she wants to ensure that they’re looking out for her best interests, and that their costs are reasonable.

Peloton’s Process

Jen decides to schedule a meeting with Peloton to explore what they could do for her. During this meeting, Peloton

  • gathers information about Jen’s retirement and near-term goals, and her ability to save;
  • gains an understanding of her risk tolerance through conversation and experienced professional judgement; and
  • collects details about her old 401(k)s and her current employer retirement plan.
Peloton’s Recommendation

Peloton then develops a proposal for Jen, outlining what they recommend from their first meeting:

  • Jen’s frugality and saving habits serve her well: even with conservative return assumptions she should reach her goals.
  • Her new company’s 401(k) is a good plan: her employer matches her contributions fully up to 3% of her salary, and the investment choices include low-cost, broadly diversified funds. Peloton encourages Jen to maximize her salary deferrals, and helps her select appropriate fund choices.
  • The old 401(k)s are a different story. Their investment alternatives seem to be a random selection of high-fee mutual funds. Since the fund selection is poor, and she’s no longer eligible to contribute to these funds or receive employer matches, Peloton proposes that she consolidate her old 401(k)s into a Rollover IRA.
  • Once the money has been rolled over, Peloton recommends that Jen utilize the Moderate Deferred Core Growth Strategy. The strategy includes tactical investments in 3-5 low-cost Exchange Traded Funds (“ETF”), oriented to provide growth.

Jen likes that she – not a fund company – is paying Peloton. And she appreciates that Peloton’s fee starts at 1.00% of assets and declines as her portfolio value increases. But more still, she likes that Peloton embraces their role as fiduciaries, putting her interests above their own.

Peloton is accepting new clients, and we welcome your Core Growth referrals for anyone you know who sounds like “Jen” described above. Next quarter, we’ll describe an investor ideally suited for our Roadmap.