12 ms·

Show HN: Simplifying 401(k) Advice - Feedback?

35 points by car 13y ago

bpm11 13y ago
Hi all, "Edit: I'm the co-founder of Kivalia." We've spent about 1 1/2 years developing the above-linked community-based 401(k) advisory service offering, which is now live. We'd welcome feedback from the community to help us refine the design/flow/usability of the service offering. The specific problem we're solving is "How should I invest my 401(k) money, given the market environment and the options available to me specifically?" My partner and I have deep domain expertise (quant finance & investment advisory experience - 25 years or so between us) and as such, run the risk of creating something intuitive to us, but too geeky for mass consumption. I’ll be active in the comments section Thanks! B
- nikoftime 13y ago
  Hey @bpm11, How does this differ from the consumer's perspective from BrightScope? Best, David
  - bpm11 13y ago
    Brightscope rates plans based on cost and other attributes, while we provide actionable advice for participants in any plan. The actionable advice is in the form of model portfolios which are updated each quarter (with notifications sent to all subscribers to a particular plan).
- wj 13y ago
  As your competitor I wish you the best! More innovation in this space is needed.
  - bpm11 13y ago
    Agree completely wj! Feel free to chat w/me if and when you'd like.
PaulHoule 13y ago
Who stays in one place enough to have "one" 401(k)? When I switch jobs I roll over. I have rollover, traditional, Roth and SEP IRAs at E-Trade Does your service work for me?
- bluedino 13y ago
  What stinks about switching jobs is most places don't do a 401k for your first 3-6 months.
  - PaulHoule 13y ago
    My last company was funded by a another company that was a pioneer in the investment and benefits management world so we had a 401k with automatic 3% contribution from day 1, although no matching contributions unless I stuck around for 2 years. If I was getting matching I would have maxed my contributions, but instead I fully funded my Roth for the year and also started making (non IRA) contributions to a Lending Club account. I worked for a while at a Uni that had something like a 401(k) which made an automatic contribution of 10% of base pay (on top of what you get paid) that started on day one. By default half of that went to Fidelity and the other half went to TIAA-CREF. I sold out Fidelity and converted my TIAA-CREF to an annuity because TIAA-CREF offered something very different from my other investments. That's probably the best plan you can get these days, although I'd really be impressed if somebody offered me a defined benefit plan. Anyhow I'm the kind of guy who buys XIV and doesn't look at the P&L figuring I'll win because the other guys will look at the P&L and blink and I won't.
    - bradleyjg 13y ago
      >Anyhow I'm the kind of guy who buys XIV Daily inverse VIX?!? Have you heard the expression "picking up nickles in front of a steamroller"? Not to mention the cost and tracking error.
      - PaulHoule 13y ago
        If XIV had been around in 2008 it would have taken a sickening drawdown but it would have bounced back much faster than stocks did. It's not "picking up nickles in front of a steamroller" because there isn't any steamroller, unless you are using leverage. If you're using leverage or having to deal with anxious customers, it isn't for you. The tracking error is in your favor because of contango, and that's the reason I invest in XIV, not because I think the VIX will go down. Ought of all the inverse volatility products I picked XIV because it profits from contango the best. Also the cost isn't bad because the trading they are doing is simple and mechanical, it's the kind of thing I could do myself (and might do slightly differently) if I was working on a scale where trading costs were not so bad. The phenomenon that implied volatility exceeds realized volatility is a force that is as strong, or stronger, as the force you harvest with beta. If they threw Rupert Murdoch in jail for sedition against the human race and outlawed "news" as we know it, that might change, but as long as people are hearing "sell in may and go away on CNBC", XIV is going to keep going up. The one thing I worry about is that VelocityShares might blow up or that expanding volumes of volatility trading might cause a discontinuity in the options market. So long as XIV doesn't blow up, it is going to make money in the long term.
anandabits 13y ago
Employer provided 401k plans are great when you receive matching contributions, but otherwise not a very good. They generally have extremely limited investment options. It will be hard to offer general advice applicable to all 401k participants since they will each have a small selection of investment vehicles. The best advice is to make sure you contribute enough to receive the matching contribution, and then immediately roll the money out into an IRA as soon as you leave the employer. This will allow you access to a much wider range of investment vehicles.
- wj 13y ago
  More and more firms are starting to offer self directed brokerage accounts that you can use within your 401(k) plan. Also in a 401(k) plan you get to purchase mutual funds at NAV which you cannot do through an IRA. I don't believe there is a one size fits all ("best advice") solution to personal finances. Though I do agree with making sure you max the matching.
  - saryant 13y ago
    > Also in a 401(k) plan you get to purchase mutual funds at NAV which you cannot do through an IRA. I don't believe that's correct. My understanding is that all mutual funds (excl. closed-end funds) must trade at NAV regardless of the type of account they're held in. http://www.sec.gov/answers/nav.htm http://www.sec.gov/answers/nav.htm
    - wj 13y ago
      From your link: "That is, the price that investors pay to purchase mutual fund and most UIT shares is the approximate per share NAV, plus any fees that the fund imposes at purchase (such as sales loads or purchase fees). The price that investors receive on redemptions is the approximate per share NAV at redemption, minus any fees that the fund deducts at that time (such as deferred sales loads or redemption fees)." In 401(k) the loads or purchase/redemption fees are usually waived (with the exception of short term redemption fees which are sometimes imposed for not holding funds at least 30-90 days to discourage people trying to "day trade" mutual funds). Also, I did forget to mention that, in addition to waiving CDSC charges, large plans can usually qualify for cheaper share classes of the funds. For example Admiral or Signal shares at Vanguard rather than the retail Investor shares.
bradleyjg 13y ago
I like the general idea -- many company's 401k options range from slightly sub-optimal to terrible, and helping people make the best of whatever choices they face can be very useful. On the UI/UX side, the look and feel is very slick, but I'd like to see some deeper tutorial type explanations for things like beta and risk profiles rather than short "help" style definitions. More fundamentally, it is hard to garner a real understanding of the sites' investment philosophy. That's something I'd really want to know before I send a friend or relative to this sort of website. For example, although it is clear that the site favors active portfolio management, beyond just re-balancing, what is its take on active versus passively managed underlying funds? Is past performance being used as a predictor of future performance? What is the weight given to fees? What about internal leverage? And so on.
- the_watcher 13y ago
  Yea, my biggest problem with my employer 401k is that I can't just invest in a Vanguard low fee fund, but I have to use their 401k management to get my matching funds.
  - arielweisberg 13y ago
    I once had an employer who gave away .5% of my 401k every year to a no value add consultant who selected the overpriced funds. I lost 1% every year I didn't roll into an IRA, but it beat having the principal taxed @ 25%. I wonder where the inflection point is where you are better off investing after tax.
    - joe_bleau 13y ago
      Annoying, isn't it? Every time Frontline or one of the major networks runs a scare story about how much money people are losing due to high fee 401k plans, I get angry. Not so much at the lost money, but that the 'in-depth journalism' never seems to bother with any suggestions on what to do if you're in one of those crummy plans. (To be fair, I guess "quit and go to work for Google or Goldman" wouldn't go over well, either...)
elindell 13y ago
Small thing I noticed. On http://www.kivalia.com/retirement-plans http://www.kivalia.com/retirement-plans, typing in something you Kivalia doesn't recognize (most easily reproduced with something like "eafeaea") occasionally results in a JS alert that says "error".
- bpm11 13y ago
  thanks for pointing that out, elindell...I've noticed that every once in awhile as well and we'll stamp that out.
dman 13y ago
How does this differ from brightscope?
- bpm11 13y ago
  From my knowledge Brightscope rates the plans themselves based on expenses and other criteria. Kivalia provides plan participants ongoing, actionable advice on how to invest the funds held in their individual accounts.
trombs 13y ago
Brilliant concept, as I've been struggling with this exact problem for a while. A few comments: Details on how you decide a fund rating would be nice. The "Forecasts that drive our models" doesn't tell me what's really going on. First item: "US Small Cap vs Large". So you're biased toward small cap? That's the implication, but it's not explicit. I'd like to read why. Also, two of the three listed items talk about international (without any explanation), yet my specific plan recommendation has just a sliver of international exposure despite several options in that regard. Usability: after finding my company's plan and creating an account, if I click on "401k guidance" in the top nav, I don't expect it to show the search field to find other company plans. Rather, I expect it to show me my plan(s). (I see it's under My Stuff, but that's less obvious.) Very good start!
- bpm11 13y ago
  Currently fund ratings are determined as risk adjusted excess return versus the fund's best fit index. A "C" is average (no curve here!), so you'll find most index funds will be rated C. Funds that have returned more than 3% more on an RAR basis over the past year are deemed A. We'll want to revisit ratings as we build out - to look at the graphic representation of excess returns in a universe and then customize ratings around reasonable percentiles. On the +/++ and -/-- portions of the ranking: these are simply momentum scores for the sector in which the fund participates. So, an A++ fund is a manager who is doing well on a risk adjusted basis, in a sector that has strong current momentum. We'll need to be more explicit on the biases. You're right they don't tell me much. The biases are clearly based on the forecast 10 year returns. At present we are negatively disposed to international generally. You can actually read through our views on the blog: http://www.kivalia.com/blog/post/2013/07/11/Investment-Outlook-Q3-2013 http://www.kivalia.com/blog/post/2013/07/11/Investment-Outlo... See if that helps. Will take usability thoughts into account as well. Thanks!
nobodysfool 13y ago
Just want to say that if it's free, why do I even need an account to see for example this: http://www.kivalia.com/plans/moderate-portfolio/226/oracle-corporation-401k-savings-and-investment-plan http://www.kivalia.com/plans/moderate-portfolio/226/oracle-c... All I have to do is right click and 'delete node' in Chrome, and I get to see everything without an account. Also, I could just go to the javascript console and run this: $.unblockUI(); If you are going to block people, at least do it right.
- bpm11 13y ago
  We're not shooting for bulletproof security, at this time, as there is no personal info here. If we were, we'd probably be hiding the model portfolios behind the firewall as well. That said, we would like those who find the information of value to sign up so we can update them as the models change.
barjo 13y ago
Like how you can get the performance rolled back in time. Nice feature that I have never seen before. Makes it feel less of a leap of faith.
- bpm11 13y ago
  that another cool thing about the Kivalia framework. We have time-stapped market views, so we can confidently go back and say "Here's what we would have recommended for your plan 9 months ago". I think you're obligated to do something like this if you're in any way providing active advice.

35 points by car 13y ago

bpm11 13y ago

Hi all, "Edit: I'm the co-founder of Kivalia." We've spent about 1 1/2 years developing the above-linked community-based 401(k) advisory service offering, which is now live. We'd welcome feedback from the community to help us refine the design/flow/usability of the service offering. The specific problem we're solving is "How should I invest my 401(k) money, given the market environment and the options available to me specifically?" My partner and I have deep domain expertise (quant finance & investment advisory experience - 25 years or so between us) and as such, run the risk of creating something intuitive to us, but too geeky for mass consumption. I’ll be active in the comments section Thanks! B

nikoftime 13y ago
Hey @bpm11, How does this differ from the consumer's perspective from BrightScope? Best, David
- bpm11 13y ago
  Brightscope rates plans based on cost and other attributes, while we provide actionable advice for participants in any plan. The actionable advice is in the form of model portfolios which are updated each quarter (with notifications sent to all subscribers to a particular plan).
wj 13y ago
As your competitor I wish you the best! More innovation in this space is needed.
- bpm11 13y ago
  Agree completely wj! Feel free to chat w/me if and when you'd like.

PaulHoule 13y ago

Who stays in one place enough to have "one" 401(k)? When I switch jobs I roll over. I have rollover, traditional, Roth and SEP IRAs at E-Trade Does your service work for me?

bluedino 13y ago
What stinks about switching jobs is most places don't do a 401k for your first 3-6 months.
- PaulHoule 13y ago
  My last company was funded by a another company that was a pioneer in the investment and benefits management world so we had a 401k with automatic 3% contribution from day 1, although no matching contributions unless I stuck around for 2 years. If I was getting matching I would have maxed my contributions, but instead I fully funded my Roth for the year and also started making (non IRA) contributions to a Lending Club account. I worked for a while at a Uni that had something like a 401(k) which made an automatic contribution of 10% of base pay (on top of what you get paid) that started on day one. By default half of that went to Fidelity and the other half went to TIAA-CREF. I sold out Fidelity and converted my TIAA-CREF to an annuity because TIAA-CREF offered something very different from my other investments. That's probably the best plan you can get these days, although I'd really be impressed if somebody offered me a defined benefit plan. Anyhow I'm the kind of guy who buys XIV and doesn't look at the P&L figuring I'll win because the other guys will look at the P&L and blink and I won't.
  - bradleyjg 13y ago
    >Anyhow I'm the kind of guy who buys XIV Daily inverse VIX?!? Have you heard the expression "picking up nickles in front of a steamroller"? Not to mention the cost and tracking error.
    - PaulHoule 13y ago
      If XIV had been around in 2008 it would have taken a sickening drawdown but it would have bounced back much faster than stocks did. It's not "picking up nickles in front of a steamroller" because there isn't any steamroller, unless you are using leverage. If you're using leverage or having to deal with anxious customers, it isn't for you. The tracking error is in your favor because of contango, and that's the reason I invest in XIV, not because I think the VIX will go down. Ought of all the inverse volatility products I picked XIV because it profits from contango the best. Also the cost isn't bad because the trading they are doing is simple and mechanical, it's the kind of thing I could do myself (and might do slightly differently) if I was working on a scale where trading costs were not so bad. The phenomenon that implied volatility exceeds realized volatility is a force that is as strong, or stronger, as the force you harvest with beta. If they threw Rupert Murdoch in jail for sedition against the human race and outlawed "news" as we know it, that might change, but as long as people are hearing "sell in may and go away on CNBC", XIV is going to keep going up. The one thing I worry about is that VelocityShares might blow up or that expanding volumes of volatility trading might cause a discontinuity in the options market. So long as XIV doesn't blow up, it is going to make money in the long term.

anandabits 13y ago

Employer provided 401k plans are great when you receive matching contributions, but otherwise not a very good. They generally have extremely limited investment options. It will be hard to offer general advice applicable to all 401k participants since they will each have a small selection of investment vehicles. The best advice is to make sure you contribute enough to receive the matching contribution, and then immediately roll the money out into an IRA as soon as you leave the employer. This will allow you access to a much wider range of investment vehicles.

wj 13y ago
More and more firms are starting to offer self directed brokerage accounts that you can use within your 401(k) plan. Also in a 401(k) plan you get to purchase mutual funds at NAV which you cannot do through an IRA. I don't believe there is a one size fits all ("best advice") solution to personal finances. Though I do agree with making sure you max the matching.
- saryant 13y ago
  > Also in a 401(k) plan you get to purchase mutual funds at NAV which you cannot do through an IRA. I don't believe that's correct. My understanding is that all mutual funds (excl. closed-end funds) must trade at NAV regardless of the type of account they're held in. http://www.sec.gov/answers/nav.htm http://www.sec.gov/answers/nav.htm
  - wj 13y ago
    From your link: "That is, the price that investors pay to purchase mutual fund and most UIT shares is the approximate per share NAV, plus any fees that the fund imposes at purchase (such as sales loads or purchase fees). The price that investors receive on redemptions is the approximate per share NAV at redemption, minus any fees that the fund deducts at that time (such as deferred sales loads or redemption fees)." In 401(k) the loads or purchase/redemption fees are usually waived (with the exception of short term redemption fees which are sometimes imposed for not holding funds at least 30-90 days to discourage people trying to "day trade" mutual funds). Also, I did forget to mention that, in addition to waiving CDSC charges, large plans can usually qualify for cheaper share classes of the funds. For example Admiral or Signal shares at Vanguard rather than the retail Investor shares.

bradleyjg 13y ago

I like the general idea -- many company's 401k options range from slightly sub-optimal to terrible, and helping people make the best of whatever choices they face can be very useful. On the UI/UX side, the look and feel is very slick, but I'd like to see some deeper tutorial type explanations for things like beta and risk profiles rather than short "help" style definitions. More fundamentally, it is hard to garner a real understanding of the sites' investment philosophy. That's something I'd really want to know before I send a friend or relative to this sort of website. For example, although it is clear that the site favors active portfolio management, beyond just re-balancing, what is its take on active versus passively managed underlying funds? Is past performance being used as a predictor of future performance? What is the weight given to fees? What about internal leverage? And so on.

the_watcher 13y ago
Yea, my biggest problem with my employer 401k is that I can't just invest in a Vanguard low fee fund, but I have to use their 401k management to get my matching funds.
- arielweisberg 13y ago
  I once had an employer who gave away .5% of my 401k every year to a no value add consultant who selected the overpriced funds. I lost 1% every year I didn't roll into an IRA, but it beat having the principal taxed @ 25%. I wonder where the inflection point is where you are better off investing after tax.
  - joe_bleau 13y ago
    Annoying, isn't it? Every time Frontline or one of the major networks runs a scare story about how much money people are losing due to high fee 401k plans, I get angry. Not so much at the lost money, but that the 'in-depth journalism' never seems to bother with any suggestions on what to do if you're in one of those crummy plans. (To be fair, I guess "quit and go to work for Google or Goldman" wouldn't go over well, either...)

elindell 13y ago

Small thing I noticed. On http://www.kivalia.com/retirement-plans http://www.kivalia.com/retirement-plans, typing in something you Kivalia doesn't recognize (most easily reproduced with something like "eafeaea") occasionally results in a JS alert that says "error".

bpm11 13y ago
thanks for pointing that out, elindell...I've noticed that every once in awhile as well and we'll stamp that out.

dman 13y ago

How does this differ from brightscope?

bpm11 13y ago
From my knowledge Brightscope rates the plans themselves based on expenses and other criteria. Kivalia provides plan participants ongoing, actionable advice on how to invest the funds held in their individual accounts.

trombs 13y ago

Brilliant concept, as I've been struggling with this exact problem for a while. A few comments: Details on how you decide a fund rating would be nice. The "Forecasts that drive our models" doesn't tell me what's really going on. First item: "US Small Cap vs Large". So you're biased toward small cap? That's the implication, but it's not explicit. I'd like to read why. Also, two of the three listed items talk about international (without any explanation), yet my specific plan recommendation has just a sliver of international exposure despite several options in that regard. Usability: after finding my company's plan and creating an account, if I click on "401k guidance" in the top nav, I don't expect it to show the search field to find other company plans. Rather, I expect it to show me my plan(s). (I see it's under My Stuff, but that's less obvious.) Very good start!

bpm11 13y ago
Currently fund ratings are determined as risk adjusted excess return versus the fund's best fit index. A "C" is average (no curve here!), so you'll find most index funds will be rated C. Funds that have returned more than 3% more on an RAR basis over the past year are deemed A. We'll want to revisit ratings as we build out - to look at the graphic representation of excess returns in a universe and then customize ratings around reasonable percentiles. On the +/++ and -/-- portions of the ranking: these are simply momentum scores for the sector in which the fund participates. So, an A++ fund is a manager who is doing well on a risk adjusted basis, in a sector that has strong current momentum. We'll need to be more explicit on the biases. You're right they don't tell me much. The biases are clearly based on the forecast 10 year returns. At present we are negatively disposed to international generally. You can actually read through our views on the blog: http://www.kivalia.com/blog/post/2013/07/11/Investment-Outlook-Q3-2013 http://www.kivalia.com/blog/post/2013/07/11/Investment-Outlo... See if that helps. Will take usability thoughts into account as well. Thanks!

nobodysfool 13y ago

Just want to say that if it's free, why do I even need an account to see for example this: http://www.kivalia.com/plans/moderate-portfolio/226/oracle-corporation-401k-savings-and-investment-plan http://www.kivalia.com/plans/moderate-portfolio/226/oracle-c... All I have to do is right click and 'delete node' in Chrome, and I get to see everything without an account. Also, I could just go to the javascript console and run this: $.unblockUI(); If you are going to block people, at least do it right.

bpm11 13y ago
We're not shooting for bulletproof security, at this time, as there is no personal info here. If we were, we'd probably be hiding the model portfolios behind the firewall as well. That said, we would like those who find the information of value to sign up so we can update them as the models change.

barjo 13y ago

Like how you can get the performance rolled back in time. Nice feature that I have never seen before. Makes it feel less of a leap of faith.

bpm11 13y ago
that another cool thing about the Kivalia framework. We have time-stapped market views, so we can confidently go back and say "Here's what we would have recommended for your plan 9 months ago". I think you're obligated to do something like this if you're in any way providing active advice.