In 2001 Kevin Coppola began to research ways to help people better manage their retirement savings and investments.
“Employers were pretty much forbidden from giving investment advice, and the responsibility was on the individual to educate themselves and make financial choices that would impact their whole life,” says Coppola.
After years of research, in 2004, Coppola created Compass Investors, which provides clients with customized analysis of their investment options so that they can change the investments in their 401(k)s every five weeks in order to capitalize on market conditions.
Coppola created Compass based on his belief that the old ‘save and hold’ model we are accustomed to when it comes to long-term investing for retirement, could not possibly deliver the returns needed to meet financial needs 20, 30, or even 40 years into retirement.
“When you look at the social and economic realities of the day, particularly the fact that we are living so much longer, you could do everything ‘right’ and still not be able to save enough for retirement,” says Coppola.
Critics point out that these companies and their trading advice are not regulated, and that they are not held accountable for what they say or do. Financial advisers like Jonathan Satovsky, founder and principal of Satovsky Asset Management L.L.C., warn that moving in and out of investments that are designed to provide value over the long-term can make time your enemy, and not your friend.
“You will only know whether your investment steward is a genius or idiot in 10 or more years. If people start changing their investments you’re not giving me time to let my thesis play out, to see that I was right, because you’re forcing me to sell the position,” he adds.
The Compass strategy begins by asking people to figure out what their ideal retirement looks like and how much it will cost.
The idea is to get to that ‘magic number’ as quickly as possible. For approximately $600 a year, Compass sends investors analysis every five weeks, encouraging them to move their money between the different funds available through their 401(k)s in order to maximize returns versus traditional long-term investment strategies.
When investors reach their target, Compass allows them the flexibility to transfer the funds to a safe investment like bonds.
“I want to be able to provide income forever, if possible, and you can do that by growing your accounts large enough and then putting them into guaranteed vehicles that will pay you interest —everything that you would have been getting from your salary,” says Coppola.
Compass is not the only player in the space. EZ Tracker provides a monthly newsletter with information about the best performing funds in your portfolio each month for $99 a year.
Unlike things like education costs, you can’t borrow money for retirement. Be sure you are getting good advice and take control of this important part of your financial life.