Frequently Asked Questions About
The 401k Autopilot™ Program
- Why do you work with airline pilots?
- How do you work to within the rules of the 401k Plans to manage pilot accounts?
- Which pilot groups do you manage investments for?
- Are you airline pilots?
- What is the minimum account size to participate in the 401k Autopilot Program?
- What are the benefits to me of the 401k Autopilot® Program?
- I have investments I’ve held and dollar-cost-averaged into for years. Is there a downside to moving out of some of those positions now?
- Shouldn’t I wait until the market is higher and my investments come back in value before I make a change? Or shouldn’t I wait until the market is lower to buy in at better prices?
- Will I still be able to see my account online anytime I want to?
- How do you make the changes in my account?
- Do you manage money outside the 401(k) Plan also? Like IRAs, or other investment accounts?
- What is the minimum account size to participate in the 401k Autopilot® Program?
- What is the management fee for participation in the 401k Autopilot® Program?
- What type of payment do you accept for the management service for the 401k Autopilot® Program?
- Are your money management fees deductible?
- Why do some other firms charge so little for money management? Or... why do you charge a bit more for your portfolio models?
- Will you be able to take money out of my account?
- Do you believe it is possible to "time the market?"
- Will you guarantee a rate of return for my account?
- How will I know when you make changes in my 401k account?
- Who should definitely be a 401k Autopilot® client? (Take this quiz)
- Is my information confidential when in your care?
- Which regulatory organization oversees and regulates Rhoads Lucca Capital Management?
- I'm already retired, but I still have my money in the 401k Plan. I guess I didn't know what else to do with it. Can you still manage it there?
- My question isn't listed above. How can I get an answer?
-
Why do you work with airline pilots?
Rhoads Lucca Capital Management is a fee-only investment management firm, registered with the SEC as a Registered Investment Advisor. We were incorporated in 1980 – now in our 30th year of service. We’ve always had a focus on managing retirement money, which still makes up the majority of money we manage. These are the “piles of money” that have to last forever. Just by word of mouth and speaking in venues like the Federal Reserve Bank of Dallas, TX, the firm has grown steadily for more than three decades.
Since our first office in Dallas, Texas was so close to the DFW airport, perhaps it was inevitable we would work with airline pilots. Our first pilots came by way of referral from friends and neighbors of exiting clients who chose us to manage their money when they retired and liked what we did.
We noticed early on that a pilot’s 401(k) account made up a large portion of his net worth, but received the least amount of advice over the years. After airlines began doing away with defined pension plans and switching to defined contribution plans, we realized that 401k accounts and RSP Plans were really the most significant assets pilots still have under their control. Yet, at retirement, their 401(k) account was worth far less than it could have been worth and those retirees started retirement with less money than they could have had, if their account performance was better.
As we saw the complete picture of pilots finances, we realized there was no one giving them quality investment advice and management throughout their career - when it would help them the most. Frankly, no one wanted the liability and since those other firms were commission-based sales people, they weren't interested. We took this on as not just a business strategy, but as a mission to improve the lives and retirement security of pilots. We created the 401k Autopilot Program to guide pilots into steadily building wealth during their working careers.
Pilots referred other pilots to us. Eventually, Rhoads Lucca Capital grew to become one of the premier investment advisors for airline pilots. We remain absolutely unique in our approach, implementing 4th generation investment management strategies, while most firms are still using ideas from the 1970s that are unable to protect pilots from severe loss. Please reread that last sentence, if you are approaching retirement. Safety controls and risk management will be just as important to your retirement as investment gains. How does it help your financial security if you give back all your gains every time a market correction comes along?
We offer the 401k Autopilot® Program for your 401(k) account. We manage money for pilots in the US Airways 401k, the Delta 401k and Federal Express 401k.
We also manage the transition for pilots to retirement, helping them step-by-step to roll over their retirement money into an IRA, plan a stable investment strategy that fits them best, and implementing it day to day in order to free them up to enjoy their retirement.
-
How do you work to within the rules of the 401k Plans to manage pilot accounts?
We do everything possible to honor and live within all the rules of each pilot 401k Plan. The rules are mostly reasonable and we all must work inside that framework.
Because each pilot must operate within the same rules, the question becomes, how can a pilot best maximize their accumulation of wealth during their careers. There are several strategies we use for our pilots - each operating within the existing rules: these include Safety Controls to protect a pilot's retirement money, Investment Strategy that guides which investments are growing without excess risk, and Continual Evaluation to keep and account on track.
All of these components are somewhat restricted by the differing rules in each 401k Plan. To the degree the rules allow freedom of choice, we responsibly operate to carry out systematic investment management for our pilot clients.
-
Which pilot groups do you manage investments for?
In the 401k Autopilot Program, for pilots who are still flying, we manage money in the Delta 401k, the FedEx Pilot 401k and the US Airways 401k plans.
When it comes to retirement, we love working together with pilots to help them retire successfully. We can and do manage retirement investments for pilots at many airlines. The minimum account size is currently $250,000 to establish a relationship.
Any pilot from these airlines can roll their 401k, RSP, Pension, etc. into an IRA and have it managed at Rhoads Lucca Capital:
Alaska
American
Delta
FedEx
Southwest
United
US Airways... and all other pilot groups, including:
AirTran
Allegiant
American Eagle
Atlantic Southeast
ExpressJet
Frontier
Hawaiian
JetBlue
Republic
SkyWest
Spirit
UPS Pilots
Virgin America -
Are you airline pilots?
No - never have been, either. As you can read on this website, RLC is an independent Registered Investment Advisor. We are independent of any connection to any airline. Our loyalty is strictly to pilots. This will not change.
We do have a connection to your world though...
John Rhoads got to try the American Airlines simulator at DFW years ago with a pilot friend (back when you could do that kind of thing) and managed to crash a jet twice and shear off a wing against a hanger before he slunk away in humiliation. He hasn't been invited back... we're sticking with money management!
-
What is the minimum account size to participate in the 401k Autopilot Program?
The minimum account size is $250,000.
-
What are the benefits to me of the 401k Autopilot® Program?
Clients tell us there are four primary reasons they choose the 401k Autopilot® Program:
A. Lack of Time - The single most valuable thing each of us has is time, because it is limited and can never be replaced. For many people the busyness of life leaves little if any time for taking care of their investments. In fact, many people simply end up ignoring their investments and giving back their gains in every market decline. Using a professional manager whose only job is to manage your retirement savings accounts can be a great solution.
B. Lack of Expertise - No one is an expert at everything anymore! (If it makes you feel better, realize none of us at RLC know how to fly an aircraft!) The great news is that professional help is available at a very reasonable cost. Rather than being frustrated trying to learn a whole new set of skills, it makes sense to immediately hire the expertise we need and have more free time.
C. Investment Performance - Investors rarely achieve the investment performance they desire exactly because they lack time, expertise and confidence. The result is buying high and selling low or being paralyzed just at the moment when it is time to take action. A disciplined strategy, managed by a professional can help you achieve the returns on your investments that you need for success.
D. Lack of Confidence - When all is said and done. When you've read and studied and learned all you can, someone still has to make investment decisions. Someone has to act. That's what we do.
Beyond those four reasons, many clients just want to know that their account is being managed in a way that their future retirement is secure.
-
I have investments I’ve held and dollar-cost-averaged into for years. Is there a downside to moving out of some of those positions now?
To be successful as an investor, the question you always have to ask is, “where’s the best place for my money today?” If that’s the fund you’ve been dollar-cost-averaging into, then keep it there. If it is in other funds, move it. If you’re worried about selling at the bottom, realize most funds will rise when the market goes up, but they won’t all go up equally. You want the strongest fund choices – not the ones you’ve dated the longest.
-
Shouldn’t I wait until the market is higher and my investments come back in value before I make a change? Or shouldn’t I wait until the market is lower to buy in at better prices?
Wait for the market to go higher? Wait for your current investments to recover first? No and no.
Here’s why.
The bottom line is that your focus should be on where the best place for your money is today. It may take years for your money to recover while it’s invested in the wrong places. It may grow very quickly in the best choices.
How about waiting for the market to go lower?
How low is low? If the market goes up a few thousand points from here (as it surely will) will you look back on today and say today it was low and wish you had acted? The truth is we never know how high is high or how low is low. Our investment discipline (offense and defense) is built around the idea that we don’t have to know. Since no one has prophetic powers, it makes lots of sense to follow a discipline that protects your money in case the market goes lower and invests it in the best performing places in anticipation of the market moving higher.
-
Will I still be able to see my account online anytime I want to?
Absolutely – 24/7. That won’t change. Once you hire us, you are also authorizing us to make the changes for you through the website, or the automated 800 number. In fact, we would like you to check your account regularly. But don’t change it yourself once you’ve hired us. That would work against your long-term goals. Relax! You’ve hired a professional team.
-
How do you make the changes in my account?
We make the changes to your account through the website or by the automated 800 number on a best efforts basis. While you are giving us authority to carry out what you hired us to do, we cannot take money out of your account. We just tell them to move it from one place to another inside your account.
-
Do you manage money outside the 401(k) Plan also? Like IRAs, or other investment accounts?
Yes. The majority of the money we manage is outside the 401(k) Plan. We manage money for a large number of people who are retired (retirement rollovers). We also manage IRAs, regular investment accounts, etc. Most Autopilot Clients transfer other accounts like IRAs or mutual fund accounts to us to manage. You can read about our full range of services on this website.
-
What is the minimum account size to participate in the 401k Autopilot® Program?
The minimum total account size is $250,000. This can be a combination of your 401k account and any other outside investment accounts. The total value (your 401k plus outside accounts that you transfer to us for management) must be at least $250,000. Obviously, many clients have more than $250,000 in their 401k account alone. For them, transferring additional, outside investment accounts (other brokerage accounts, old 401ks from previous employers, IRAs, etc) is a way to obtain better quality management for their investment assets.
-
What is the management fee for participation in the 401k Autopilot® Program?
There is a declining fee schedule based on account size. The larger the amount under management, the smaller percentage the fee for management. The fee is pro-rated by quarter. You will be charged 1/4 of your annual fee each quarter and you can cancel at any time. Fees are calculated based on the account value of your investments on the last day of each quarter. The complete fee schedule is included in the 401k Autopilot® Starter Kit.
-
What type of payment do you accept for the management service for the 401k Autopilot® Program?
Check, credit card, or deduction of fees from an outside (non-IRA) account that is transferred for us to manage and use as a "billing account". Unfortunately, management fees cannot be deducted directly from your airline 401k account at this time. Despite this being legal, no airlines are making this option available to their pilots yet. Please contact the Benefits/Retirement Office for your airline and ask that this option be added to your 401k Plan. Professional management is an important benefit to help pilots be prepared for retirement and should be encouraged.
-
Are your money management fees deductible?
Fees paid for money management services may be deductibe under IRS Code Section 212, which states that investment advisory and financial planning fees incurred may be deductible as miscellaneous itemized expenses to the extent that they exceed 2% of your adjusted gross income. Other miscellaneous itemized deductions which fall into the same category are fees paid for a safe deposit box, estate planning fees, tax preparation fees, attorney and legal fees, and more. We encourage our clients to ask their accountant or CPA about the deductibility of fees in the context of your overall tax picture.
-
Why do some other firms charge so little for money management? Or... why do you charge a bit more for your portfolio models?
Other firms know best the value they are providing for their clients. The bottom line is that they offer a 1970s era investment strategy that has no defensive strategy at all - absolutely no safety controls - and they aren't providing much value, so we assume they are pricing it accurately. After all, if you give back everything you make, you're no better off than you were. You will need both an offense and a great defense, using the latest advances in investment management strategy.
Throughout my life, I've found that it always pays to buy the best. If you buy quality from the start you save money. Don't be penny wise and dollar foolish. Quality is economy. Quality costs more on the front end, but lasts longer and provides a better experience in the long run.
A Lexus and a BMW cost more than a Yugo. The only thing they have in common is that they are both cars. They’re not the same. Higher value, higher price. Realistically, if you cannot see the difference, we are probably not for you. There are many competitors who will give you much less and charge you less. If you can't see beyond cost to value, that approach is probably a good fit for you.
What is it worth to you to have an investment strategy you can count on exactly when you need it most - when the bottom falls out? What is it worth to have not just one, but multiple strategies working in your favor? What is it worth to have something truly unique and special in a world filled with relics from the 1970s? In our experience, quality pays. It isn't a cost. This is the approach we demand for our own money, which is invested right next to our clients, using the identical strategies.
It is worth noting that when your portfolio value climbs over $500,000, our fee schedule becomes very competitive with others, but you will get more at Rhoads Lucca Capital.
-
Will you be able to take money out of my account?
No. You are hiring us and authorizing us only to make changes within your account. There are only two ways money can come out of your account: A.) When you separate from service with your company and B.) When you take a loan. Both require you to fill out papers and a check is sent only to your address of record. Only you can take money out of your account.
You are just putting us on your team to bring your investments to the next level. We do not have the ability to withdraw your money from your retirement account.
-
Do you believe it is possible to "time the market?"
No. As an aside, if you ask anyone what market timing is, no one has an answer. The very fund managers who are in charge of each fund in your 401(k) plan all buy and sell securities throughout the year. We do the same. We recognize the cycles of planting and harvest in the markets and do the right thing for each. To us, market timing would be trying to anticipate turns in the markets and act before they happen. We don’t do that. We objectively measure the risk in the market, fund performance, etc. and act in a rational way based on what is happening now.
-
Will you guarantee a rate of return for my account?
No. It is illegal for an Registered Investment Advisory firm to guarantee returns. Instead, we devote a full-time effort in creating and executing investment strategies that we believe will help our clients reach their goals.
-
How will I know when you make changes in my 401k account?
We will send you regular communications by email and by mail. Your 401k Plan administrator will continue to send you confirmations of all trades and all activity in your account as well as quarterly account update statements of account value. And of course, you can access your account online, as always.
-
Who should definitely be a 401k Autopilot® client? (Take this quiz)
Take this simple quiz to see if you’re a good candidate for the 401k Autopilot®. Check off any or all of the following that apply to you – and be as honest with yourself as you possibly can. The more you check off, the stronger the fit:
1. ___ Do you often forget to make the needed changes to your 401(k) account?
2. ___ Are there other things in life you would rather do instead of being tied to watching the markets? Golf, fish, vacation, family, whatever?
3. ___ Do you ignore, dislike, or procrastinate taking action to maximize your 401(k)?
4. ___ Have you experienced confusion, immobilization or discouragement from working with your 401(k)?
5. ___ Do you have other investments scattered around with no definite overall plan or strategy to reach your retirement goal?
6. ___ Have you managed your money yourself and lost serious money? Have you rationalized losing it by telling your spouse, “everyone else lost money?”
7. ___ You have a strong sense that time is moving you towards retirement, but feel you aren’t ready financially yet? And you’d like to start moving ahead?
8. ___ You’re busy, but you long to simplify your life and reduce stress?
9. ___ You want to go to the next level of real money management instead of generic advice?
10. ___ When it comes to making timely buys or sells in your account, do you sometimes find yourself paralyzed – unable to pull the trigger?
11. ___ Do you want to improve your odds of a successful outcome with your 401(k)?
12. ___ You lack the experience to properly measure and manage risk.
13. ___ You lack the time to gather information and monitor the markets on a daily basis.
14. ___ You lack the experience to take appropriate action when necessary. -
Is my information confidential when in your care?
Yes. We recognize your private information is highly confidential and we take this preserving your privacy very seriously. By law it is illegal for us to disclose your private information to anyone but you directly, or your other financial advisors (attorneys, accountants, estate planners) with your consent only. We insist you place this instruction in writing for our files, when you request it. In certain situations, a court can order the disclosure of information to the court.
-
Which regulatory organization oversees and regulates Rhoads Lucca Capital Management?
Rhoads Lucca Capital Management is a Registered Investment Advisory Firm, regulated by the Securities & Exchange Commission.
To verify the firm’s status as a Registered Investment Advisor Firm, you may follow this link to the Security and Exchange Commission’s website by pasting the following link into your browser: http://www.adviserinfo.sec.gov/IAPD/Content/Search/iapd_OrgSearch.aspx
By doing this, you will be able to view the most current registration Form ADV that is filed by our firm.
-
I'm already retired, but I still have my money in the 401k Plan. I guess I didn't know what else to do with it. Can you still manage it there?
Yes. You can still participate in the 401k Autopilot® Program. We would advise you though, to roll your 401k account into an IRA in order to have greater investment selection and more portfolio management options. This is something we should discuss personally with you.
-
My question isn't listed above. How can I get an answer?
Please email your question to us at information@rhoadslucca.com/staging, including all relevant information. If you need immediate assistance, you can always call us at 888.895.1212 or 214.373.9771