When you started your pension plan – be it individually or through your employer – you were probably handed a form with two options for your pension contributions:

Option A – Fund Model allocation (check one box only)

  • Conservative Model
  • Moderately Conservative Model
  • Moderate Model
  • Moderately Aggressive Model
  • Aggressive Model


Option B – Create Your Own Portfolio (enter whole %’s; must total 100%)

  • Mutual Fund A
  • Mutual Fund B
  • Mutual Fund C
  • Etc.

Sound familiar? I can only imagine how overwhelming that must have felt if you were new to investing (and perhaps still are). And, if you were simply emailed the form by your HR department and didn’t have the chance to experience one of our enrollment sessions before you made your choice, that would have made it even worse! The good news is, whatever you did end up choosing when you enrolled can be changed.

Perhaps you’ll read this article and it will reinforce your decision, or perhaps it will have you questioning everything. Either way, please don’t stress! Each has its pros and cons:

Option A – Fund Model (a good fit if you prefer a more hands-off tinker approach)


  1. You can know virtually nothing about investments and still achieve a good result. It’s a set-it-and-forget-it way to invest.
  2. It’s much simpler to rebalance your portfolio if you need to change your risk tolerance as you age.
  3. Usually there is a questionnaire that helps you in lieu of an advisor.


  1. Limited flexibility in choosing what you invest in (most are vanilla, but some have taboo things like alcohol and tobacco companies in them); you are all in or all out.
  2. You can’t mix and match; you get to tick one box and one box only.
  3. You rely on someone else’s knowledge of markets, quite literally putting your trust in their ability and passion.

Option B – Create Your Own Portfolio (and tailor it to suit)


  1. You can choose where you invest the most (i.e., 60/40 allocations or 95/5 if you like, but your choices must add up to 100%).
  2. You can take risks on and off the table where you want and in the amounts you want.
  3. You can choose more than one of something (e.g., more than one index fund – diversity is the spice of life!).


  1. The onus is on you. You must commit to doing your research on everything you invest in.
  2. Your wins and losses are yours alone. We give you a list of what you can invest in as well as suggestions on allocations, but you and only you decide what number you put down on those papers. If you haven’t done your research, you will do yourself a disservice.
  3. Rebalancing depends on market timing and can get complicated with this approach. With the other approach (Option A), there’s a committee that does the research and rebalancing for you within the model itself, so you get diversity without too much effort and mitigate some of the risks associated with market timings.

Think about it this way: your pension account is like an investment portfolio for long-term growth. You can’t touch it and you can’t (and shouldn’t) use it for your everyday trading. You need a well-researched long-term plan if you’re going to choose your own adventure here (Option B). You need to be confident enough to endure any swings in the market.

If you’re keen to learn and have the time to dedicate to growing as an investor, this approach might be a good fit, but be honest with yourself. Are you prepared to take responsibility for your choices? Do you have the time horizon and financial ability to take on that added risk? If the answer is yes, then go for it! If you’re not sure or can’t fully commit, I would suggest Option A, the Fund Model approach instead.

The Fund Model is what suits most of our clients and there is nothing wrong with saying, “Nope, I don’t have the time or the stomach for the tailored approach. I prefer to tinker, and I want something easy that I don’t need to think about or watch unless I want to.” In either case, we’re here to help you choose the option that works best for you.

Melanie Gauntlett is Financial Pensions Advisor at Freisenbruch. To learn more, or if you have any questions, please contact her at mgauntlett@fmgroup.bm, or call +1 441 294 4660 or +1 441 296 3600