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Raise your hand if your company has a qualified retirement plan (QRP)? Your QRP can be a 401(k), profit-sharing plan, SEP-IRA, pension plan or any one of the many other QRPs.

Listen up! Chances are this article is going to make you and your employees money. Lots of money. But first a little warning: Your author is a tax guy, not an investment advisor. Yet the nature of my professional work – estate planning, business succession planning and the many related areas – has allowed me to review the personal financial statements of about 1,500 business owners over 50 years of practice. You would be amazed at what I have learned over the years about my business-owner clients. Much of what I learn – and need to know in order to put a comprehensive estate/succession plan in place – is based on questions I ask my clients — about their goals, business, family, key employees, etc.

This article is based on the answer to one of the questions I ask every client: “What is your average annual rate of return on your investments? Personal funds, QRP funds, excess funds in your business and other funds you control?”

The shocking answer: 80 percent earn less than the general market (measured by the DOW or S&P) average percentage growth (about 10 percent per year). About one-third only average 6.5 percent or less. Ah, but here’s what’s even more interesting. Almost all of those in the 80 percent group do their own investing. Great business people. Lousy investors.

What about the other 20 percent who, most of the time, beat the general market growth? Almost all of them had a professional money manger. When this 20 percent group used professionals to manage their QRP funds, their employees enjoyed the same investment success. My client files are bulging with hundreds of examples.

So, over the years, I’ve done some extensive research (which is an ongoing labor of love) to show you the best way to improve your (and your employees) investment results. Let’s start with a chart of what the impact of a better rate of return can do for your retirement nest egg, over time. (Bet you’ll want to join the better-rate-of-return club.)

The following chart shows you what happens to a single $1,000 contributed to a QRP and invested over a 36-year period (the typical length of employment time for the business owner or a long-time employee in a QRP) at various rates of return. Hold on to your chair. The differences are astounding. (Note: The chart is a simple application of the rule of 72, which tells you how long a specific amount of money takes to double, depending on the rate of return.)

Rate of return - Years to double - Times will double in 36 years - Growth of $1,000 in 36 years

6% - 12 - 3 - $8,000

8% - 9 - 4 - $16,000

9% - 8 - 4.5 - $24,000

10% - 7.2 - 5 - $32,000

12% - 6 - 6 - $64,000

You don’t have to be a rocket scientist to see the results. It’s easy to see if you put about $10,000 into a QRP (every year) for about 36 years and earn just 10 percent per year on average (a good money manager – including the one we prefer – consistently earns more), you’ll have many millions of dollars by retirement age.

So why do about 80 percent of you mess up? You sign up your QRP with a “cookie-cutter” (CC) type plan. CC plans focus on two things that sound terrific (but in practice put you in that unwanted 80 percent group): (1) low cost for plan administration and (2) lots of investment choices for the plan participants.

My research continues to show the costs (talking about 100s or 1,000s of dollars per year, depending on the number of employees) are miniscule compared with the potential investment results (in the millions) – or with many employees – in the 10s, or even 100s of millions of dollars.

Actually, I could write a small book about the pros (not many) and cons (a long list) of why a CC plan almost automatically puts you and your employees in the low-return 80 percent group. Why does this happen? Because you and your employees are expected to become investment gurus (and beat the pros). Very few do. Most fail. Let’s face it, if your QRP has 142 (more or less) investment choices, you are locked out of every other possible investment. Worse yet, it is a rare employee (or business owner) who knows which of those 142 to pick in the first place or when it is time to switch to another investment. Many of the employers (including the boss), overwhelmed by the investment choices, invest a large – sometimes all – portion of their funds in cash, a disastrous long-term investment choice.

Think about this example to drive the point home: Every year about 81 percent of mutual fund managers (remember, they are paid professionals) fail to do as well as the general market (DOW and S&P). Why? They too are locked into a limited choice of investments, because almost all mutual funds specialize in something. For example, some of the popular funds invest only in emerging companies, energy stocks, large-cap or small-cap stocks and there are about 6,000 more funds. You want a fund or a money manger that can select any and all of the wide range of investment possibilities.

Here’s the suggestion I’ve made to everyone who has a CC plan or is in the horrible 80 percent self-investment group: Go professional. First, hire a professional QRP consultant to create the best plan (there are many important decisions not available in CC plans) for you (the boss) and your employees.

Second, hire a professional money manager. Surprisingly, the costs are competitive with CC plans. They are easy to check out: Just check their rate of return (after fees) for the years they have been in business.

One more point: The boss (usually the business owner) probably has the largest account in the entire QRP. So, having a professional money manager to mange your account is a terrific tax-free perk. A big deal! How big? Well, you judge. Stop for a moment. Write down the balance in your account and add just one percent increase in growth, on average, that your account would enjoy for each year your account might be in existence. Take one more minute and estimate what the one percent (or more) would mean to all your employees in your company QRP. Some of you, because of your terrible investment returns, should conservatively use a two percent or three percent (or more) increase.

Exciting? I invite you to call me (239-417-9732) and share your new-found enthusiasm or ask any questions you might have.

This is an important subject; to you and all of your QRP employees. So, if you think you are one of the many companies that are (inadvertently) being ripped off, here’s what I have arranged for readers of this column: Professionals, who specialize in the QRP area, to review your QRP and investment return potential. To get started, fax (847-674-5299) me (Irv) the following info: (1) your name, company name and address; (2) all phones/work, home, cell; (3) approximate number of employees in your QRP (4) type of QRP.

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Irv Blackman is a certified public accountant who lives part-time on Marco Island and specializes in estate planning, business succession and asset protection. E-mail him at wealthy@blackmankallick.com or call 417-9732. His Web site is http://www.taxsecretsofthewealthy.com.