Author Topic: Processing Financial Advice  (Read 1700 times)

Melisande

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Processing Financial Advice
« on: December 08, 2016, 08:42:34 AM »
My husband and I recently had a couple of meetings with a TIAA retirement planner (husband's idea). Since we were not paying him, we asked whether or not he was paid on commission. He said that he was not -- that he was a salaried and he and others in their office got raises based broadly on client satisfaction and that the financial planning he offered was a service that TIAA gave to its clients.

Since then, I can see that he does indeed soft-pedal various products and services that could be construed as being in our best interest (as well as his and TIAA's). The latest example of this is the suggestion that we move our savings account (Suntrust money market with a pathetic interest rate of .05%) to a TIAA "high yield" savings account (with a somewhat less pathetic interest rate of .65%). I'm currently asking some questions about this (such as what will it mean to have our checking and savings at different instituions; how can we transfer from one to the other; does Suntrust have any better options to offer us, etc.)

However, the question I have for you today is about another of his other pieces of advice. He suggested that my husband move his funds from his retirement plan at his old university and merge them with those in his retirement plan at his current university. This way (says the retirement planner) we will be able to benefit from a better class of stock (I think this is what he said, does this make sense?). I'm not too skeptical because both funds are in TIAA -- it's not like he's asking us to transfer fund from another company to TIAA. Still, I like to make some attempt to get a few other opinions and you guys seem like a smart bunch. Could there be any catches to a consolidation move like this? Are there any questions I should be asking about this?

[ETA: Now it seems to me like this thread might have been better in the "Investor Alley" forum. Sorry ...]
« Last Edit: December 08, 2016, 08:44:47 AM by Melisande »

Cwadda

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Re: Processing Financial Advice
« Reply #1 on: December 08, 2016, 08:57:32 AM »
My opinion on anyone who says they're a financial advisor/planner is that unless they are a fiduciary, they have legally zero obligation to act in your best interest. Speaking from experience, I know they're great people and trying to make a living but I will never assume their advice is for my best interest. Sorry if that came across as harsh.

Another Reader

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Re: Processing Financial Advice
« Reply #2 on: December 08, 2016, 09:28:52 AM »
Put your savings in a high interest savings account.  Synchrony and GS Bank both pay 1.05 percent.  Ally pays 1.0 but has a better ability to move money quickly.    They also offer checking accounts that pay interest.  I keep savings in these types of accounts and checking accounts with buffers at the local big bank branches.  See www.depositaccounts.com for the best rates. 

ETA:  Ask the advisor to show you the expense ratio differences between the funds in the two 401(k) plans.
« Last Edit: December 08, 2016, 09:37:28 AM by Another Reader »

Melisande

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Re: Processing Financial Advice
« Reply #3 on: December 08, 2016, 09:32:18 AM »
My opinion on anyone who says they're a financial advisor/planner is that unless they are a fiduciary, they have legally zero obligation to act in your best interest. Speaking from experience, I know they're great people and trying to make a living but I will never assume their advice is for my best interest. Sorry if that came across as harsh.

That's OK.

But I do think it's OK to get advice, then do due diligence on our own side, explore the options and ask the questions that need to be asked before taking action. I think TIAA is a pretty reputable company and they are supposedly not-for-profit (although I am not sure what that is supposed to mean when it comes to the financial industry).

Cwadda

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Re: Processing Financial Advice
« Reply #4 on: December 09, 2016, 07:44:30 AM »
My opinion on anyone who says they're a financial advisor/planner is that unless they are a fiduciary, they have legally zero obligation to act in your best interest. Speaking from experience, I know they're great people and trying to make a living but I will never assume their advice is for my best interest. Sorry if that came across as harsh.

That's OK.

But I do think it's OK to get advice, then do due diligence on our own side, explore the options and ask the questions that need to be asked before taking action. I think TIAA is a pretty reputable company and they are supposedly not-for-profit (although I am not sure what that is supposed to mean when it comes to the financial industry).

Yeah, absolutely! No harm, no foul.

NoStacheOhio

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Re: Processing Financial Advice
« Reply #5 on: December 09, 2016, 08:04:18 AM »
However, the question I have for you today is about another of his other pieces of advice. He suggested that my husband move his funds from his retirement plan at his old university and merge them with those in his retirement plan at his current university. This way (says the retirement planner) we will be able to benefit from a better class of stock (I think this is what he said, does this make sense?). I'm not too skeptical because both funds are in TIAA -- it's not like he's asking us to transfer fund from another company to TIAA. Still, I like to make some attempt to get a few other opinions and you guys seem like a smart bunch. Could there be any catches to a consolidation move like this? Are there any questions I should be asking about this?

It's an entirely reasonable suggestion, but you do need to double-check for yourself. Many plans offer institutional, or institutional plus class shares, which have lower expense ratios than investor class shares of the same fund.

Just compare the expense ratios for the funds you're currently in with the legacy plan to the funds you would be using in his current plan. Also, check and see if you're being charged any fees for keeping the plan after separating from service.

Your other option is to roll the legacy plan into an IRA (qualified rollover is not a taxable event).

If the funds are pretty similar in cost, you may want to consider a rollover for the sake of simplifying.