Jump to content
Kevin P

403(b) Choices

Recommended Posts

You seem to think an advisor only does investing and we keep agreeing that an advisor adds little to no value in this area. Maybe some behavioral aspects of keeping them invested and increasing their contributions but that’s about it. Most of what they do is stopping people from making dumb decisions like pulling out of market, getting too aggressive, etc.

I’m sure the clients that had an advisor help them get over $100k in student loans forgiven think that an advisor was well worth it.

Share this post


Link to post
Share on other sites

 

 

41 minutes ago, Rhaegar said:

If a teacher needs one the key is to find a good one. We need to help them be able to tell the difference between the good and bad as like 90% are bad.

You absolutely do not need an advisor in the accumulation stage.  In my personal experience they've done more harm than good.Even if you are thick as a brick, there are options without the excessive fees. Many companies like Fidelity , and Vanguard , and some state 457b plans offer target retirement funds or life path funds  that do all the managing you will need  internally at a much fairer cost. Vanguard Life Strategy funds is a good example and I use it myself. Sure insurance companies sell target funds too but they overcharge. Most advisors I've meet know very little and many are either amateurs just getting into the business or have been in it long enough to know how to con teachers into buying expensive high fee products plus add-ons they don't need. In essence they are helping their own retirement not their client's.We've discussed this before but I think every school system should enroll every teacher automatically in a target fund  instead of turning its employees over to a bunch of ravenous zombies. They would certainly come out way ahead at retirement time.  I really believe no advisor is needed during your working years unless you have a very complex financial situation. Then, use a fee only advisor. Also teachers are more than capable of learning. A good book by John Bogle is all a teacher would need to get on the right path.

Meet Rick Ferri, he tells it like it is  here and he is an advisor. I posted this previously but its worth recommending again.

https://view.joomag.com/collin-county-living-well-magazine-march-april-2020/0679023001583728257/p44?short

Share this post


Link to post
Share on other sites

Agree 100% that a vanguard target date fund would be best for teachers. Also wish schools used a percentage of pay instead of a flat dollar amount, which requires a teacher to manually increase every year.

Share this post


Link to post
Share on other sites
5 minutes ago, Rhaegar said:

Most of what they do is stopping people from making dumb decisions like pulling out of market, getting too aggressive, etc.

Not true. The ones I dealt with put me in more aggressive investments and constantly tried to sell me more funds I didn't need. They made the dumb decisions for me LOL!!  Please don't overestimate their value. They are salespeople.

Share this post


Link to post
Share on other sites
1 hour ago, Rhaegar said:

Sounds like you have had bad ones. Please don’t lump the bad ones with the few good ones.

Almost all K12 public school educators in this country have had a bad financial adviser. Just about every new poster who comes here is asking how to get out of an annuity. It's been this way since the 403(b) was launched in 1961. At that time we could only use annuities. Annuity salespeople do NOTHING but get that signature and collect a commission, and move on to the next victim. 

I think we agree on insurance agents. But you might be talking about genuine fiduciary financial advisers who can help people stick with their plans. I agree that many fiduciary advisers are competent and genuine portfolio investment managers, but there is a problem there too.

In the last ten years, the perverse incentive system for the financial industry has changed, but not enough. When commissions or revenue sharing fees were dropped from retirement plans and the so-called fiduciary financial adviser transferred from a commission and revenue business model, those hideous costs I mentioned, to the new business model, the fee-only pay by the hour, we were thrilled! But then we heard that people don't like to open up their checkbooks to pay for an adviser! (Interesting, people pay big bucks for attorneys, taxman, plumbers, new cars every 3 or four years, and ALL OTHER PROFESSIONALS by the hour, but the advisers complained they were not making any money. So the Assets Under Management (AUM), AUM fees were launched. They retreated to hiding the fees once again! 

What started as a great idea turn out a very disappointing change with unintended consequences. If investors aren't careful, they will get ripped off by this new business model too. In some situations, they can be abused even when a fiduciary adviser, who even signs oaths to look out for the client's interest over their own, charges way too much for what they do. Who says that can't charge way over the top AUM, as high as 1.25% or higher! That's way too high, and that's taken away value, not adding. 

Read one of my most popular blog pieces when I confronted an adviser who was listed on the well respected Garrett Planning Network, where if an investor wants to pay by the hour, the adviser must allow it. It was shocking what this unethical adviser did with one of my blog readers: https://latebloomerwealth.com/did-garrett-planning-network-pass-the-smell-test/

BTW, Sheryl Garrett, the founder, removed this adviser when I reported this terrible incident. 

Just one final note, I am so grateful that I can manage my money without an adviser. So many of my friends, family members and my blog readers lack the confidence and knowledge to do this. Also, one friend who has an adviser doesn't want to think about his money! I met his adviser and while this adviser is a fine person, I would never allow him to manage my portfolio. NEVER, because he charges fees for something I can perfectly do myself. In fact, I have saved so much in fees, it paid for solar panels, and two new electric cars in the last ten years since I retired. 

Share this post


Link to post
Share on other sites
1 hour ago, Rhaegar said:

I’m sure the clients that had an advisor help them get over $100k in student loans forgiven think that an advisor was well worth it.

I'm sure the people who spent 10 minutes googling the rules for debt forgiveness are quite happy they're not funding the lifestyle and retirement of an advisor.

1 hour ago, Rhaegar said:

You seem to think an advisor only does investing and we keep agreeing that an advisor adds little to no value in this area.

What I'm saying generally is that the value an advisor brings in any arena is almost certainly outweighed by the cost of the advisor. This is the most charitable statement I can make with ethical advisors in mind. The vast majority of advisors are very much unethical and I can promise you they're hurting people full stop.

The delivery driver provides value that is easily outweighed by their cost, but at least they're improving the quality of my life. An advisor, on net, just sucks away your money with nothing in return.

Share this post


Link to post
Share on other sites

This has nothing to do with me. It has everything to do with how little advisors bring to the table and how much they take from people’s life savings.

You can talk up advisors all you want, but I will voice my disagreements and I’ll be happy to point anybody to the resources they’ll need to easily bypass expensive advisors. 

Share this post


Link to post
Share on other sites

My entire point is some advisors bring no value and others bring massive value. Not right to lump them all together.

to me this community should be helping DIYers that don’t want help and also helping teachers that do want an advisor to better ones.

 

for example asking an advisor to sign a fiduciary pledge is a huge first step. I’ve heard axa and other will still sign these so I would take a signed pledge and confirm with the manager or home office that the advisor was allowed to sign it to be safe.

Share this post


Link to post
Share on other sites
1 hour ago, Rhaegar said:

My entire point is some advisors bring no value and others bring massive value. Not right to lump them all together.

to me this community should be helping DIYers that don’t want help and also helping teachers that do want an advisor to better ones.

 

for example asking an advisor to sign a fiduciary pledge is a huge first step. I’ve heard axa and other will still sign these so I would take a signed pledge and confirm with the manager or home office that the advisor was allowed to sign it to be safe.

AXA is a terrible company!

And of course, it's not right to lump them together, but the alternative is worse. There isn't enough return from the stock and bond market to also included a financial adviser's costs, especially when they do not add value. They are way too expensive, as I have said over and over. 

For years, everybody from insurance agents, brokers, and fee-only financial advisers are all calling themselves fiduciaries. It used to be the "in-word" but its gotten so hackneyed and jaded, fiduciary doesn't mean very much anymore. 99% of all people don't even know what an oath is nor why they exist! 

The founder of this site, Dan Otter and Scott D., has vetted some FA for those who come to this website searching for an adviser. But the discussion forum here focuses and encourages everyone to do it yourself. It is a different world here than in the real world. People can successfully self manage their money and get better results than using financial advisers, especially in the 403(b) world!  

Share this post


Link to post
Share on other sites

Rhaegar,

I know where you are coming from because I was once you. I wanted to believe that my advisors truly were working for me and in my best interest. When one disappointed me, I jumped to another advisor with a different company  hoping for better results . Guess what? Same results.  Finally I figured it out because I started  to realize that if I where an advisor I would not operate like these advisors were operating with me. The smarter I got the more I realize that they were feeding me some well rehearsed lines just to get me to sign up with them. Once I started doing it myself my portfolio did so much better. There is only so many stocks in the universe. When an advisor has you in 10-15 funds like they did to me there is a lot of overlap and you can get all those same stocks and bonds with a 3 fund index  portfolio. Its a fact. And at a much much lower cost. Sometimes as with Fidelity, at zero cost.

It really is a B.S system. You've got to trust us. Ed and Steve know what they are talking about.  Read that Rick Ferri article above. It pretty much repeats what we are telling you here and he is a financial adviser!! 

 

Share this post


Link to post
Share on other sites
1 hour ago, Rhaegar said:

some advisors bring no value and others bring massive value.

this community should be helping teachers that do want an advisor to better ones.

for example asking an advisor to sign a fiduciary pledge is a huge first step. I’ve heard axa and other will still sign these

🤣 Quantify this massive value they’re bringing because I can certainly quantify their fees and how long it takes me to learn the information they’re providing. Advisors do NOT bring massive value. Saint Bogle brought massive value.

I’ll politely decline your suggestion for this community to promote advisors. This form, the bogleheads, and me personally...we will provide all the guidance anybody needs and we do it for free. Absolutely no reason to pay an advisor.

AXA, you really brought up AXA 😂. The last time I checked their management fee was 0.90% and their cheapest fund was around 0.60%. Explain to me how anybody acting in my best financial interest would charge me 1.5% or higher for a portfolio that Vanguard or Fidelity could give me for 0.08% or less and tens of dollars per year?

Also, I’d be absolutely shocked if AXA advisors were signing fiduciary agreements requiring them to act in the investor’s best interest. If they are then I’d like to start a class action lawsuit and collect on that. 

Share this post


Link to post
Share on other sites

I have read the article and agree with most of it.
 

But I also disagree and believe there are advisors worth it. There are few of us but to say there is none does not seem logical.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

×
×
  • Create New...