Why You Shouldn't Trust The "Trusted" Advisor
April 23, 2024
You have to hand it to the National Tax-Deferred Savings Association, a lobbying group working furiously to maintain the broken K-12, multi-403(b)-vendor structure. They know that logic and facts are heavily stacked against them. They know they only exist because governmental 403(b) plans are NOT subject to the fiduciary standard that 401(k) plans must adhere to: The Employe Retirement Security Income Act (ERISA). So what's a lobbying group to do when reform is in the air? To quote W.C. Fields “If you can't dazzle them with brilliance, baffle them with bullshit.”
"Research"
The NTSA routinely puts out non-peer reviewed research that (surprise!) supports their business model. My colleague fiduciary planner Scott Dauenhauer, CFP® masterfully debunked the NTSA's Improving Retirement Savings for America's Public Educators "study". Scott takes on each NTSA claim.
"Trusted" Advisor in the Lounge
Besides facts, the NTSA's other big problem is protecting the army of sales agents who trawl school lunchrooms and email in boxes. The story is about as old as, well, me (I'm 58): teacher walks into lunch room and sees what s/he thinks is a school-sanctioned financial professional. In no time the teacher is enrolled in a product of dubious quality that almost certainly benefits the sales agent over the teacher.
Middle school math teacher shares how she was sold a high-cost 403(b) product from a "trusted" advisor.
Who to Trust?
Increasingly savers of all stripes are turning to fiduciary advisors who must pledge to atually put client interests above their own. The NTSA know this. The NTSA fears this. So what do they do? They start calling sales agents in the lounge "trusted" advisors! What does "trusted" advisor mean? Nothing. What does the NTSA want you to think it means? That these people are looking out for your best interests.
If I'm going to quote W.C. Fields, I might as well quote, Ronald Reagan, who once said: "Trust but verify." How do you do that? Work only with a fiduciary advisor because they are required to put your interests first.
Angry Educators
More and more educators are wising up to the so-called "trusted" advisor. More than 15,000 of them have joined the 403bwise Facebook Group. What is the primary reason cited for joining? They seek help getting out of the high-cost product sold to them by the "trusted" sales agent in the lounge. Our story on How to Get Out of a Bad 403(b) has been downloaded more than 20,000 times in the past few years. It's companion resource Get Out of Equitable/AXA is almost as popular.
Resource
Check out Working with a Financial Professional which includes...
- Questions to ask an advisor before employing one
- Downloadable Fiduciary Pledge
- Where to find a fiduciary advisor
- Links to podcasts with fiduciary advisors
More Reading
- Thrown to the Wolves
- 403(b) Sales Shark Repellent
- NTSA to School Officials: You Don't Have to Do the Right Thing
- NTSA and the Big Lie
- There's a Fishy Smell in the Lunchroom
Stay wise and well (and don't trust those telling you to "trust" them).
Related Podcast:
Middle School Math Teacher on a Fin Lit Mission After falling for the "trusted advisor" in the staff lounge, Rachel, a middle school math teacher from western NY is on a mission to help others get wise about the 403(b) and saving for retirement. Listen Now »