Updated Thursday, September 3, 2015 as of 6:57 AM ET

How Advisors Lure Federal Workers Out of Low-Fee Retirement Plans

(Bloomberg) -- John Turner suspected that brokers were encouraging federal workers to ditch their top-flight retirement plan. So he went under cover.

Get access to this article and thousands more...

All On Wall Street articles are archived after 7 days. REGISTER NOW for unlimited access to all recently archived articles, as well as thousands of searchable stories. Registered Members also gain access to exclusive industry white paper downloads, web seminars, blog discussions, the iPad App, CE Exams, and conference discounts. Qualified members may also choose to receive our free monthly magazine and any of our daily or weekly e-newsletters covering the latest breaking news, opinions from industry leaders, developing trends and growth strategies.

Already Registered?

Comments (9)
What a bogus article. Nothing is stated about the advice, the tax planning, the social security income planning, the coordination with other plans, the beneficiary planning, asset allocation, etc.

If it were just about investments fees, Mr.Turner, that might be a valid argument. But, like the do-it-yourselfers who we've seen make huge mistakes that have cost them - in some cases - millions, you have no understanding of the value that a good professional advisor brings to the table. To use your logic sir, you can also perform foot surgery on yourself. There are some great books that will show you how to do it!
Posted by STEPHEN M | Tuesday, August 12 2014 at 6:25PM ET
As a RIA acting in a fiduciary capacity there is No need to transfer a TSP with lower management fees to another custodian. There are enough choices within the TSP to properly allocate MOST client portfolios. The client still can pay a fee to the advisor through either a financial plan or annual advisory contract. Unless there is a commission to be made by churning.
Posted by RICHARD B | Wednesday, August 13 2014 at 8:16AM ET
Yes , and the Government runs so many other programs so well too.
Robert C
Posted by rc r | Thursday, August 14 2014 at 3:23PM ET
This puts a very narrow view on asset management, that the only thing worthy of consideration are "fees."

Fees are one of many factors that determine an investor's success or failure. The most important factor is behavior, which is not being adequately managed by the TSP. Having inexpensive access to the stock market doesn't matter if you shoot yourself in the foot by buying high and selling low.

Additionally, if we really examine the options... The G Fund is guaranteed to not lose principal, but it is also guaranteed to barely keep pace with inflation.

The F Fund is mirroring the Agg, and is now about 80% in government debt. How do you think it will hold up during a significant rise in rates?

And the C, S and I Fund are all very good index funds, but they don't provide any risk management at all, nor do they generate sufficient retirement income to live on.

Working employees should of course be using the TSP for the matching, but beyond that, there are other options that do make sense, even if they are more "expensive."
Posted by Ross A | Thursday, August 14 2014 at 3:54PM ET
One of the unstated problems has to do with the way that investment advisory expenses are treated tax wise. Why should fees paid from an IRA be neutral and yet, for other accounts such as 401K, be problematic? Wouldn't it be wonderful if advisory fees could be paid via direct debit to the TSP or 401K? Do you think that would make it easier for people?
Posted by Consumer A | Thursday, August 14 2014 at 3:55PM ET
Add Your Comments:
Not Registered?
You must be registered to post a comment. Click here to register.
Already registered? Log in here
Please note you must now log in with your email address and password.

Already a subscriber? Log in here