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Help!

April 3rd, 2019 at 02:50 pm

I reached out to the guy who manages my 403B retirement account as I will not be contributing to it as of July. He suggested a managed IRA. Does anyone here know anything about it. I tried to look it up and it felt like I was reading another language. Help!!!

5 Responses to “Help!”

  1. disneysteve Says:

    Absolutely not. You do not want to be paying someone to "manage" your account. All you need is a good allocation in low cost index funds. Move the 403b to a rollover IRA with a company like Vanguard or Fidelity. Choose your funds, or go really simple with a target fund, and be done with it.

    This guy wants to keep your business and keep generating commissions for himself. Forget that. Do it yourself.

  2. Amber Says:

    I know nothing about investing but Dave Ramsey has ELPs (endorses local providers) who are able to assist. Goal is to make sure they’re explaining things in such a way that you understand

  3. Carol Says:

    I'm with Steve. Fidelity or Vanguard and a target date fund would be simple for you and do the job just fine!

  4. disneysteve Says:

    "Dave Ramsey has ELPs (endorses local providers) who are able to assist"

    No, No, No!

    You do not need or want a paid financial person to manage your money. That can literally cost you tens of thousands of dollars over the course of your life.

    Investing for retirement is incredibly simple and cheap if you do it correctly. You need to buy just ONE mutual fund and you can be all set. Anyone can handle that. And the mutual fund company can help walk you through the process of rolling over your 403b into the new account.

  5. Dido Says:

    It really depends on what kind of assistance you need. Steve and Carol are right that for most people, especially during the accumulation phase, you will get at least 80% of the results by rolling over to an IRA at Vanguard and investing in just a Target Date Fund to start. And 80% of the results is really all you need! People get themselves in trouble by trying to beat the street.

    If it's JUST investments you are concerned about, and especially if you are still in the accumulation phase (pre-retirement), this will do you well.

    On the other hand, as someone who works IN the industry, there are times that a financial advisor can provide a lot of value especially at transition points--having a child, retiring, losing a spouse, etc. What GOOD financial advisors do is only partly about investing!

    Having the right insurance strategy, the right Social Security strategy, having your assets allocated appropriately to taxable, tax-deferred (401k/403b/IRA) and tax-free (Roth IRA) "buckets" and drawing from those appropriately can add a lot of value, as is having someone to make sure that all of your advisors (insurance people, attorney, CPA, and investment advisor) are on the same page and not giving conflicting advice.

    For many people, you could probably increase the chance that the decisions you make are optimal by having at least one consultation with a fee-based planner as you are approaching retirement. And for those with more complex assets to manage, they will get benefit from having a planner who they consult regularly, but yes, they will pay for it. The most typical fee is 1% of assets under management for portfolios up to 1 or 2 million, with a discount for larger portfolios. That is not most people, however. Yes, advisors can cost tens of thousands of dollars, but they can also add tens of thousands of dollars by making sure that you have the right insurances and estate plan in place, by making the right choice about Social Security strategy (especially for married couples), by helping executives with complex option compensation make the most of this, by helping manage taxes, etc.

    A reputable advisor is looking for a good fit client and will let you know if you don't meet their client profile. The key is finding an advisor who is reputable.

    If you ever go to an advisor, do make sure that you are consulting someone who works as a Registered Investment Advisor (RIA) and/or a CFP (Certified Financial Planner) as that will ensure that the advisor has a fiduciary responsibility to act in YOUR best interests. The vast majority of advisors do NOT, giving the entire industry an unsavory name.

    The Garrett Network and NAPFA (National Association of Personal Financial Advisors) are good sources for reputable advisors.

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