As brokers urge IRA rollovers, ex-workers ditch their low-fee federal retirement plan.....John Turner suspected that brokers were encouraging federal workers to ditch their top-flight retirement plan. So he went undercover. The former Labor Department economist called representatives at companies such as Bank of America, Charles Schwab and Wells Fargo. He identified himself as a potential client grappling with what to do with his own nest egg.Turner thought he knew the answer: Leave it alone. As a legacy of his government service, he kept his money in the Thrift Savings Plan, considered the gold standard of 401(k)-type programs for its rock-bottom fees. Yet all but one company told him to roll over all his money into individual retirement accounts. On average, stock funds charge almost 50 times what the government plan does.“It’s a scandal,” said Turner, director of the Pension Policy Center in Washington. “They are trying to sell me an IRA clearly not in my interest. It’s in their interest. They want to get the fees.”</snip>Link: http://www.washingtonpost.com/business/as-brokers-urge-ira-r...--BigBunk
“It’s a scandal,” said Turner, director of the Pension Policy Center in Washington. “They are trying to sell me an IRA clearly not in my interest. It’s in their interest. They want to get the fees.”Well, maybe.For real financial planners who charge by the hour for their services, there is really no reason to transfer the retirement savings to an IRA, assuming the TSP owner is seeking financial planning help, unless there's some pressing need for diversification into REITs, MLPs, utilities, etc...although for Federal Retirees, I'd be hard pressed to understand why, as the G, F, C, S, & I funds provide pretty good diversification.But if a financial plan, with all of its parts, are needed...and most new retirees would benefit from such service...this is going to have to be paid for, and it is reasonable for some to use a % of Assets Under Management to pay for such services. I'm not sure if an advisor can be listed on a TSP account, but I doubt it. So if one wished to retain a financial planner and pay them as a % of AUM, they would likely have to roll over the TSP to an IRA. But this would be part of an overall plan, not something done in isolation.BruceM
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