IT TAKES WORK!
Big Idea #2 is an extension of Big Idea #1. If you didn’t see it recently, click here.
In our pervious post we hinted softly about how the endorsed provider handcuffs can come off when you retire. You are FREE! You are able to choose any company or any advisor you want to invest your PSERS lump sum or 403(b) funds. You no longer have to choose a name off of a list that you get from the business office. But, what we failed to emphasize in the last post was in order to find that fiduciary advisor who must (by law) act in your best interests NOT in the best interests of the company they work for, it’s going to take a little work on your part. “Endorsed provider” does not mean they have been vetted. It means that they have some political connection with the “system” you are part of. It doesn’t mean you are going to get better advise or better / cheaper products either! But, like anything in life, the more you put into something, the more you get out of it. In this case, it could mean more money in your pocket AND a better life lived! Vanguard recently conducted a study that put a value on a fiduciary advisor at adding potentially 3% per year to your investment value. In terms of your $200,000 lump sum, that could add $300,000 to your account over twenty years of retirement! How is this possible? Here’s Vanguard’s conclusion:
1.Cost effective implementation – .40% more
2.Asset location to minimize taxes – 0 to .75% more
3.Rebalancing – .35% more
4.Withdrawal strategy – 0 to 1.10% more
5.Behavioral coaching – 1.50% more. Good advisors will save you from yourself five or six times over 20 years!
Total “about 3%”! But, let’s say you get just 1% of extra benefit, that’s over $100,000 more for you! There’s a lot of extra vacations, automobiles, and new kitchens in that number.If you don’t believe what we’re saying or don’t understand it, you might want to do the extra work and interview some fiduciary advisors. As we said earlier, that hard work is usually rewarded!
Next week: Big Idea #3 – Why you want to choose the PSERS Maximum option when you retire.
If you would like to arrange a Complimentary, no obligation DISCOVERY meeting with Chip Addis of Addis & Hill to see if we can help you make smart retirement decisions, click here.