Financial Planning: It’s Academic

Financial Planning for employees who work at a university (or hospitals associated with a university) can be complex not only to the employees, but also to financial advisors not used to working with clients in this arena. Navigating through the complexities of this niche market requires the experience of working with university benefit offices and retirement plan providers.

Retirement Plan Providers

For employees in the private sector, they have the option of a single retirement plan provider. However, university employees typically have the choice of multiple retirement plan providers. These providers are commonly companies such as TIAA-CREF, Fidelity, VALIC, and Vanguard. Each one of these companies has strengths and weaknesses. Professors and other employees have to be careful navigating through the choice of carriers and take into account fees, choice of funds, and restrictions on certain funds to make the most appropriate choice and avoid unwanted mistakes. Two of the most common mistakes include investing in high cost funds or an account that hinders liquidity and locks up the ability to take a lump sum or transfer money – even in retirement.

Unique Accounts and Fund Choices

Due to the type of retirement plan (403(b) and 401(a)) and the uniqueness of the retirement plan providers, employees at universities are offered funds that are often hard to understand or miscategorized by employees and advisors alike. For example, TIAA-CREF and VALIC offer fixed or guaranteed accounts which may have distribution restrictions. TIAA-CREF offers a very unique real estate account often miscategorized by advisors. Often, Fidelity and Vanguard offer a plethora of funds which investors find hard to sift through to put together the highest quality portfolio. In addition to these fund choices, each company sets up a different structure for receiving employer and employee contributions. Understanding each fund, how to put together the most efficient portfolio, and where contributions are places are the foundation of an asset allocation strategy.

Retirement Distribution Choices

The decisions do not get any easier heading into retirement. Distribution options include systematic withdrawals, lifetime income choices (annuitization), interest-only, transfer payout annuities, required minimum distributions, and lump sum options. Each one of these retirement distribution options has multiple decisions to be made – some which are permanent. Choosing and monitoring the correct income options and distribution amounts are key to flexibility and longevity of a retirement distribution strategy.

Ease Into Retirement

Unlike the private sector, many university employees are able to ease into retirement by working out an agreement to work part-time, while receiving benefits, prior to retirement. This allows a professor or professional at a university to ease into retirement while still being a part of the university.


As you can see, there is a complex web of decisions to be made up to and through retirement for employees in the academic, medical, and cultural fields. I can make an easy argument that the consequences of failure are much too great to make mistakes. Mistakes can be made by trying to manage these decisions on your own, hiring the incorrect advisor, or relying on shallow guidance from a retirement plan provider.

Kevin McNab

This article is written by Kevin J. McNab. Kevin is President of ACE Wealth Partners, LLC and is a CFP®, ChFC®, and CRPC®. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views expressed in this blog post are as of the date of the posting, and are subject to change based on market and other conditions. This blog contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this blog post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by ACE Wealth Partners, LLC unless a client service agreement is in place. If you have any questions regarding this Blog Post, please Contact Us. Please read our website DISCLOSURE carefully for additional information.