The Value of a TIAA Wealth Management Advisor

TIAA and Fidelity offer Wealth Management Advisors (WMAs) to university employees with $500,000 or more in investible assets with their company.  Wealth Management Advisors provide a very basic financial plan and peace of mind to their clients in the beginning – best of all, there is no charge.

A “Free” Wealth Management Advisor

As the old saying goes – you get what you pay for.  Often this leaves clients who work with free Wealth Management Advisors with a false sense of security, lack of expertise, and a realization that the WMA may have more pressure to bring in assets to these companies then provide great advice and service.  Many university employees end up seeking out a different solution to financial planning after what seemed like an exciting starts ends with the realization that a typical Wealth Management Advisor from a large retirement plan company may service up to 1,000 other clients and take a reactive role as opposed to a proactive role.

Quantifying the Value of a Wealth Management Advisor

With this in mind, there are a few questions that should be answered.  First, what are some of the basic types of advice a good advisor should be providing  to add value?  Also, how much value can a good Wealth Management Advisor add to a client’s portfolio?  According to Vanguard – a lot.   Based on a recent study by the mutual fund and ETF giant, a good financial planner can add up to 3% in returns annually.   The five principles that provide the greatest value by an advisor include:

Taking the emotion out of Investing:

  • Being a good behavioral coach and providing a disciplined and long-term approach can add up to 1.5% to a client’s portfolio.
  • Applying an asset allocation strategy:  An asset allocation strategy can add between 0% up to .75% per year to a client’s portfolio
  • Cost effective investing:  Implementing a strategy of investing in low-cost investments is simple math – gross return less costs equals net return.  The potential value add is .45%
  • Rebalancing:  Rebalancing a portfolio as investments drift from their targets will provide consistent return/risk characteristics.  This can add up to .35% to a client’s portfolio
  • Implementing a Spending Strategy:  As retirees start to take money out of their investments, important decisions regarding how to spend down assets can add up to .70% to a client’s portfolio.

Vanguard also adds that the value added may come intermittently during times of high volatility and times of stress.  Needless to say, the principles that provide the greatest value should also be the basic planning provided by every Wealth Management Advisor.  So ask yourself, does your free Wealth Management Advisor or commissioned based advisor provide this planning to you?  Is your Wealth Management Advisor more concerned about gathering assets and selling products or placing your goals first?  The stakes are too high not to know!

Update 11/14/2017:  In a series of scathing articles, the New York Times alleges multiple issues with advisors at TIAA:

New York Times: The Finger Pointing at Finance Firm TIAA

New York Times: TIAA Received New York Subpoena on Sales Practices

New York Times: If You Bought In to TIAA Based on Reputation, Check Your Accounts

This article is written by Kevin J. McNab.  Kevin works with professors, doctors, and university executives across the country.  Kevin is President of ACE Wealth Partners LLC and is a CFP®, ChFC®, and CRPC®. Kevin is the Professor’s Advisor!

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.