We’ve been talking about the antiquated 403(b) sales system in PA school districts for years. The Investment News article provides a good summary of the resulting consequences for all teachers – poor products, high costs, lack of fiduciary representation, and no transparency! Plus, you have sales people roaming the halls trying to sell you things!
The time has come to replace the current system as follows:
1. Let Vanguard or another no-load fund provider offer their funds directly to teachers. The negative for teachers is they need to know what to choose from the menu of funds – a daunting task for many and they have to call an 800#. The positive is the funds are dirt cheap!
2. Offer another provider like TIAA Cref for those who want to meet face-to-face and can also offer annuities WITHOUT commissions and resulting surrender charges.
3. Allow a fee-only fiduciary planner on the list to provide comprehensive financial, retirement, and investment planning services for a fee, free of conflicts of interest.
We would love to hear your comments and feedback on the article. The world has changed, why haven’t the delivery of financial services to teachers?
Article: In K-12 403(b) plans, employees and their unions can be their own worst enemy
Distrust between school districts and unions, as well as potential financial incentives, factor into lack of reform
Source: Investment News
