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thank you [Music] welcome to the higher ed retire podcast with your host Greg Shepard Greg is a fee only financial advisor who specializes in helping those in higher education to take control of their retirement since 2001 Greg has helped employees all over the country make the most of their retirement plans hey there folks Greg Shepard here higher ed retired podcast as always I do appreciate you all listening out there and on that note I'm closing in on 3 000 downloads does anybody out there have any clue if that's good or bad because I don't uh sounds like a lot of people right but I've been doing this a long time so maybe that number should be bigger but nonetheless I appreciate all of the questions over the months slash years not very I'm not sure how many episodes I've done but nonetheless again I appreciate all the questions that have been generated from you all out there as I enjoy helping everybody out there and uh talking with a bunch of you as well so I've got to know some great folks in the higher ed industry over the time uh course of time I've been doing this podcast so for those of you that don't know me let me informally introduce myself again the name is Greg Shepard I do have an investment independent investment advisory firm here in the Kansas City area but as I've stated in other podcast episodes with the advancements of technology I am able go figure I'm able to help out just about anybody all over the country navigate and basically just get the most out of your higher ed retirement plans the goal of this podcast in this episode specifically is really just to arm you with as much information as possible so you can make an informed decision when it comes to your retirement plan because you know the old adage I said it time and time again you don't know what you don't know and that applies to a lot of information surrounding your higher ed retirement plan now specifically I talk a lot about Tia and Fidelity in these podcast episodes and this is no exception but today's topic we're going to talk about should you as an employee of a higher ed institution hire a financial advisor so I'm going to obviously tackle that question I'm going to give you an idea maybe a couple scenarios where where it might be advantageous and again it's for you to decide where it might be advantageous for you to consider using a financial advisor and maybe one or two scenarios maybe just one I think it's pretty simple for those that it's uh you may not get much benefit out of a financial advisor now let's define that real quick who or what is a financial advisor in regards to this podcast episode it is not it is absent of the Tia infidelity wraps now there's other vendors at some of your higher ed institutions but again the big boys in the sandbox are Fidelity and tia so I'm going to stick to that so absent of those good folks over over in their respective companies they are not your fiduciary financial advisors now in this case like I say stated I'll talk a lot about Tia and Fidelity they act as a fiduciary when it comes to the plan level but not the participant level they are not acting in what's in your best interest they're acting they're good folks don't get me wrong okay I'm not discrediting any of these folks or what they do but we know who their boss is so as business goes okay they're going to do what's in the best interest for the business for their company okay so let's make sure we get that straight um a financial advisor in this case is someone that's independent of Tia infidelity but that works with them in an independent fashion for fee only no commissions no commissions involved okay and this person this financial advisor needs to be for for you for the benefit of you needs to be educated experienced in the higher education retirement space because if they are not they they all had to start from scratch they have to start from step one and learning a lot of this stuff okay and again the old adage goes for them as well these financial advisors you don't know what you don't know so he or she this financial advisor could be making irrevocable decisions for you that hence are irrevocable okay so we don't we don't want to go down that path uh an FYI you can you can um qualify these financial advisors just by simply asking some of the questions that you learn in these episodes okay so let's go over those uh maybe a couple scenarios where it makes sense for those out there in higher ed to consider using a financial advisor oh I almost forgot before I get going I've been told time and time again don't forget this uh I need to quote recite one sentence for some reason that keeps the attorneys at Bay right so here we go investment advisory services offered by me Greg Shepard as an investment advisor rep of SN a Financial Services Inc which is a registered investment advisor so sna Financial Services by the way way is as I stated that's the firm that I work for here in Kansas City and that's it okay let's move on okay who does this make sense for financial advisors let me give you two scenarios maybe maybe this just answers the question but maybe generally speaking real quick from the macro perspective I think it makes sense for those out there in the higher ed space to to to speak with an independent financial advisor when you're about 10 years ish away from retirement and I don't have a lot of time or the desire to get in all the reasons why but you know that's kind of the Target that that 10-year-ish window from retirement and again macro generally speaking because a lot of you out there are going to have TI traditional accounts you're going to have multiple accounts okay very very common heck I've talked to two or three of you today that weren't the client that aren't clients that probably will be but have multiple contracts where they have TI traditional there's got to be some kind of game plan installed or or implemented when it comes to those TI traditional accounts rather than you becoming retired going through the phase of retirement and then learning about some of the restrictions liquidity specifically regarding a TI traditional account so let me give you two real case scenarios one um let's see I just spoke to this person last week by the way uh anything I stated here it's March of 2023 so if I talk about TI traditional advantageously that's because rates are really high right now so if you're listening this in the future I don't know what rates are in the future but right now they're pretty good so keep that in mind as I speak uh during this episode so the person I spoke to uh last week let me get my ducks in a row here as as per huge per usual I don't have anything written down so I'm going off going off memory which seems to uh dwindle as years go on can any of you relate to that okay so this person has a current employer of course she has multiple accounts with the current employer one of those employers where the plans have morphed especially last year it's as of late okay so we have some mandatory accounts and some voluntary accounts with the current employer and she has two ex-employers of which she has a few TIAA accounts there as well mostly I'm sorry mostly liquid in those old accounts okay if I think one or two um going off memory here one or two lick uh I'm sorry ill liquid accounts and then mostly liquid accounts so without getting into a lot of details you know she she actually uh knows what she's doing okay she she is uh more advanced than most of the folks I talk to when it comes to this stuff so we kind of bounced ideas off each other and we ultimately went with a version of my game plan which is the following okay and she did hire me as an advisor so and as she stated you know she's married and the husband is involved with this stuff he's good at numbers and all that fun stuff but he doesn't have a clue when it comes to her higher ed retirement plan and she is basically alone and dealing with TIAA ing to her these are her words is exhausting okay and then and she knows they don't act as her fiduciary so it was advantageous for her to at least bounce ideas off of someone like myself and it doesn't I mean honestly it doesn't cost that much okay so here we go what we came up with in her situation was I think it was Abby advantageous again don't you go out there and implement this strategy without talking to somebody okay so for the liquid money let me preface this what we're trying to do is find out how much she wanted in safe and air quotes here safe fixed Investments that's where we started okay because she has multiple contracts with her current employer where we can take advantage of new deposits going into that TI traditional okay we're talking about some of the illiquid accounts six and a quarter percent on new contributions and some of the liquid accounts five five and a quarter five and a half so how do we take advantage of that well what we did is we decided how much she wanted in TI traditional accounts right and that answer uh like uh what's the top of my head I think it was like 150 000 so what we did is we massaged carefully so we we reallocated all of our accounts to take advantage of the new high interest rate on new deposits going in where they totaled 150 000 now we took those old accounts okay and she's a relatively conservative investor so we took all those monies in those old accounts rolled it over to an IRA in my case we I custody over at Charles Schwab and we went a hundred percent equities okay and she like you know her eyes kind of lit up and she's like what's going why are we doing that well the answer was we we used that old con those old accounts as equities right and I can't remember exactly what the total was that's irrelevant for the most part for this conversation and then because I told her we can access investments in this case over at Schwab or the investment portal you know we have thousands of investment options we can get you know very cheap ETFs if we want stocks if she wants you know various types of Investments that you cannot access over your employer retirement plan okay on the equity side I can't go out in this case a Schwab and get anything um fixed paying six percent in perpetuity obviously CDs have a maturity life so let's take advantage of your employer plan not only that we implemented what if you've heard my episodes prior a reinvestment strategy where we took money out of one of our TI traditional liquid accounts sat it in Money Market okay we're going to reintroduce those monies back into TI traditional at a higher rate okay so right there there's a lot and we bumped up her rate we're going to about two percent maybe a little less than that but about two percent so there's massive value added right here with the financial advisor even though she was very capable of doing these things she just wasn't um she needed someone to bounce ideas off of her her strategy was a little different than mine but then I explained to her why it's in her benefit why it's advantageous to basically do what I was telling her to do so we did we implemented what I told her to do and uh where we went so that was a great example of value added with the financial advisor uh scenario number two I'm not I'm not gonna get into weeds too much but just simply real quick uh again I don't want to elaborate on this this episode will be way too hot way too long um without interest rates being high again March of 2023 not that long ago a few months ago uh late last year maybe october-ish we did for a prospect I became a client we implemented that reinvestment strategy that I just talked about a couple seconds a few seconds ago and again if you don't know what I'm talking about make sure you educate yourself on this Tia calls it something different I call it the 120 day reinvestment strategy but we did implement this strategy for a large portion of this person's account and again we exited I don't remember the numbers off hand but we exited this is a liquid account the ti traditional paying gosh it wasn't even paying four percent and this is an old contract set in money market for 120 days reintroduce those money back in the same contract ta traditional and I think we got well over five maybe five and a half percent five and a quarter so we bumped up his rate quite a bit and so right there again it's value added for foreign financial advisor heck that basically paid for my fee okay that's why I always say you know I kind of relate it to a CPA me personally I'm in the industry I know what I'm doing when it comes to finances but a number of years ago I hired a CPA to do my taxes obviously and he is worth his fee in Gold if that isn't even makes any sense he's worth his weight in gold because he's doing things that I don't even know about I don't have the time or desire to go out and think about the strategies that he's implementing for me in my family's situation so he basically he pays for himself in that regard so same idea here with the financial advisor but again make sure you qualify the financial advisor just start asking questions and just listen and see what he or she says now I will tell you this on this last scenario I just gave for someone that should be thinking about a financial advisor where I implemented the investment strategy reinvestment strategy this person actually went to you know one of those financial planning seminars you know that you get to yell the old big postcards with a big picture of a stake on it well he actually went to that and spoke to the guy giving that seminar and the prospect at the time now now the client told me the the gentleman giving this seminar very professional they always look nice and dress dress well and speak speak eloquently unlike Yours Truly where I trip over my tongue constantly going off on tangents he spoke about finances just fine that that checked the box for for the now client but the financial advisor given a seminar was in favor of pulling out all of his liquid money that he could from ex-employers okay he was retired and rolling it over to an IRA right okay typically that's advantageous that would be an advisable thing to do and the advisor in this case told now client of mine this is to your advantage because those TI traditional rates aren't worth the paper they're written on so this this advisor didn't know what he was talking about because I did a 180 and told now client that what we need to do is keep some of this money the liquid money in Tia do the 120 day reinvestment strategy and we did some other things too to take advantage of that in lieu of some of the poor performing Bond Investments and then we can roll over you know whatever we want outside of that so my advice here again when you're talking and speaking with a potential financial advisor make sure and this is where it gets a little tricky but make sure maybe use your gut feeling this advisor he or she isn't hungry for assets what do I mean by that so this advisor in this example one of the reasons he wanted to pull out the liquid money and roll over to an IRA is that that's the only way this advisor could get paid because I know for a fact you can't get paid inside a lot of these higher red retirement plans so if those assets stayed there you know you can't charge directly from those accounts like you can as an IRA rollover and so I always tell clients an advisor should never charge you on TI traditional monies anyway okay that's not what we do I think it's um I don't know unethical is not the right word I don't know what the word is but you know advisor can't do anything for you when it's sitting in TI traditional so why is an advisor charging you on that money so with all my clients that I deal with I tell them up front anything we leave in TI traditional I'm not going to charge you one and that by no way is going to sway my decision as what I do because my now make note of this okay make note of this I always tell prospects what I recommend to you I need as a fiduciary I've got to justify my decisions my recommendations to you and to me okay and also maybe most importantly to the SEC if the SEC walks in this office which they do they they give you know audits of my firms like mine all over the country I have to be able to justify as to why I did XYZ and Jane and John's account for the benefit of Jane and John okay and if I can't coherently give a good explanation as to why I got a problem okay so I'm very careful when I make changes in people's accounts that I can justify to everybody as to why we're doing it you can justify it in a number of different ways does it does putting in a better position mean better investment products okay better service different strategies there's a few different ways you can Define that but it better not be I made those uh recommendations pulling you out of like TI traditional putting you over a rule over Ira so I could make money okay so you need to be careful of those advisors that are hungry for assets and it's hard to do and I'd say the only way you can really figure that out is just asking questions asking questions asking questions okay don't be afraid to ask questions it's your money it's your money so if a good financial advisor for those in higher ed what he or she's going to do especially if you have a bunch of Tia accounts they that that advisor is going to be the quarterback of your situation they're going to quarterback at that situation they're going to tell you what the game plan is before they implement it now on that note a competent financial advisor in the higher ed space he or she is going to want especially if you have Tia accounts okay and Fidelity accounts I just did this with someone that didn't have any T accounts we we did the Fidelity authorization form so what I'm speaking about is prior to in my opinion in my opinion prior to you becoming a client of said advisor that advisor in order to make a competent comprehensive game plan that encompasses all the vendors that you're utilizing for your higher ed retirement plan needs to submit an authorization form too in this case Tia or Fidelity so they can see a picture of what you're doing now I emphasize this especially with Tia accounts because I get statements all the time from folks right that have Tia accounts but it doesn't tell me the whole picture without going into a lot of details I tell them hey these statements are great it gets me uh it gets me the ball gets the ball rolling it gives me an idea of what I want to do for you but the the game plan that I really want to set in stone will be formulated after I submit an authorization form that you must sign and what this does is it gives my firm authorization to view your accounts online because that affords me access and information that I cannot extract from statements I need access online to those accounts then I formulate a game plan okay and then once the client or Prospect agrees with what I'm talking about at that point I have the client or Prospect sign forms fee deduction forms and all that fun stuff there's only one form at the beginning that's the authorization form that enables the advisor to set up a game plan okay so that'd be my opinion if I were in your spot you know no there's no reason to sign an agreement with any advisor prior to an actual game plan being set in place now okay I'm him and Han here so let's move over to those that may not find it as as advantageous to hire a financial advisor this is pretty simple we'll start off with those that are young okay young I don't know you can Define what Young is but for those certainly retirement is not in their near-term future you folks out there you youngins out there your goal is to crush your debt and put away as much money as possible that's it okay typically it's synonymous you know being younger is synonymous with being aggressive typically not everybody that's not an investment advice but if you're if you're an aggressive investor even if we you're solely with Tia craft Tia or Fidelity or another vendor you're going to want to look at those Equity Investments okay a financial advisor can't really do much for you uh just look for low-cost Equity maybe index Investments they're they're abundant out there in these higher ed retirement plans now and just put away as much money as you can afford and Crush that debt at the same time okay I don't think there's really a big need for you to pay an advisor oh speaking on that again I'm going off the tangents here fees fees fees fees this is my opinion okay take it for what it's worth I think a competent financial advisor should should charge no more than one percent all right that's what we charge here no more than one percent Azure assets get greater get greater is that correct English that fee becomes less so one percent I'm just speaking from my firm my opinion the most we charge is one percent then it ratchets down depending upon how many assets how much assets you have with us me okay so we make it as simple as possible there's other ways other advisors charge uh in tears but we just keep it very very simple and again I'll re-emphasize that I don't think a competent financial advisor should charge you on money held in TIAA traditional okay now that we've got that out of the way so a person that may not find benefit as beneficial to hire a financial advisor those that are young and those that maybe just have a simple and again you have to Define what simple is a simple retirement plan maybe you just have Fidelity and that's it maybe you just have 1403b you're retiring you know you're going to take Social Security your spouse is retired there's not a you're going to roll that account over to an IRA maybe you know what you're doing in that regard and that's perfectly fine okay maybe not a huge need for a financial advisor really again the a competent financial advisor is going to hold your hand is going to be your quarterback through those latter years of employment formulate a game plan and then from the distribution phase going to help you distribute those assets in the most tax advantageous way so it did go a little long here I do apologize but I wanted to make sure I got everything in I did kind of him and haul and went off on different tangents by all means you're not alone if you want to ask me questions I am here to help you I've had two Zoom meetings today I don't I'm very honest here I don't think either person is going to become a client which is perfectly fine they just needed some questions answered and that's why I do this so don't be bashful in reaching out out and having someone help you absent of Tia and Fidelity reps easiest way to get hold of me is my email emails Greg at shepherdfinancial.com Shepherd is spelled s-h-e-p-a-r-d that's all I got today folks as always go out there and take control of your retirement today take care bye thanks for listening to the higher ed retired podcast just because this episode is over doesn't mean you can't continue your retirement Journey please please visit .hireadretire.com to see how you can work with Greg or to Simply ask him a question thanks again s and a financial services is a registered investment advisor information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific Securities Investments or investment strategies Investments involve risk and unless otherwise stated or Not Guaranteed be sure to First consult with a qualified financial advisor and or tax professional before implementing any strategy discussed herein past performance is not indicative of future performance