An article by reporter Gretchen Morgenson published in the New York Times recently detailed whistleblowing at the Teachers Insurance and Annuity Association (TIAA). The retirement plan company is under fire for exerting pressure on employees and advisors to direct investors into higher fee generating accounts.
TIAA, a once non-profit, switched their business model a few years ago. After seeing assets leave to other advisors, TIAA decided to fight fire with fire: they started providing wealth management services for a fee.
Given the profit motive that may be influencing the recommendations they receive, TIAA’s participants should be made aware of incentives that might influence why a TIAA advisor might be calling or recommending a managed account. A managed account may very well be a suitable solution for many, but participants should be made aware that the company is offering these services at a higher cost and determine whether such services align well with their investment goals. The investor needs to understand what he or she is paying for and why. If not, then buyer beware.
The whistleblowing that is driving these headlines serves to remind all investors of the need for full disclosure and unbiased financial advice. Because we are committed to putting our clients first, we at Fort Pitt always disclose the fees and costs associated with our services.
The NY Times article illustrates the need for investors to be attentive to fees, incentives, business models, and the philosophies of the companies with whom they choose to work — especially when it could affect their money over the long-term.
If you have any questions, feel free to contact us at FortPittCapital.com, or call your advisor at 412-921-1822.