I was just talking with an adviser with one of the large regional banks in our area.  They are offering a pension plan with a fee.   “But wait” you say, “Why pay a fee?   I get my mutual funds for free.”  Do you?   It turns out that everyone has their grubby little fingers in your pension pie.   Yes, didn’t you notice how your accountant is now working with a pension adviser?   They all work together.   You know what else?   They all get a tiny little piece.   What is a tiny piece?    The pieces are measured in basis points.    100 basis points is a percentage.  So sometimes they get 25 basis points, sometimes more.

You want to know something else?   Pepsi and Acme brand soda have different markups.   If you are selling soft drinks, which one do you want,  Profit or Sales.   I would say that you would push the product that gives you the most profit.   Did you know your pension advisers sometimes do the same?   Yes, depending on the basis points they get, there is a temptation to push those that have the highest profit for them.    Unlike Doctors, there is no wall street creed to “do no harm”.

So, what do they do?   Some I fear choose out of their best interest not yours.   Even when they advise the employees on the self directed plans, they might be tempted to push them to the higher margin product. . . . sad but true.

So what do you do?    Relief is on the way.   Regulations in process will require the brokers, advisers, etc to disclose where and who is paying them. . . .might make sense to ask them now for a disclosure to find out what they are getting paid and from whom.     Never hurts to know, and if they shy away might be time to look for a new adviser.