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The TIAA manager assumed I did not want to manage my account. His report gave projections for how long my money would last, either managed by TIAA, vs all kept in cash.
The yield for the proposed allocation, managed by TIAA, seems to be 1%. And that just happens to be the approximate fee total (.85% for TIAA, plus the fund fees). So it cancels out.
So the proposed projections are worthless. I don't know how people can defend that kind of deceptiveness, or carelessness, or both.
If you are referring to me, I have absolutely nothing to say about your situation. I am only relating my experiences with TIAA and other investment houses.
If you are referring to me, I have absolutely nothing to say about your situation. I am only relating my experiences with TIAA and other investment houses.
The TIAA manager assumed I did not want to manage my account. His report gave projections for how long my money would last, either managed by TIAA, vs all kept in cash.
The yield for the proposed allocation, managed by TIAA, seems to be 1%. And that just happens to be the approximate fee total (.85% for TIAA, plus the fund fees). So it cancels out.
So the proposed projections are worthless. I don't know how people can defend that kind of deceptiveness, or carelessness, or both.
OK, so if I understand you want no risk and the and the yield they projected without the management fees would be 1.85% why don't you just go that route unmanaged unless you can find CD's that pay that.
OK, so if I understand you want no risk and the and the yield they projected without the management fees would be 1.85% why don't you just go that route unmanaged unless you can find CD's that pay that.
No, I said the yield without the management fees would be about 1%, or that's what the report seems to say. With the fees, there is no yield. It is the same as buying a safe and putting all my money in it.
If I have interpreted the report correctly, the proposal is useless and pointless. I have not finished analyzing the report yet though, and I am not absolutely sure yet if my impression is correct. I am pretty sure though.
I did not say I want NO risk. Like anyone who is retired and doesn't have millions, I can't afford a lot of risk.
But investing money and getting only a 1% return is just silly, because you can get CDs with that rate. And paying 1% to have it managed is even sillier, because that makes it much worse than CDs.
At the first meeting I told the TIAA adviser that I don't like risk and he said that's fine, I have enough money to last to age 95, with very conservative investments.
His report compared 2 strategies:
1. Keeping the traditional TIAA 3% account (and starting to withdraw from it at about age 70), and leaving all the rest in cash. He called this the "current" plan, even though it is not actually what I had planned.
2. Keeping the traditional TIAA account, leaving about $100k in a money market, and giving the rest to TIAA to invest in 90/10 bonds and stocks. That is the proposed plan.
The report shows the proposed plan doing better than the current, shows that the money is more likely to last long enough.
The report leaves out that fact the fees per year would cost about 1% of the assets managed by TIAA.
The estimated return on the TIAA managed investments seems to be 1%. The report does not try to make things clear, and I am not absolutely sure about this yet. But I am pretty sure.
When the 1% in fees is considered, there is no return on the investments. I could dig a hole in the back yard and bury the money, with the same result.
Therefore, the proposed plan would cause the money to run out much faster than just keeping everything in cash.
My plan is to annuitize the TIAA traditional account with a 6.18% payout rate, and to find CDs, or something guaranteed, that get at least 1% interest. I could decide later on to invest some of the money I had in CDs.
My plan results in an overall return of about 2%, and has no risk.
So should I do the plan that gets no return and has risk, or the one that gets 2% and has no risk?
Someone can correct me if I'm wrong, but the fund fees are included in the stated yield amount.
The reported performance of a fund, such as yield, in general is net of the fund's expenses but not of brokerage fees or loads. Note that there are many ways of reporting yield for bond funds and not all of them will include expenses. Any trailing yield (e.g., 1-year, 5-year, YTD, etc.) should be net of expenses but forward looking yields (such as YTM) may not be. The best yield metric to use for short-term current yield, and which must include expenses, is the SEC Yield.
No, I said the yield without the management fees would be about 1%, or that's what the report seems to say. With the fees, there is no yield. It is the same as buying a safe and putting all my money in it.
If I have interpreted the report correctly, the proposal is useless and pointless. I have not finished analyzing the report yet though, and I am not absolutely sure yet if my impression is correct. I am pretty sure though.
I did not say I want NO risk. Like anyone who is retired and doesn't have millions, I can't afford a lot of risk.
But investing money and getting only a 1% return is just silly, because you can get CDs with that rate. And paying 1% to have it managed is even sillier, because that makes it much worse than CDs.
You are learning what a low yield environment is all about. The fund fees for a low yield non stable value account can suck up your ROI. If you want it actively managed also it could consume it. Even if a equity fund loses money and you have it managed you will still pay management fees. Perhaps you have long since answered your question and you don't see the value in having a low risk, low yield portfolio managed. It is like paying Wells Fargo to manage a four fund index portfolio for you. What are you really paying for them to do that you can't?
You are learning what a low yield environment is all about. The fund fees for a low yield non stable value account can suck up your ROI. If you want it actively managed also it could consume it. Even if a equity fund loses money and you have it managed you will still pay management fees. Perhaps you have long since answered your question and you don't see the value in having a low risk, low yield portfolio managed. It is like paying Wells Fargo to manage a four fund index portfolio for you. What are you really paying for them to do that you can't?
Maybe I have answered my own question, but what I am trying to explain is that what I got from the TIAA adviser is ridiculous.
An unsuspecting and trusting person might have been fooled. The more I analyze the report the more I see what looks to me like deceptiveness. The information is framed in ways to make it look different from what it is.
It seems to me they count on retirees being confused and worried, and are hoping their adviser cares about their long-term well-being. They get this very professional-looking report full of numbers.
Most people are easily confused by numbers. TIAA customers probably include a lot of scientists, so you would think they would not be fooled by this. But a lot of smart scientists don't like thinking about money, so maybe they never analyze these things in depth.
Have I really noticed what I think I noticed about this report? Could I be the first customer to see it?
TIAA seems to have such a great reputation. But having a great reputation makes it easier to fool customers.
You and others here seem to be saying that what I got is what you should expect if you asked for very low risk.
No. I have been trying to explain that I could get lower risk and better returns from CDs, or maybe online bank accounts.
I noticed this from reading the report CAREFULLY, which most customers might not bother doing. I am not done reading it carefully.
Maybe I have answered my own question, but what I am trying to explain is that what I got from the TIAA adviser is ridiculous.
An unsuspecting and trusting person might have been fooled. The more I analyze the report the more I see what looks to me like deceptiveness. The information is framed in ways to make it look different from what it is.
It seems to me they count on retirees being confused and worried, and are hoping their adviser cares about their long-term well-being. They get this very professional-looking report full of numbers.
Most people are easily confused by numbers. TIAA customers probably include a lot of scientists, so you would think they would not be fooled by this. But a lot of smart scientists don't like thinking about money, so maybe they never analyze these things in depth.
Have I really noticed what I think I noticed about this report? Could I be the first customer to see it?
TIAA seems to have such a great reputation. But having a great reputation makes it easier to fool customers.
You and others here seem to be saying that what I got is what you should expect if you asked for very low risk.
No. I have been trying to explain that I could get lower risk and better returns from CDs, or maybe online bank accounts.
I noticed this from reading the report CAREFULLY, which most customers might not bother doing. I am not done reading it carefully.
Its unclear to me whether or not you have access to this advisor in person or just by phone. When we met with them they went over the report page by page. We questioned them regarding assumptions used and anything that was confusing or that we didn't understand.
After you read it yourself and identify all your questions, I would ask for another meeting or schedule a phone call to have them go through the report page by page with you.
Additionally, have you done much reading on asset allocation in general. If not, that might be beneficial to you.
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