Where to move 401k due to job loss

We have looked into 1. a CFP who has a small hand-picked client base, affiliated with Schwab, makes things understandable, but is going to cost 1% commission annually 2. our credit union financial advisor (we are meeting with him next week so we don’t yet know what his plan would be) whose services are free or 3. using Vanguard (my retired friend switched there from her private advisor, as he was costing more than she wanted to spend). She talks to them every 6 months to discuss her portolio, but lets them manage it for her. Their free is .3%. How do we choose?

Terry Says:  Go through the entire process, talking with each of the proposed advisors –and then listen to your instincts.  All three are appropriate choices. It’s worth paying a small amount for good advice.  Just remember that no services are free.

Either there is an annual fee, typically a  small percent of assets under management.  Sounds like that’s what the CFP offers — but do ask if there are any additional commissions or underlying annual  fees on the investment products he recommends.

Or there are commissions which typically are built into the products they recommend (mutual funds, annuities, etc), so you don’t see them broken out (likely that’s what the credit union does) — and those are typically more than what you will pay elsewhere.

Or you can use a place like Vanguard, which because of its size and technology, can give advice and also offer investment products at a very low cost.

One other thing to keep in mind.  When you are talking to a certified financial planner (CFP) you should be getting more thanjust investment advice. The planner will be looking at your entire financial plan, retirement goals, insurance, tax situation, estate plan, etc. Whereas, at Vanguard — excellent and inexpensive — they will only be managing your investment diversification, and likely withdrawal scenarios.

Ask each person exactly what you will be paying — not only on the advice, but on the underlying costs of the investments.  Ask each person what their advice covers — ie just investments, or more broad financial planning. And then — except for Vanguard —  be sure to ask each one if he/she will sign a “fiduciary pledge” — to put your interests ahead of his own, and to fully disclose all commissions, fees, and other incentives he or she receives for getting you to buy recommended products.

Don’t consider an advisor (except at major fund companies like Vanguard and Fidelity and T. Rowe Price) who won’t sign that pledge in writing.

I’d love to know how this works out for you.  Please do write back and let me know what you decide to do!