I can’t even remember how many Minnesota company retirement plan participants I have heard this same story from. I can tell you that it has been several over my 29 years in the financial services industry.
When you change jobs, you naturally call the company that provides your old company retirement plan. After all, this is the company that holds your old company retirement plan account.
After you identify yourself, and explain your leaving the company, what is the option that you hear most from the company retirement plan provider?
That is correct. The young and eager customer service representative on the other end of the phone offers to send you out the information on a self-directed IRA. The reason you are given is that “this is the option that most people in your situation take advantage of.”
Financial services firms take full advantage of the fact that the majority of individual company retirement plan participants don’t have the experience of managing old company retirement plan accounts that come from a job change or a retirement.
The same financial services firms also know that these same individual company retirement plan participants don’t always remember to ask about the fees and costs associated with moving money from an old company retirement plan account.
The other dead giveaway on your call to your old company retirement plan provider is when the customer service representative offers to send you the current investor education materials offered by your current company retirement plan custodian.
Please don’t ever confuse investor education with new account forms. You also need to be very careful before you sign any documents sent to you by your old company retirement plan provider.
There is no reason that any individual company retirement plan participant should be the victim of misleading sales practices, bad investment products, or unsuitable investment advice in this day and age.
The vast majority of information provided by company retirement plan providers is misleading, confusing, and self-serving. This information is most times intended to confuse the process for the majority of individual investors who have to go through the process of leaving an old company retirement plan provider.
For most investors, an old company retirement plan account is one of their largest financial assets. They deserve full disclosure and fair treatment from any financial services firm or any advisor they come in contact with.
Ric Lager
Lager & Company, Inc.
