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SSDI and rolling over to IRA and financial advisors. Fiduciary and/or RIA?


SSDI and rolling over to IRA and financial advisors. Fiduciary and/or RIA?

Hello.  I am retiring soon.  I am receiving SSDI.  I have a 401a and I also have a regular pension which I have the option to take payments or take a lump sum.  I am going to take the lump sum, combine it with the 401a and roll it over into an IRA away from my employer.  The reason I want it away from my employer is because there is only a handful of options to invest in, sort of cookie cutter.  I also do not like how I'll be in a fund, then all of a sudden I get a letter in the mail that they are removing that fund and the money will be moved over to another fund, which is irritating.  This has happened a few times over the years.


Anyway.  I have dealt with Fidelity in the past with taxable brokerage accounts.  I chose some mutual funds with some of the money I've earned from my pay check, but never tapped into Fidelitys advisors at the time.  I do like however their simplicity and customer service.  After some time I had removed the money from Fidelity to buy some precious metals.


Fast forward to today, I want to rollover the money I have with my employer and I met with a private financial advisor today.  This advisor runs his company with another person.  One owner has CFP, and the one I was speaking with is RFC.  He also said he is an RIA.  So it seems he is looking to roll me over to invest with LPL financial.  I'm not saying this is a bad thing and I didn't commit as of yet.  He says he's independent, but it seems he deals mostly with LPL.


So I got home and was reading that I should make sure an advisor is a fiduciary and/or RIA.  Again, this advisor said he was an RIA, but I don't seem to see him listed as a fiduciary.


So I looked back into Fidelity's website and they specifically state that all their advisors are fiduciary.  So then I started thinking about maybe not dealing with a private advisor, which seems affiliated with a larger investment company anyway.


So I guess at this point, my question is: 


What is the benefit of me going through this advisor just to invest into LPL anyway, when I can just go directly to Fidelity or LPL myself and use one of their advisors?


I also would like to know how to verify if an advisor is fiduciary and/or RIA?


Thank you.



Bronze Conversationalist

@HenryW60912 First, I believe both Fidelity and LPL are self clearing brokers. So, both appear to offer similar services. You can also review Schwab and Vanguard. You may find all of the above offer similar services. However, you need to consider the costs of using a financial advisor who will charge a fee whether a flat fee, a percentage of assets, or commission based. Most importantly, does the FA  have a proven track record for managing money. Most do not. About 85% of FA will not out perform the S & P 500 over time. Some may outperform a year or two, but over longer periods of time, most fail to do better that investing in a low cost S & P 500 index fund. Also, keep in mind, being a fiduciary which essentially is making investment decisions with your best interest in mind does not equate to always increasing investment value. Many folks with equity exposure in their portfolios may have lost approximately  20% of their value in 2022. I think your age, marital status, prognosis, life expectancy, health insurance status and long term care strategies are equally important factors to consider. Having worked with employee benefits in the private sector for most of my career (401 K Plans), I believe 401 A Plans are more common in the public sector (i.e., government, education, etc.) which generally means more conservative investment options. However, I believe most Plans including 401 A Plans should have equity investment options and some type of income investment options which are reviewed and approved by the Plans Investment Committee who are fiduciaries who maintain fiduciary insurance coverage including Errors and Omissions coverage. Moreover,I believe your 401 A Plan is protected against creditors or any legal judgement against you. You may want to give your 401 Plan consideration as a viable retirement asset versus an IRA Rollover. I would be surprised of any of the folks you talked to reviewed your 401 A as a viable retirement asset. And they call themselves fiduciaries. Good Luck.  

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