Being in the military means that you will have a host of people try to sell you things, drawing on your association as a Servicemember. Some of the most frustrating can be those that want to sell you financial planning or counseling services.
Now, there are a great number of financial planners, even those that are vigilant, and have the best interest of the customer, in this case, the Servicemember at heart. For those professionals that focus on honest and reputable work they are a credit to their profession. But there are those in the financial services field that are not high caliber. They will try to make you make decisions that are solely aimed at lining their own pocket. Here are some things that a financial planner may ask you to do, that are not in your best interest:
Maxing out An IRA. Maxing out an Individual retirement plan can work toward your interests this is true. But often an advisor will look to steer you to a plan that has a high load, and high expense ratio. Planning for retirement should be something done carefully, and with a great deal of thought. ANYTHING that causes you to have to pay money in fees, and investments is something to look at with a jaundiced eye.
Purchasing Whole Life Insurance. Buying life insurance is something that is important, this is true. But the insurance options available through the military tend to be at better rates as a rule than insurance found in the private sector. You want to look very carefully at insurance purchases, these are areas where less than reputable financial planners may try to get you to drop money down their rat hole.
Financial advisors often try to sell life insurance to military people knowing that they have options at less expensive rates. But guess which option, their selling you insurance or your insurance through the military, which pays them a fat commission?
Stop Paying Into TSP Retirement. The TSP retirement is a great advantage for military Servicemembers. It is a low cost-High performing retirement plan, and is not something to be stopped on a whim. If you have an advisor who says he can do better than this program, you should really really make sure before you leap. Of this you can be certain: The money that you pay into a TSP makes a lot of financial advisers salivate. As a rule don’t stop your TSP without getting at least a second, if not a third financial opinion, as its just too good a fund to withdraw from lightly.
So if you are being given this type of advice you should do three things:
-Take a deep breath.
-Call your financial advisor.
-Tell them their services are no longer needed.