As a teacher, you work hard for your money, and we all know in most places your salary should be much higher than is provided given all that you do to provide the best for your students. Unfortunately, in combination with a lower salary, you also have to contend with financial providers whose job it is to get you to pay excessive fees on inferior financial vehicles, thanks to a lack of protections offered to teachers. Here’s what you need to watch out for to keep from getting fleeced by them.
First and worst are annuities. There’s a saying, annuities aren’t bought, they’re sold. And unfortunately, they’re commonly sold to teachers through their 403(b) plan by reps that hang out in the teachers’ lounge. Annuities generally have high fees, poor investment options, and terribly restrictive provisions to make changes or get out. They are one of the least efficient ways to save for retirement, so stay away or else you’re likely to get fleeced by one.
Second are poor insurance recommendations. These are also sold through representatives that hang out in the teachers’ lounge or that you’re a required to meet with by your district thanks to your Section 125 contract. In a 15-20 minute session, they’ll recommend, or even try to scare you into buying whole life, cancer, accident, and a host of other insurance policies, when in actuality, most teachers don’t need these policies, and if they do, should find out through a careful evaluation of their insurance needs, not a quick sales pitch.
Lastly, there’s bad student loan advice. Many companies use student loan planning as a way to get teachers in the door to sell what we talked about earlier, skimping on the actual advice or even making recommendations to consolidate loans with their company that destroy the chance to take advantage of loan forgiveness or that negate important federal loan protections.
So now you know the three most egregious fleecing strategies to be on watch for. If you’d like to connect with a fiduciary Financial Planner that puts your interests first, don’t hesitate to give us a call or drop us an email.