Missing pieces

Uncovering and interpreting fees in your retirement accounts can be puzzling, even for the most financially savvy. In fact, many people are unaware of the fees they pay.

The FINRA Investor Education Foundation’s National Financial Capability Study (NFCS) Investor Survey found that lack of awareness about fees is a blind spot when it comes to people getting their finances in order. Over 21% of respondents did not think they paid any kind of fee for investing, and 17% said they did not know how much they pay. Among mutual fund owners, nearly 38% believed they did not pay any mutual fund fees or expenses.

Of course, fees are part of any retirement plan. Companies need to generate some money so their business can function. However, not all companies charge the same fees, and they can vary widely.

Paying excess fees can have a huge impact on your savings and future financial security, and may prevent you from creating the complete picture of retirement that you envision.

Types of costs

According to FINRA, costs generally fall into three categories:

1. Transaction costs: Costs associated with buying and selling securities. You’re charged when you make a transaction, which include:

• Commissions, which compensate an investment professional for buying and selling stocks and other securities.
• Markups or spreads, when you are sold securities that the firm has in its inventory.
• Sales loads charged when you purchase or sell mutual funds.
• Surrender charges when you make an early withdrawal from an annuity.

2. Advisory or client fees are charged for advice or portfolio management. They vary depending on the type of service provided.

These fees may also be charged based on the size of your portfolio, referred to as an assets-under-management or asset-based fee. They are generally assessed regardless of whether you buy or sell securities in the portfolio, and whether your account gains or loses money.

3. Ongoing expenses: These are costs you incur regularly, such as annual operating expenses, fees associated with operating and administrating your 401(k) account, and other miscellaneous fees.

Mutual funds and exchange-traded funds have annual operating expenses to cover the professional management and marketing of the funds. And they may charge different amounts to different share classes. Investors can use FINRA’s Fund Analyzer to compare the cost of owning different funds.

Common fees

Fees can be charged by the insurance or mutual fund company, financial advisor, broker, or brokerage. Here are some examples:

• Mortality and Expense (M&E) fee associated with insurance-based products to cover the issuer’s risk of providing death benefits and their administrative costs.
• Operating or administrative expenses.
• Compensation or commissions to brokers/dealers for selling their funds.
• Commissions paid to the financial advisor from the financial or insurance products you buy through them. This may be on top of their hourly, flat, quarterly, or annual fee, which can vary greatly.
• Charges for the company’s cost in managing the fund.
• Surrender charges paid for closing an account before a holding period (surrender period) has elapsed.

According to 403bwise.org, on an average annual basis, variable annuities charge 3%, mutual funds charge 1.74%, and no-load index funds charge 0.07%.

Those fees may seem small, but over time they can really take a big bite out of your savings potential. For example, the Securities and Exchange Commission (SEC) illustrates how much ongoing fees in your investment portfolio can affect your return (see chart) with just a 1% ongoing fee on a $100,000 investment portfolio that grows 4% annually over 20 years. As the investment portfolio grows over time, so does the total amount of fees you pay. Because of those costs, you have a smaller amount invested that is earning a return.

Does zero commissions mean zero costs?

The quick answer is no. Some brokerage firms offer free trades or “zero-commission trading.” Think of it like a doorbuster sale—free trading is a way to attract customers, but free trading does not mean free investing.

FINRA points out that those brokerage firms offering free trading often make money in other ways, such as through interest income from margin loans, robo-advisory service fees, commissions on options or other types of securities, and other charges.

Puzzle it out

So what can you do as an investor to help fill in your retirement picture?

• Ask questions and shop around. For example, you wouldn’t buy a car without knowing what it’s going to cost. Before you sign for a car, you receive itemized costs for special features, floor mats, sales tax, registration, etc. So when you walk away with your new vehicle, you know—to the penny—how much you paid and for what. Treat how you choose retirement accounts the same way and make sure you understand all the costs involved, including costs to purchase, maintain, and sell investments with the companies you research.
• When working with a financial planner or other investment professional, don’t be shy about asking how they are paid. Commission? Assets under management?

Fitting it all together

According to the T. Rowe Price Retirement Savings and Spending Study (2023), respondents with a formal financial plan were 62.5% more confident about their financial outlook.

As a Wisconsin public school employee, you have access to Member Benefits’ financial advisors. If you want help on how to assess fees or review prospectuses, or if you want to evaluate your retirement goals, check out our financial consultation options.

Member Benefits also offers a range of complimentary and in-depth, fee-based services to help you align your portfolio with your financial goals, evaluate if you’re on track to retire, or determine if your current financial position is going to support your desired lifestyle in retirement.

Don’t be puzzled by investment costs. Let us help you complete your retirement vision so you can meet your future financial goals.

Avoid risk creep with regular portfolio rebalancing

If you have a successful investment, you may want to stick with it. But over time, its performance can shift a portfolio’s intent and its risk profile, sometimes referred to as “risk creep.” In other words, if your investment has varying returns over time, the portfolio may bear little resemblance to its original allocation.

There are two ways to rebalance a portfolio.

The first is to use new money by allocating new funds to those assets or asset classes that have fallen. For example, if bonds have fallen from 40% of a portfolio to 30%, consider purchasing enough bonds to return them to their original 40% allocation. Asset allocation and diversification are investment principles designed to manage risk. However, they do not guarantee against a loss.

The second way of rebalancing is to sell enough of the “winners” to buy more underperforming assets. Ironically, this type of rebalancing actually forces you to buy low and sell high.

Periodically rebalancing your portfolio to match your desired risk tolerance is a sound practice regardless of market conditions. Consider setting a specific time each year to schedule an appointment with one of our financial advisors to review your portfolio and determine if adjustments are appropriate.

Source: FMG.

How should I draw my Wisconsin Retirement System pension?

Everyone’s situation is unique, and Employee Trust Funds employees are not allowed to make specific recommendations.

Fortunately, Member Benefits’ advisors are trained and licensed to help you decide which options work best for you. We also test various options (including the accelerated method) when you take advantage of our the fee-based Retirement Income Analysis.

But make your appointment soon! Summer slots fill up fast. Call 1-800-279-4030 or send us an email for more information.

Ask WEA Financial Advisors about…Investments and inflation

“Inflation is, in general terms, an upward movement in the average level of prices,” says Andrea Hartwig, Financial Planner at Member Benefits. “And it certainly can affect your investments.” Some of the effects it has as inflation rises and falls are:

• Inflation reduces the real rate of return on investments. If an investment earned 6% for a 12-month period and inflation averaged 1.5% over that time, the investment’s real rate of return would have been 4.5%. If taxes are considered, the real rate of return may be reduced even further.
• Inflation puts purchasing power at risk. When prices rise, a fixed amount of money has the power to purchase fewer and fewer goods.
• Inflation can influence the actions of the Federal Reserve. If the Fed wants to control inflation, it has various methods for reducing the amount of money in circulation. Hypothetically, a smaller supply of money would lead to less spending, which may lead to lower prices and lower inflation.

What can you do to mitigate inflation on your investments? Consider meeting with a trusted professional such as the financial advisors at Member Benefits. Andrea adds, “When inflation is low, it’s easy to overlook how rising prices are affecting your budget. But when inflation is high, it may be tempting to make more sweeping changes in response to increasing prices. The best approach may be to reach out to us to help you develop a sound investment strategy that takes both possible scenarios into account.”

Source: FMG. This is a hypothetical example used for illustrative purposes only. It is not representative of any specific investment or combination of investments. Past performance does not guarantee future results. All investments involve risk, including the loss of principal.

Taxe$ in retirement

While you’re working, you understand that you’ll be paying taxes. What you might not realize is that you’ll still be paying taxes in retirement, only they’ll be different.

Be aware of these possible tax consequences in retirement:

• Social Security. Depending on your income in retirement (such as retirement account withdrawals, dividends, capital gains, etc.), you may need to pay federal taxes on your Social Security benefits. Some states also tax these benefits, but Wisconsin does not.
• Employment income. Anything you earn from side gigs, part-time or full-time work, etc. is still taxable and is added to your income total from retirement fund withdrawals, annuity income, and Social Security benefits.
• Retirement accounts. If you made 403(b) or IRA contributions with pre-tax dollars before retiring, you will have to pay taxes on the funds you withdraw.
• Required minimum distributions (RMDs). At age 73, the IRS currently requires you to take out withdrawals (RMDs) each year. Even if you don’t need the income, you still need to take RMDs, and you’ll be taxed on the withdrawals as income.

Taxes don’t stop in retirement, but they do change. If you want help with tax and withdrawal strategies in retirement, make an appointment with one of our financial advisors by calling 1-800-279-4030.

Qualified charitable distributions (QCDs)

Did you know you can choose to give up to $111,000 to a qualified charity from your IRA (other than an ongoing SEP or SIMPLE IRA) without counting it as taxable income when you are over 70½ years old? This type of gift is called a qualified charitable distribution (QCD).

A QCD will count towards your required minimum distribution (RMD). However, you can’t claim a charitable contribution deduction for any QCD not included in your income.

Our financial advisors can help you calculate how much you may want to rollover to a Traditional IRA that will generate a QCD equal to the amount you intend to gift each year. You will still have an RMD from your 403(b), because 403(b) plans are ineligible to deliver QCDs.

• Give us a call at 1-800-279-4030 to speak with one of our financial advisors or visit our Financial Planning pages to learn more about QCDs.
• To learn more about moving money from your 403(b) account to an IRA account to take full advantage of QCDs, ask for one of our RIS Specialists or schedule a meeting online.

P.S. Would you consider using all or part of your QCD to give to WEA Member Benefits Foundation to support student mental health in our Wisconsin public schools? The Foundation’s statewide initiative focuses on enhancing access to mental health services within schools and expanding partnerships with local philanthropic funders and community mental health agencies.

Your year-end financial checklist

The end of the year can remind us of last-minute things we need to address and the goals we want to pursue. Here are some aspects of your financial life to consider as this year leads into the next.

Investments: Set a goal to review your investments with your financial professional like the experts at WEA Financial Advisors, Inc. You’ll want to come away from the meeting with an understanding of your portfolio positions. Look over your portfolio positions and revisit your asset allocation. Remember, asset allocation and diversification are approaches to help manage investment risk. They do not guarantee against investment loss.

Retirement strategy: Consider reviewing your current retirement account contributions, including opportunities to maximize deposits to these accounts. This may also be an appropriate time to evaluate catch-up contribution eligibility and determine whether to take advantage of these options.

Taxes: It’s a good idea to consider checking in with your tax or legal professional before the year ends, especially if you have questions about an expense or deduction from this year. Also, it may be prudent to review any sales of property as well as both realized and unrealized losses and gains. Look back at last year’s loss carried forward. If you’ve sold securities, gather up cost-basis information. As always, bringing all this information to your financial professional is wise.

Charitable gifting: Plan charitable contributions or contributions to education accounts and make any desired cash gifts to family members. The annual federal gift tax exclusion allows you to give away up to $19,000 in 2025. Such gifts do not count against the lifetime estate tax exemption amount as long as they stay beneath the annual federal gift tax exclusion threshold. Besides outright gifts, you can explore creating and funding trusts on behalf of your family. The end of the year is also an excellent time to review any trusts. Using a trust involves a complex set of tax rules and regulations. Before moving forward with a trust, consider working with a professional familiar with the rules and regulations.¹

Life insurance: The end of the year is an excellent time to double-check that your policies and beneficiaries are up to date. Don’t forget to review premium costs and beneficiaries and consider whether your insurance needs have changed. Several factors could impact the cost and availability of life insurance, such as age, health, the type of insurance purchased, and the amount purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, you may pay surrender charges, which could have income tax implications. Before implementing a life insurance strategy, you should consider determining whether you are insurable. Finally, remember that any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.

Life events: Evaluating any significant life changes in the last year.

• Marital status
• Moving
• Changing jobs
• Buying a home
• Starting a business
• Inheritance
• Gifts
• Additions to the family.

All these circumstances can financially impact your life and how you invest and plan for retirement and wind down your career or business. Take a moment to review your financial plans and note any updates or new goals you’d like to explore together at your next meeting—we’re here to keep you moving forward.

Call for an appointment: 1-800-279-4030
Send us an email

Keep in mind that this article is for informational purposes and is not a replacement for real-life advice. Contact a tax or legal professional before modifying your tax strategy. The ideas presented are not intended to provide specific advice. Also, tax rules are constantly changing, and there can be no guarantee that the rules will stay the same for any period of time.

1. IRS.gov, 2025.
Source: FMG

Four financial goals for fall

How times flies! We’re already well into the new school year. Before the holidays close in, why not take advantage of the season by taking a peek at your finances? Here are four things you can do to get ahead.

1. Don’t miss the open enrollment period to participate in a 403(b)

School districts have their own open enrollment times. Check with your district office to make sure you’re not missing an October deadline.

2. Maximize your retirement savings

Could you contribute more toward your retirement yet this year? Saving more may lower your taxable income and help you reach your retirement goals. Check on 403(b) and IRA contribution limits.

3. Take stock of transitions

Summer is often a time of weddings, moving, job changes, and more. If you have had any major changes recently, now is the time to check the beneficiaries on your policies and make sure we have your correct address. It’s also a good time to review your insurance coverage to make sure you still have appropriate coverage.

4. Do a budget check-up

Use our fillable budget sheet and free financial calculators to get a good picture of your spending habits and make any adjustments necessary. It can help you set priorities, keep you from spending more than you earn, and prepare you for financial emergencies.

Ask WEA Financial Advisors about…Market volatility

As of April 2025, tariff talks were progressing and stock prices were seeing more down days than up days as the details rolled out. However, intra-year declines are part of investing. In 2024, for example, stocks pulled back 8% during the year yet arrived at a 23% annual gain.

But pullbacks will test your emotions. “As an investor, you know there are highs and lows during any given year. The challenge is remaining focused during the lows,” says Anna Edelstein, Financial Planning Supervisor at Member Benefits. “It can be tempting to react emotionally.”

If market volatility is feeling tough, keep these points in mind:

Retirement accounts are set up for long-term investing. Focus on your long-term goals and try to ignore short-term market ups and downs. It’s generally not advisable to stop your contributions when the market drops, because your dollars buy more shares when prices fall.

Having clear, prioritized retirement and investment goals will keep you on track, no matter how the market fluctuates. A solid long-term financial plan can help weather short-term volatility and other economic conditions.

A well-diversified portfolio can alleviate some of the effects when the market declines. You want to diversify across, and within, the major asset classes, keeping in mind that investments fluctuate in price.

Take advantage of opportunities to build up your finances by paying down debt, maintaining an emergency fund, and saving up for larger expenses, such as a house or vacation.

Protect your money by staying vigilant for fraud. There are no “risk-free” returns, so be cautious of anyone offering such guarantees. Avoid fraud by working only with registered investment professionals verified through FINRA BrokerCheck and adhering to your established financial plan.

“The Guaranteed Stable Investment through Member Benefits is one option to consider as part of your long-term strategy,” adds Anna. “It’s a more conservative investment in your asset allocation mix.

“If you’re experiencing more volatility than you’re comfortable with, it could be a good time to take a look at your portfolio. We can help with that. Contact us for an appointment.”

Sources: FMG, FINRA

Hidden costs of putting off investment decisions

A lack of action is played out often invisibly, with potential negative consequences to a person’s future financial security. Here are just a couple of ways this can impact your finances.

1. One of the worst passive decisions may be the failure to enroll in your district’s 403(b) plan—and fund it. Not only would you miss out on a way to save for retirement, but you may also forfeit any potential employer-matching contributions.
2. If you put off regularly reviewing your investment choices, over time you can end up with a collection of investments that may have no connection to your investment objectives. By not periodically reviewing what you own, you are making a default decision to own investments that may be inappropriate for your goals and needs.

Whatever your situation, your retirement investments require careful attention and can benefit from deliberate, thoughtful decision making.

If you have questions about your 403(b) or need to review your investment allocations, our financial advisors can help. Contact us at 1-800-279-4030 or learn more about our financial planning services. Your retired self will be grateful that you invested the time in making active decisions today.

Source: FMG.