--- title: Non-Profit is a Tax Status, Not a Golden Halo description: There are a number of attributes that assure the high ethical standards of a wealth manager. However, non-profit isn't the beacon of light you'd hope. image: https://www.exchangecapital.com/hubfs/Image%20-%20Blog%20Image%20-%20Andy%20-%20Non-Profit%20is%20a%20Tax%20Status%2c%20Not%20a%20Golden%20Halo%20-%20Angel%20(green)%20-%20PNG%20-%2010-12-2020-1.png --- [![ECM_Hi_Res_Logo](https://www.exchangecapital.com/hubfs/Logo/ECM_Hi_Res_Logo.bmp "ECM_Hi_Res_Logo")](https://www.exchangecapital.com) [(734) 761-6500](tel:7347616500) [![Login](https://no-cache.hubspot.com/cta/default/2173418/b6517516-71e3-47b5-9b09-b50b5b2980b2.png)](https://cta-redirect.hubspot.com/cta/redirect/2173418/b6517516-71e3-47b5-9b09-b50b5b2980b2) [![WealthyStreet Academy](https://no-cache.hubspot.com/cta/default/2173418/2827678b-1867-4d1f-8b28-a81bae5d0b93.png)](https://cta-redirect.hubspot.com/cta/redirect/2173418/2827678b-1867-4d1f-8b28-a81bae5d0b93) ** ** ** [![Exchange Capital Management](https://www.exchangecapital.com/hubfs/Logo/ECM_Hi_Res_Logo.bmp "Exchange Capital Management")](https://www.exchangecapital.com/) [(734) 761-6500](tel:7347616500) [![Login](https://no-cache.hubspot.com/cta/default/2173418/b6517516-71e3-47b5-9b09-b50b5b2980b2.png)](https://cta-redirect.hubspot.com/cta/redirect/2173418/b6517516-71e3-47b5-9b09-b50b5b2980b2) [![WealthyStreet Academy](https://no-cache.hubspot.com/cta/default/2173418/2827678b-1867-4d1f-8b28-a81bae5d0b93.png)](https://cta-redirect.hubspot.com/cta/redirect/2173418/2827678b-1867-4d1f-8b28-a81bae5d0b93) ** ** ** Search [![Exchange Capital Management](https://www.exchangecapital.com/hubfs/Logo/ECM_Hi_Res_Logo.bmp "Exchange Capital Management")](https://www.exchangecapital.com/) [(734) 761-6500](tel:7347616500) [![Login](https://no-cache.hubspot.com/cta/default/2173418/b6517516-71e3-47b5-9b09-b50b5b2980b2.png)](https://cta-redirect.hubspot.com/cta/redirect/2173418/b6517516-71e3-47b5-9b09-b50b5b2980b2) [![WealthyStreet Academy](https://no-cache.hubspot.com/cta/default/2173418/2827678b-1867-4d1f-8b28-a81bae5d0b93.png)](https://cta-redirect.hubspot.com/cta/redirect/2173418/2827678b-1867-4d1f-8b28-a81bae5d0b93) ** ** ** **Menu** ** ** [(734) 761-6500](tel:7347616500) [![Login](https://no-cache.hubspot.com/cta/default/2173418/b6517516-71e3-47b5-9b09-b50b5b2980b2.png)](https://cta-redirect.hubspot.com/cta/redirect/2173418/b6517516-71e3-47b5-9b09-b50b5b2980b2) [![WealthyStreet Academy](https://no-cache.hubspot.com/cta/default/2173418/2827678b-1867-4d1f-8b28-a81bae5d0b93.png)](https://cta-redirect.hubspot.com/cta/redirect/2173418/2827678b-1867-4d1f-8b28-a81bae5d0b93) [**Exchange Capital Management Blog](https://www.exchangecapital.com/blog) # Non-Profit is a Tax Status, Not a Golden Halo [![Andrew Stewart, CFA, CAIA](https://www.exchangecapital.com/hubfs/Caricatures%20/Andy%20Caricature%20-%20White.png)](https://www.exchangecapital.com/blog/author/andrew-stewart-cfa) by [Andrew Stewart, CFA, CAIA](https://www.exchangecapital.com/blog/author/andrew-stewart-cfa) Oct 13, 2020 ![TIAA-CREF](https://www.exchangecapital.com/hs-fs/hubfs/Image%20-%20Blog%20Image%20-%20Andy%20-%20Non-Profit%20is%20a%20Tax%20Status%2c%20Not%20a%20Golden%20Halo%20-%20Angel%20(color)%20-%20PNG%20-%2010-12-2020.png?width=1068&name=Image%20-%20Blog%20Image%20-%20Andy%20-%20Non-Profit%20is%20a%20Tax%20Status%2c%20Not%20a%20Golden%20Halo%20-%20Angel%20(color)%20-%20PNG%20-%2010-12-2020.png)I've been interested in markets and investing since I was a student in middle school, but my first experience giving financial advice was when I worked at a high school. In my first job after college, I managed all the technology at an independent high school in Boston. When my co-workers learned that I knew as much about stocks as I did about servers, they started asking me questions. Lots of questions. I began hosting a once-a-week lunch meeting where I tried to answer whatever came to mind to a handful of teachers. A few wanted to nerd out on stock picking, but most just wanted a sounding board for the typical questions from working 20 & 30-somethings, such as: Pay off debt versus save for retirement? Save for kids' college versus save for retirement? and [Which account to use to best save for retirement?](https://www.exchangecapital.com/resources/ebooks/getting-started) That last question was very common, because we had a TIAA-CREF 403(b) plan at the school, and wading through the alphabet soup of 403(b) versus IRA versus Roth IRA can be difficult. The default choice that most of my colleagues made without thinking was: TIAA-CREF 403(b), because: 1. It had the implicit recommendation of our employer 2. It had a history of supporting educators, starting in 1918 3. It was a non-profit organization Doing due diligence on service providers is difficult, and institutional reputation is often an easy way to get started. Indeed, the [CFA Institute](https://www.cfainstitute.org/en/ethics-standards) and [CFP Board](https://www.cfp.net/ethics/our-commitment) are strong institutional signals for competence and ethics for professionals in the wealth management business. The tax status of *non-profit*, on the other hand, is a poor signal for something as important as your retirement savings. Furthermore, TIAA has since [changed its organization](https://www.nytimes.com/2017/10/21/business/the-finger-pointing-at-the-finance-firm-tiaa.html), isn't a simple non-profit anymore, and has dropped the "CREF" in their name. Don't misunderstand me, I am not trying to throw TIAA under the bus. I am arguing that the corporate organization of your service provider isn't nearly as important as: 1. Their [fiduciary](https://www.exchangecapital.com/blog/are-hidden-motives-harming-your-financial-future) status 2. The [quality of the advice](https://www.exchangecapital.com/services/financial-planning) they give you 3. Their [cost of service](https://www.exchangecapital.com/services/cost-of-service) TIAA-CREF is not likely any better or worse than other Broker/Dealers in this regard, but putting them on a higher pedestal because of their history does not lead to better outcomes for your retirement. For example, the fees inside their annuity programs are difficult to discover and their indexed mutual funds are expensive compared to other indexed funds available. Plus, their expense ratios appear to include [12b-1 distribution fees](https://www.investor.gov/introduction-investing/investing-basics/glossary/distribution-andor-service-12b-1-fees), a kick-back in the world of financial advice that muddies the objectivity of the financial advisor. These problems are common in 403(b) and 401(k) programs, since operating these plans can be expensive and imbedded fees in the investment options are one way to cover those costs. But all things equal, an IRA offers the account holder much more flexibility and a lower cost of investment. This is why I strongly encouraged my co-workers at the school to dig a little deeper, think through their situation, and make an informed decision about where to store their hard-earned retirement savings. At Exchange Capital, we have clients that are current employees at the University of Michigan and other educational institutions that use TIAA and Fidelity to operate their 403(b) plans. We perform our same high-quality financial planning work for these clients and also manage the investments inside their retirement accounts, within the constraints of the [particular menu](https://www.exchangecapital.com/blog/dining-at-the-cafe-401k) available. Later, when they are allowed to, we usually suggest that these clients rollover their 403(b) accounts into an IRA. In an IRA, the universe of investment options opens wide up and each building block can be held to a higher ethical and expense standard. When your employer has a matching program or there are other reasons to use a 403(b) account over the other options, go for it. But as soon as you have the flexibility to take your money wherever you want, do some research before you blindly trust the firm your employer's HR department hired forty years ago. [![New call-to-action](https://no-cache.hubspot.com/cta/default/2173418/14ba224e-2f26-45b0-b918-e5da37e29311.png)](https://cta-redirect.hubspot.com/cta/redirect/2173418/14ba224e-2f26-45b0-b918-e5da37e29311) **Andrew Stewart, CFA, CAIA is Chief Investment Officer and Partner at ****[Exchange Capital Management](https://www.exchangecapital.com/)****, a fee-only, fiduciary financial planning firm. The opinions expressed in this article are his own.** ![Print](https://www.exchangecapital.com/hs-fs/hubfs/Blog%20Images/webiconspng%20-%20Printer%20Simple%20Icon.png?width=30&name=webiconspng%20-%20Printer%20Simple%20Icon.png) ## Comments ** ##### Market Knowledge ###### Read the Blog Gather insight from some of the industry's top thought leaders on Exchange Capital's team.  ** ##### More Guidance ###### [Explore Free Resources ](https://www.exchangecapital.com/resources?hs_preview=JvUytiCL-6242156730) [Get access to educational eBooks, infographics, cheat sheets, and so much more!](https://www.exchangecapital.com/resources?hs_preview=JvUytiCL-6242156730) ** ##### What's the Buzz ###### Check out the Newsroom  Discover what Exchange Capital Management is saying in print and broadcast media. ### Exchange Capital Management, Inc. 110 Miller Ave. First Floor Ann Arbor, MI 48104 [(734) 761-6500](tel:%20734-761-6500) [info@exchangecapital.com](mailto:%20info@exchangecapital.com) ### Contact Us Copyright © 2024 Exchange Capital Management, Inc. 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