You could be leaving thousands of dollars on the table if you stop at your plan’s basic investment options.
Most university faculty and staff understand the importance of contributing to their retirement plan—but fewer realize there’s a big difference between simply participating and truly optimizing those investments.
The standard options offered through plans like TIAA are designed to be easy, one-size-fits-all solutions—but the easiest options rarely lend the largest rewards. While convenient, they may not provide the flexibility, cost savings, or growth potential you need to maximize your financial future.
In this blog, you’ll learn about how to go beyond the basics to access a broader range of investments, lower fees, and implement strategies better aligned with your goals.
The Reality of Standard University Investment Menus
At first glance, your university’s retirement plan may seem to offer plenty of choices. In reality, most basic retirement plans are limited compared to the thousands of investment options available in the broader market. Faculty and staff at the University of Maine often see only 15–25 funds, many with higher expense ratios and outdated strategies.
Target-date funds, for example, provide a simple one-size-fits-all path by automatically adjusting the asset allocation. Still, they rarely align perfectly with an individual’s risk tolerance or career timeline. Other “core” options, like TIAA Traditional may feel ‘safe’ or convenient but can come with trade-offs, such as limited returns, or often limiting access depending on the plan rules, and often can only be paid out annually over 10 years. With bond selections also restricted, investors often face gaps in diversification that leave their portfolios less resilient than they could be.
Self-Directed Brokerage Options (SDBO) As Your Gateway to Investment Freedom
If the standard menu feels limiting, a self-directed brokerage option (SDBO) can open the door to a much wider world of investments. Instead of choosing from a handful of funds, you gain access to thousands of possibilities designed to better match your goals, risk tolerance, and interests.
With an SDBO, you can unlock:
- 10,000+ mutual funds across hundreds of fund families
- Low-cost ETFs that often carry lower expense ratios than mutual funds
- Individual stocks and bonds for those who want direct ownership
- Sector-specific investments, such as technology, healthcare, or international markets
- Alternative investments (depending on plan rules)
For University of Maine faculty and staff, the SDBO is available through Pershing LLC on the TIAA platform. While it adds another layer of choice and responsibility, the potential for customization and cost savings makes it an attractive option for those ready to take a more active role in their financial future.
When to Graduate Beyond Target-Date Funds
Target-date funds are popular for a reason—they’re convenient, simple, and automatically adjust as you approach retirement. But convenience can come at a cost. For many university employees, these funds don’t fully match individual timelines, spousal coordination, risk tolerance, or tax situations.
But when is the right time to explore other investments? You may be ready to move beyond target-date funds if:
- Your risk tolerance is different from the fund’s age-based allocation
- You want more control over where your money is invested
- You’re missing exposures to certain asset classes or strategies
- Cost savings are becoming a higher priority—fees are often higher for target-date funds
- Your financial goals are unique, such as phased retirement or legacy planning
Consider the example of a mid-career professor who shifts from a standard target-date fund to a customized mix of low-cost ETFs, stocks, and mutual funds. Over 20 years, the savings on fees alone could add up to more than $50,000—without even factoring in improved diversification or flexibility.
Moving beyond target-date funds doesn’t mean investing has to be complicated—it just means tailoring your portfolio to meet your specific needs.
The Real Cost of Investment Freedom
While an SDBO gives you more control and choice, there are costs that come with it. These fees are usually manageable—and often offset by the long-term savings from lower-cost investments—but they shouldn’t be overlooked.
Typical costs with an SDBO include:
- Transaction costs: $0–$35 per trade (depending on the investment type)
You may also run into some extra costs from market timing, bid-ask spreads, or tax liabilities, but those costs are more unpredictable.
4 Common Fee Mistakes to Avoid:
- Overtrading: Racking up transaction costs from too many trades can eat away at returns
- Paying for expensive active funds: Expensive doesn’t always equate to high performance—low-cost index funds may perform just as well (or better)
- Opening multiple accounts: Keep it simple—don’t create unnecessary complexity and overlapping fees with multiple accounts
- Ignoring tax efficiency: Look at the whole picture, not only on gross returns, without considering after-tax results
The key to success? Be strategic—avoid unnecessary trading, watch for high-fee funds, and focus on the long-term benefits of lower costs.
4 Common Pitfalls (and How to Avoid Them)
With more investment freedom comes more responsibility—and that’s where some investors run into trouble. A Self-Directed Brokerage Option (SDBO) can be a powerful tool, but only if used wisely.
Top 4 investing mistakes we see every day:
- Overcomplicating portfolios: Using too many funds without a clear strategy
- Chasing performance: Buying last year’s winners instead of focusing on long-term fundamentals
- Inadequate diversification: Concentrating too heavily in one sector or region
- Letting emotions drive decisions: Fear and greed are powerful but poor investment guides
Case Study: The DIY Investor Who Got Lost
One faculty member tried to overtrade within their SDBO, chasing market headlines. The result? Higher fees, more stress, and underperformance compared to a simple target-date fund. After simplifying and building a well balanced portfolio and sticking to a disciplined rebalancing schedule, they had a better experience with far less hassle.
The lesson: investment freedom doesn’t mean doing more—it means doing better. A thoughtful, disciplined approach almost always outperforms a reactive one.
A Step Ahead At Provision Wealth Planning
If you’re already working with Provision Wealth Planning, you’ve likely experienced many of the benefits that come with moving beyond the basics. Our role is to help you take advantage of opportunities within your university plan while avoiding the common pitfalls of going it alone.
Here’s what we’ve already done for many of our clients:
- Portfolio composition: Expanding beyond standard menus to include small-cap growth, emerging markets, and diversified bond strategies—lowering overall risk while improving return potential.
- Fee-conscious investing: Using low-cost ETFs and mutual funds where appropriate to keep expenses in check.
- Tax efficiency: Incorporating ETFs, selecting low-turnover funds, and actively seeking tax-loss harvesting opportunities to improve after-tax outcomes.
- Ongoing monitoring: Adjusting portfolios as markets, managers, and your personal goals evolve.
By continuously reviewing and updating your portfolio, our team ensures that your investments remain aligned with your needs today, tomorrow, and well into retirement.
Next Steps: Moving Beyond the Basics
Exploring a self-directed brokerage option can feel like a big leap, but you don’t have to navigate it alone. Whether you’re curious about lowering fees, diversifying beyond the standard menu, or tailoring your investments to your unique career and retirement goals, professional guidance can help ensure your choices work for—not against—you.
Key takeaways:
- Standard university menus are only a starting point.
- SDBOs can provide access to broader, lower-cost, and more customized investments.
- Costs matter, but behavior and discipline matter even more.
- Professional oversight can bridge the gap between opportunity and results.
If you’re wondering whether you’re maximizing your University of Maine retirement plan, and don’t currently work with a financial advisor, now is the time to take the next step. Schedule a portfolio review with our team at Provision Wealth Planning to understand your current position and discover how to make your retirement savings work harder for your future.
Disclosures: The target date is the approximate date when investors plan to start withdrawing their money. The principal value of a target fund is not guaranteed at any time, including at the target date.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
ETFs trade like stocks, are subject to investment risk, fluctuate in market value, and may trade at prices above or below the ETF's net asset value (NAV). Upon redemption, the value of fund shares may be worth more or less than their original cost. ETFs carry additional risks such as not being diversified, possible trading halts, and index tracking errors.
Investing in mutual funds involves risk, including possible loss of principal. Fund value will fluctuate with market conditions and it may not achieve its investment objective.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
Because of their narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.
Alternative investments may not be suitable for all investors and should be considered as an investment for the risk capital portion of the investor’s portfolio. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.
Provided are hypothetical examples that are not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing.
No investment strategy assures a profit or protects against loss.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
