Is the group rate the best rate?
Common sense would lead one to believe that a group rate for insurance or other financial products would be better than going it alone. Turns out that isn't necessarily the case. The Star Ledger has an article on this subject today.
When financial planner Andrew Tignanelli's clients first came to him saying they were planning to buy financial products from AARP, he said he was thrilled. He assumed the products the group sold to its members, whether TVs or financial products such as insurance or mutual funds, would be the best and least expensive.It is counter-intuitive, but seems to be true. Before anyone assumes I'm dumping on AARP just because they are a left wing organization, I'll go on record with my opinion that this is probably the case with most large organizations. I've received insurance offers from various veterans organizations and when I checked the rates they were higher than I was able to find elsewhere. These organizations may officially be non-profit, but over time their management teams have realized how to line their own pockets. Bottom line: Don't assume anyone is looking out for your best interest except yourself. Do comparison shopping and find the best product for your needs.
"But then when they showed me what they were getting and the price, I told them that I thought they could do better elsewhere," the Baltimore-based adviser said. "People assume that AARP is their advocate and doing the best for them. That isn't always the case." Tignanelli has since done a market comparison of AARP products and those offered elsewhere, and he found the senior advocacy group's offerings were often more costly. That's because the nonprofit group in fact has a profit motive, he said. About $400 million of the group's $1 billion annual budget comes from royalties and "service provider relationship management fees" earned on products AARP sells, according to the organization's 2006 financial statement.