Can We Trust The Bank To Know What an IRA IS?

I got a frantic telephone from a good friend this afternoon.  She and her husband had just left the bank in a failed attempt to open a joint Roth IRA.  She said, I need you to calm me down. 

The short versoin of the story is they entered the bank, sat down with a representative and explained to her that they would like to invest $8,000 in a Roth IRA.  She said the representative seemed puzzled and fumbled around for awhile telling them that she was having technical difficulties with the computer.  My friend started to suspect that something was amiss.  After about a half hour of fumbling, the representative pulls out a brochure with investment options that range from 3 months to 8 years.

 My friend asks, aren’t IRAs supposed to be long term investments?  The representative tells her, no after the IRA matures you will either put it in a similar investment or another investment.  The woman was selling her a CD!!! 

The analogy I used to my friend was, imagine you walk into Best Buy and ask to see the laptop choices and instead, the associate show you the flat screen tvs.   That is basically what happened to my friends at their bank.  Not only would my friends have bought the wrong product, they would have suffered tax consequences as well.

It is completely baffling to me that a bank representative does not know the difference between a CD and an IRA.  Just another proof source that we need to be armed with as much personal finance knowledge as possible so that we are not misled by “experts” to make costly mistakes.

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