It would be hard to find a podcast-hosting duo more totally invested in answering your financial questions than Alison Southwick and Robert Brokamp -- they put "Answers" in the show's name, for goodness' sake! And this week, they're at it again, combing through the Motley Fool Answers mailbag in search of conundrums to address for their listeners. But because three heads are better than two, for this episode, they've enlisted the help of Sean Gates, a financial planner with Motley Fool Wealth Management.

In this segment, they have high praise for Brian, who convinced his employer's financial advisor to put some index funds and target-date funds on the 403(b) menu. But now, he needs some advice on how to move things further into the favor of the employees -- and how to convince his coworkers to take the best advantage of their new choices.

Sean Gates is an employee of Motley Fool Wealth Management, a separate, sister company of The Motley Fool, LLC. The views of Sean Gates and Motley Fool Wealth Management are not the views of The Motley Fool, LLC and should not be taken as such.

A full transcript follows the video.

This video was recorded on June 26, 2018.

Alison Southwick: Next question comes from Brian. "I work at a community health center and have been trying to improve our 403(b). Our financial advisor has had us in some high-expense funds. The 12b-1 fees," ugh, 12b-1 fees!

Robert Brokamp: The worst.

Southwick: That's my least favorite fee. "They're 0.25%, and most of the expense ratios are around 1.25%. This year, with extra support from the health center, the financial advisor agreed to offer three index funds. He was not keen on doing this, but agreed. He also is putting in target date funds, as I had recommended. However, he went with American Funds and not Vanguard.

"I'm frustrated with this. What can I do? Also, I'm trying to explain to others so that they understand how index funds are generally better than actively managed funds. The problem is that the financial advisor picks funds that seem to out-perform the index funds."

Brokamp: How dare he!

Southwick: "Am I missing something? How do I explain this to others?" Aw, keep fighting the good fight, Brian!

Brokamp: I was going to say, first of all, you should be treated like a hero by your colleagues. They should be naming babies after you. Or at least taking you out for lunch, one of those two. But, good for you for improving the company plan! That benefits everybody. We mentioned the 12b-1 fees. Basically, you're paying the mutual fund company's cost of marketing.

Southwick: It's bananas!

Brokamp: It's bananas. To a certain degree, everybody does that for every business that they use, but it's so explicit --

Southwick: But not so blatant about it!

Brokamp: [laughs] It's so blatant! This came out in 1980. The idea was, if people pay for the marketing, we'll attract more assets, then we can lower overall costs. But studies have shown that's not exactly what has happened.

Southwick: Companies don't usually do that. "We got more customers, now we're going to lower costs."

Brokamp: [laughs] Right, exactly. That just annoys me. Anyway, the deal with this financial advisor, from what I can tell, the bottom line is, different mutual fund families have different payouts schemes for the advisors. The reason why this guy probably chose American Funds' target date funds over Vanguard's is, he's making more money from American. In fact, I think Vanguard doesn't pay anyone anything.

Sean Gates: Including their employees.

Brokamp: [laughs] I've been to the campus. It's nice.

Southwick: Nice enough.

Brokamp: It's nice enough. That's why he's doing it. I also assume -- I tried to look this up, it was definitely true in the past, but I couldn't figure out if it's still true -- basically, advisors get paid less from index funds than they do from other types of funds.

Southwick: So, Brian needs to stand up during a company meeting, point at the advisor, and say, "J'accuse!"

Gates: Throw bananas at him.

Southwick: Throw bananas at him!

Gates: I didn't know what the B stood for, and I've been in this industry for 15 years!

Brokamp: For bananas!

Southwick: Bananas 1 fees.

Brokamp: I will say that, I don't think there's anyone at The Motley Fool who are bigger proponents of index funds than Sean and me. Me and Sean? I don't know. I wish I were a grammar. I admire that you are pushing for the index funds.

That said, you can have a good plan with actively managed funds. I own actively managed funds. The Motley Fool 401(k) is an actively managed fund. If the advisor is picking ones that do beat the indexes, that's good. I don't think you have to go whole hog on that. Having three index funds is actually above-average. That's good.

But, basically, if I were to recommend anything, it would be to question whether you even need the financial advisor. You can go to companies that will just administer the plan for you without the help of a financial advisor. If he is not adding value, and if he seems more of getting in the way and is an obstacle to you having an awesome plan, maybe you should just go directly to a plan provider. It could be a bank, it could be a big mutual fund company. They will work directly with companies. You don't need a financial advisor.

Southwick: We go directly with a bank, don't we?

Brokamp: We go directly through a bank, yeah.

Southwick: Yeah, with Motley Fool.

Gates: I think the only caveat I might mention with our plan, where we go right to a bank, is, a lot of companies will hire a financial advisor because, in this case, I think the DOL does apply, where you are a fiduciary as the plan administrator. So, you need some figurehead to represent the fiduciary standard in administering the plan. Most people just outsource it to financial advisors. If they went direct to a bank, they might not have a team of fiduciaries available. They might, they might not. But, it's something to be aware of, in terms of why.

And I think I'd just make a plug for the fact that you did an awesome job, and I want to make a baby with you so that we can then name it after you.

Southwick: We all love Brian.

Gates: I think more broadly, what I would say is that, Bro and I are some of the largest advocates for index funds. I use index funds. But I also pick my own stocks. I think I can out-perform the market, and have, in some cases. There's a tendency to think it's a zero-sum game or mutually exclusive, in that if you have index funds, that's all you should have. People are becoming almost overzealous about it. But having both options is fine. That's good, good job.

Brokamp: But really, keep up the great work! Good for Brian!

Gates: Yeah, totally.

Southwick: Yay, Brian! And all of the babies to come in nine months named Brian!

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