Although it has a longstanding reputation of protecting the interests of the nation’s senior citizens, AARP is no different from any other profit-seeking organization, maintains Baltimore financial planner Andrew Tignanelli, the Los Angeles Times reports.

Tignanelli says when clients first came to him saying they wanted to invest in AARP funds, he was thrilled.

But after he did a cost analysis of the funds’ fees compared to similar products, he found them to be more expensive.

“When [the investors] showed me what they were getting and the price, I told them that I thought they could do better elsewhere,” Tignanelli said. “People assume that AARP is their advocate and doing the best for them. That isn’t always the case.”

Indeed, AARP’s 2006 financial statement itself shows that about $400 million, or 40%, of the group’s $1 billion annual revenues come from “service provider relationship management fees” from products that AARP sells.

AARP counters that while it does earn royalties on products it endorses, it strives to serve members well.  AARP spokesman Adam Sohn said Tignanelli’s analysis doesn’t take into account all of the benefits of the mutual funds that AARP offers.

Target-risk funds-of-funds managed by State Street, AARP’s three offerings—aggressive, moderate and conservative—are diversified and actively managed on behalf of investors.

Tignanelli counters that Vanguard also offers target-risk funds that are less expensive and that delivered stronger performance last year and in the first half of this year.

AARP’s Sohn answers that charge by saying that Vanguard charges high initial investment minimums to keep its fees low. Vanguard’s initial investment minimum to its LifeStrategy funds is $3,000, whereas AARP’s is only $100, he said.

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