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  2. Conclusion after a year of 403b/457b reform.

    I think financial literacy while a good idea in our schools will not necessarily solve the 403b crisis or the rip-off sneaky financial models being used in our culture.. I have to wonder if more education just leads more teachers into the laps of these sharks. Might they be better served staying ignorant? I taught Financial Literacy. I tried to educate the kids on expense ratios and index funds but what I noticed was that while it opened their minds to saving more , it did not necessarily lead them to distinguishing between good investing and bad investing or differentiating between the good guys and the bad guys. That takes a whole new level of sophistication. I guess getting that spark towards understanding finance makes financial literacy a worthwhile pursuit but there is so much muddled and fake information being dispensed in the financial world that it would be easy to end up leading people inadvertently to making bad decisions with our good intentions. Thats what happened to me!! And who profited-the very forces I was trying to avoid! I think books like Steve wrote about powerful interests groups is very specific in its financial education and should be required reading after financial literacy basics are instilled in our citizens. Ed, your primer and guide on investing specific to your state for teachers is also a great guide as are Dan Otter's books. An oversite committee is a great idea if you can keep them free from bias and influence from the outside finance world and that may not always be easy. Just look what happened at the NEA!!
  3. Los Angeles Teachers and LAUSD Employees

    Isn't "Shark Attack" GREAT! And written by the 2nd largest teachers union in the country. But they did not follow their good advice. I was on the committee that selected the next vendor and while I was supporting TIAA, TIAA was not ready in 2002 for the K12 world. I abhorred their selection, another insurance company, and I could not figure out why they went against their own advice from their Shark Attack article. In answering your question about how to better alert new teachers? Don't get me started. Yeah, that's the million dollar question. This website and over 30 newspaper publications and Morningstars and Bogleheads forums have all condemned the 403b with public K12 districts for 20 years, and as you said, not much as changed. The unions have been SILENT, the entire world outside of education knows how terrible the current 403b is and yet our teachers hardly complain and they still believe in "their guy." The unions will not talk to the press in those past newspaper articles (not a word from NEA of AFT to the NY times articles in 2016) and for good reason there is no reform--it's only a dozen or so of us who post on this board that are complaining. And yet every time we organize a workshop in Los Angeles 50-70 show up! I cannot overestimate that those 50-70 LAUSD teachers get NO SUPPORT or discussion about how to properly use either the 403b or the newer 457b plans anywhere in California. Yet, they somehow hear about us and come on a Saturday morning to hear and learn about a subject that they get NOWHERE ELSE. So I guess the best answer to your question is to meet teachers face to face. But it takes time and money to organize these workshops, and since we have a very low-cost plan, no TPA is going to organize similar workshops. I wrote a report of the latest workshop here: Have a great day, and keep thinking about what we can do to reach teachers. We need new ideas! Steve
  4. Last week
  5. Latest Spiva results on fund category performance . "Building a portfolio around index funds isn’t really settling for the average. It’s just refusing to believe in magic.” So why do workers in the financial industry get paid so much ? . The financial industry commands a much larger share of the U.S. economy than in the past, causing some (like us)to worry that the industry gets more money than its economic contributions merit. Annuity sales to teachers is a HUGE industry and sales are doing great!! And this article shows not many of these pseudo experts can even beat an index fund with their products!! Or like another article I posted, often they can't beat a seven year old's portfolio! http://www.aei.org/publication/more-evidence-that-its-very-hard-to-beat-the-market-over-time-95-of-financial-professionals-cant-do-it/
  6. LAUSD financial literacy workshop report

    Thanks, Steve. You, Sandy and the other organizers should be very proud. What a great event!!
  7. Conclusion after a year of 403b/457b reform.

    However anybody feels, Rubio hasn’t been reliable. I too would love to see the TSP available to everybody for every type of account. I’m shocked Rubio wouldn’t consider that to be big government, but I’d support him 100%.
  8. LAUSD financial literacy workshop report

    Steve, that fantastic that the SEC is helping in the battle against 403b annuities! The NY Times articles have made a difference.
  9. Indeed, the 85% support level is far better than nothing! Very glad to hear that you've been rescued by supplemental savings.
  10. Conclusion after a year of 403b/457b reform.

    I'm no fan of Rubio, but extending access to the TSP strikes me as a good idea, wherever it comes from (I believe there are some liberal-identified organizations or politicians who have also supported this, though I don't have the names off the top of my head). I'm not sure whether Rubio's proposal extended to 403b accounts--it was mostly aimed at workers who had no access to a 401k or 403b--but I'd support a universal, transportable (across employers) TSP account with the same contribution limits as the 401k. This could effectively eliminate the 403b (except, perhaps, as site for additional savings for those who have maxed the TSP), and with it, all the inherited connections to annuity sales fees, exaggerated fund fees, third party wrap fees, awful fund choices, etc. The industry that thrives on those fees would fight it to the death, but should the country arrive at a moment friendly to worker-focused retirement reform, I think this idea could gain wide support.
  11. Hi Over 50 LAUSD employees came and they were very thankful. About a dozen stayed until 1:30 because they had questions. One of the confusing points was that people were thinking that the target date funds specific year was the year they were supposed to take the money out! Yeah, they were confusing it with the IRS 59.5 for the 403b and 70.5 for RMDs. There is so much confusion!! They need more support because as you know when they left the workshop, there is no follow up until we have another workshop next fall. Half a day is too short for all of the good speakers and information we presented. We are talking about going back for an entire day. That’s where VOYA could help, by offering a Saturday workshop before the end of the year to follow up. Our people need help. None of the previous TPAs have organized a workshop. But if LAUSD says no, the committee should know about this so we can work out the resistance so everybody benefits. At the rap up, I reminded the participants that 403b vendors are not allowed on campus. Only VOYA is allowed and so we had the two VOYA reps Germaine and Violeta introduce themselves and talk about what they would do. The participants had their business cards and the VOYA information sheet. This is after Barbara talked at length about the choices of the 457b plan. The Securities and Exchange Commission attorney talked about the usual stuff with high-cost annuity plans which are way too often sold to teachers. Both the L.A. SEC and the SF offices have been providing informational 403(b) workshops to California teachers since they read the horror stories in the NY Times in the fall 2016 five-article series. They actually care and want to help with financial education. Finally, somebody else besides the same few of us wants to help save our teachers from the annuity hucksters. If you want financial literacy speakers to come to your school or district office, contact them here: Los Angeles Regional Office 444 South Flower Street, Suite 900. Los Angeles, CA 90071 323-965-3998 ... 351 S. West Temple St., San Francisco Regional Office 44 Montgomery Street, Suite 2800. San Francisco, CA 94104 415-705-2500. They are very knowledgeable! Have a great week, Steve
  12. Conclusion after a year of 403b/457b reform.

    Agree with krow that the 403b world with public k12 districts has NO ERISA protections!!! In fact, here in California and a few other states insurance agents and their conflicts of interest practices and their terrible products are not only allowed but are protected by state insurance codes. The California code 770.3 is the most hideous of all, and nobody talks about this or the two times we tried to update this terrible and cruel code. I wrote a book about this mess. My book received a review by an attorney, James Reardon, and posted this on Amazon: Boy, does Steve Schullo tell it like is. As former President of an RIA firm who has a J.D. degree; I’ve done a fair amount of plaintiff’s recovery work as an expert witness until my recent retirement. Fighting Powerful Interests lays bare the inner workings of the insurance industry, It’s the most truthful account I have seen in my 27 years in the financial services industry. Teachers everywhere should know of and appreciate this account of an exhaustive two person crusade spanning a number of years to free teachers and non-profits from predatory practices not permitted to occur in other professions. I love it this review because its the truth that we all intimately know here!!!!!! READERS, PLEASE do NOT purchase my book. I can give you a pdf copy but I need your email. PM me your email. All I would like back from you is a review on Amazon: https://www.amazon.com/Fighting-Powerful-Interests-Educators-Tax-sheltered-ebook/product-reviews/B00UODW0ME/ref=cm_cr_dp_d_show_all_top?ie=UTF8&reviewerType=all_reviews If more teachers took a look at my book, they would understand the problem and know one possible solution to the 403b MESS: a low cost mutual fund platform using 457(b) and having an oversight committee.
  13. Conclusion after a year of 403b/457b reform.

    It is an interesting thought. I wish I could run a simulation to find the answer. I hypothesize that enough workers would stand up and prevent a good portion of the nonsense we see in K-12, but I'm not overly confident in that hypothesis. At any rate, the awful nature of the 403b/457b world can only exist because of teachers' willingness to accept it. I'm reasonably confident that level of acceptance won't change for a very long time (if at all). Hopefully I'm wrong.
  14. Conclusion after a year of 403b/457b reform.

    Ed, you may be correct that teachers as a group “are far worse than any other group” in their retirement investment knowledge and practice. However I think that the non-ERISA, multivendor 403b free-for-all that teachers deal with is fairly unique. If a for-profit company provided a pension but also allowed multiple salespersons to come onsite and sell non-vetted, non-ERISA 403b contracts to individuals, and this had been happening since the start of deferred-contribution plans in the 1970s, . . . .It’s a setup for the K-12 Wild West mess that the ERISA 401k world has avoided.
  15. Conclusion after a year of 403b/457b reform.

    T I see people asking questions about 403bs all the time on Bogleheads. I also notice they are often referred here but some don't make it here to ask their questions. Its sad in a way because those here know more about the ins and outs of the 403b system better than most.
  16. Conclusion after a year of 403b/457b reform.

    One group of educators that are left out of the discussion here are the financial savvy educators, and I wonder if the percent of DIYers in education are about the same as the general public. I think that most schools in this country have at least one teacher or administrator who knows the annuity rip off but keeps there big mouth shut. Administrators are notoriously silent because they are in a higher socioeconomic status and they don't want to be sued for giving wrong advice, BUT IF THEY READ HERE over time, we do not give advice but show how those annuities are not appropriate products due to their high costs, illiquidity and low performance. This group goes about his or her business and does not participate here or do the other things we advocates do. I had one teacher at the workshop last Saturday say he heard about me and the workshop from Bogleheads, but not from here. School administrators I am told invest in real estate to get passive income. White Coat Investor blog by an MD talks only to high-income earners and they talk about real estate investing frequently.
  17. Conclusion after a year of 403b/457b reform.

    Yup and I'm happy for them; they're a counter example to some of what I've personally observed. We ought to tie the lower and upper bounds of salaries to inflation. We don't need to beg for random, one-time 5% increases. That's a solid hypothesis. However, I imagine if I had a pension I'd still be very upset that somebody was basically stealing money from my supplemental account. If I could I'd test this hypothesis with another profession that also has a pension, but I don't think I'll ever know for sure why people have behaved the way they have. Rubio is well known in Florida for talking quite a bit and doing very little unless it we're talking about cutting services for everyday people or using deficit spending to finance corporate tax cuts. Having said that, using the TSP for 403b and 457b plans would be genius. Similarly we could expand the FRS Investment Option (alternative to a pension in Florida) to handle 403b/457b plans too. These ideas would be fantastic. Fair enough. I can only gather so much data in my personal life...not nearly enough to come to a scientifically valid conclusion. However, I must note that the non-technical folks were equally receptive as the technical folks. I'm not ready to specify a reason that this problem exists. Resistance to financial knowledge, unwillingness to take action, etc...who knows for sure? Maybe all of the above. Your hypothesis may be true, but I'm still left wondering why the general public has 401ks that are far less awful. I suspect they engage more strongly. To be clear, the population at large does not invest well. I used to be in that group. However, my anecdotal observations show that teachers invest (or don't invest) far worse than any other group that I have personal experience with. It isn't particularly close either.
  18. Conclusion after a year of 403b/457b reform.

    Krow, you are very detail oriented. I never even noticed the edit button below. I will have to play with the whole gamut of tools and see what else I can learn
  19. Conclusion after a year of 403b/457b reform.

    Ed, I think you may be comparing apple and oranges when you compare teachers with your coworkers. I’m guessing that your colleagues (mostly software engineers?) are much less math-phobic than are teachers. And I think teachers are not more resistant to financial knowledge than is the general public. The general public is as lazy as teachers when it comes to researching who they intrust their retirement savings with. The Edward Jones guy with an office down the street is a nice friendly guy—sure is convenient! Or, my bank, or my friend, or my dad’s broker. . .The average ER is somewhere around 1%, which indicates to me that the average American doesn’t understand how costs effect investing results! I’ve found that non-teachers are very resistant to making changes that would significantly lower their investment costs. I agree that teachers’ pensions lull them into thinking that their financial retirement needs are taken care of. That probably contributes to the 70% of teachers who do not save in 403b or 457 plans! Relatively low salaries probably also contributes to low participation in 403b or 457 plans. My point is that teachers are not unique in having a lot of resistance to educating themselves about the basics of retirement finance. It’s a national problem that benefits the majority of the financial industry. As is brought up on this forum, financial education should be part of the K-12 school curriculum. And college curriculum!
  20. Conclusion after a year of 403b/457b reform.

    Tony, 2 suggestions: To quote a previous post, use the "Quote" button at the bottom of the post. That adds the poster's user name to the quote. It looks like you are copying and pasting and then using the " from the menu bar? That doesn't ID the quote. To add your comment to the quote, put your cursor down below the quote box, so your comment is separate from the quote. It took me a while to figure out the new website--still learning.
  21. All of us need to thank Ron for this article and ask him to continue to make reports. Send a message via his Twitter account. If you don't have a twitter, I urge you to create one ASAP. It's a powerful way to connect with influential people. I got a response from THE mr. money mustache, Tara, and Ron on twitter! @ronlieber and @tarasbernard Only until we make enough noise will the public k12 powers to be will take notice. We can talk among ourselves for the next 18 years about how terrible the 403b is with our colleagues and it will be good for the few teachers that come here, but the powers to be will never change until we make more social media noise and take our message face to face via workshops. For the last 18 years that this board has been in existence, not much as changed from posts on this board alone.
  22. https://assetbuilder.com/knowledge-center/articles/seven-year-old-investor-beats-harvards-endowment-fund
  23. I see that CalSTRS calls the 2% a "benefit", not a COLA, and says it doesn't track changes in the cost of living, as you say. That 85% floor in purchasing power is sure a lot better than no inflation protection at all though! My WA teacher's pension had a COLA for a few years, but the legislature dropped it some years ago. After 26 years, I think I've lost about 50% of the initial purchasing power. 403b (now IRA) to the rescue!
  24. Conclusion after a year of 403b/457b reform.

    You're preaching to the choir, Tony!
  25. Conclusion after a year of 403b/457b reform.

    Whyme I think you are right but its a false security as those defined pension plans are becoming more and more extinct and going the way of dinosaurs. I know I repeat myself, but teachers need to cover all their bases and that requires having a backup plan just in case. https://www.bloomberg.com/news/articles/2018-03-14/a-worrying-shift-for-pensions-retirees-will-soon-outnumber-kids
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