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#1 Admin

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Posted 18 June 2017 - 04:56 PM

Hey All,
 
I thought it might be good to post this here as a stand-alone story because so many come here looking to do exactly what this music teacher did. Note: Eric is also the subject of our latest Teach and Retire Rich podcast (#49) http://teachandretir...h.com/podcasts/ and http://traffic.libsy...ic_teacher_.mp3 - Dan 
 
My 403b Story: How to add a vendor to your school and switch from AXA
 
When I finally received my first full time teaching job in 2010, I was thrilled to have a job. I was so concerned with making sure my students liked me and impressing my administrators that I didn’t have time to learn or care about my retirement. Unfortunately, after a year I was let go due to budgets. For the next three years, my girlfriend (also a teacher) and I bounced around from several school districts, always being let go due to budget cuts. I applied to everywhere in the state, and in 3 years I sent out over 200 cover letters, went on over 60 interviews, and I made it to probably 15 different final round interviews. Frustration mounting, I considered quitting teaching.
In the summer of 2013, we got married. My wife had just been hired by a district, and I had an interview at that very same district. We got lucky, and I got hired as well. Needless to say, we were swelling with happiness to work in the same district. So happy, in fact, that that same feeling from my first job crept in of wanting to impress that I once again did not consider my finances. This time, there was a representative from AXA. You know the rest of the story.
 
In truth, I didn’t quite understand what I was signing. We had just signed everything from marriage certificates, change of name forms, we were moving to a new town, new apartment, and a new job with new insurances and all of the other bells and whistles, I’m embarrassed to say that I though the rep from AXA was from our district office. This was just something else you signed, right?
 
Our rep was nice, and quite helpful. Her boyfriend was a science teacher in a neighboring district, so she took it upon herself to learn a lot about student loans. She would come to our house every 6 months to discuss our contributions and finances. Of all of the reps we could have gotten when we read other peoples stories, we consider ourselves lucky.
Then in 2015, I became obsessed with the topic of personal finance. A friend introduced me to YNAB, and my life changed. I’ve read every book on finance that I had time for, my wife and I have paid off more than half of our original debts, we reduced our expenditures and increased our incomes with hobbies, I was giving financial presentations to my coworkers on basic finance… but that 403b was nagging me. I just didn’t understand it. Every time I would ask our representative about it, she would explain it, but I still couldn’t understand it. For awhile, I considered it, “one of those things” I will never understand.
Finally, I found this podcast and website, and I bought Dan’s book. I had all the information I needed to become the most well informed person in the room on 403b’s. As I researched, I discovered AXA had high fees, and the statements I got were not crystal clear with information I wanted. So we decided to make the switch. The real problem was, the rest of our provider list was just awful.
 
Here is where the nightmare begins. I emailed my human resources department about the possibility of opening up Vanguard, Fidelity, or Aspire to our school. The administrator made it clear that we only had access to the providers that our 3rd party, The OMNI Group, made available. So I called OMNI, and they told me the school had the right to choose their providers. I emailed my HR department again, and the admin told me that was, in fact, not true. So I called OMNI again, relaying the information. They told me that if we were to add other providers, we would not have access to the “P3” program, essentially dropping a group of providers so we can add one. This seemed ridiculous, but I took the information back to my union, hoping that if I could convince them that one great option was better than 15 bad ones, they would back me.
The union leaders knew I was fired up about this topic. I asked if I could speak to the district on the first day of school or send out an email. They came to visit me in person to let me know I had made some waves in the district office. I was surprised, I just wanted what was best for everyone. They said that when I was ready, the district had given me a green light to add any vendor allowed on the P3 program if I could convince 5 other teachers to join it. Aspire was on that list, so I agreed.
 
A few months later, the administrator I was emailing had retired, and a new administrator was in charge of HR. I figured this would be a great time to ask. I still don’t know what happened behind the scenes, but after I emailed my union saying I was going to start talking to my co-workers, they emailed me back a few days later to say that Aspire had been added. A day after that, the new administrator emailed the district, letting us know Aspire was open for business at our district.
 
Here is what you can expect from vendors if you decide to switch companies:
 
Create a new account:
Create account with Aspire: 8-10 days to confirm new account.
Change contributions with 3rd party, OMNI: 1-2 pay cycles to process paperwork.
 
Transfer funds:
AXA, Aspire, and OMNI all need to approve each others paperwork to transfer our funds. You can send each companies paperwork to each other, but OMNI sends an approval which can cut down on the faxing time: 3-5 days to fax everything back and forth, 1-2 weeks to process. We were each charged $15 and 5% of our account value by AXA to terminate, and another $65 rollover fee.
 
What did all of this ridiculous work save us? 
 
AXA:
$30 yearly fee for accounts under $25,000
1.2% M&E fee
1% (average) fee from all 11 variable funds, 
???% - Representative charge
 
Total: 2.2% +$30 yearly fee plus maybe another 1%. 
 
Aspire:
$40 yearly fee
.15% fee from Aspire
.16% Vanguard retirement account fee
0% - Self-directed (With an advisor you can access 25,000+ funds. Without one you are limited to retirement shares).
 
Total: .31% + $40 yearly charge
 
In summary, the change was worth it. From a quick check on an interest rate calculator, my savings is going to be in the tens of thousands. Since this is for my wife and I, we might be talking about hundreds of thousands. This whole process took us over two years, but I no longer wonder about my 403b.


#2 saab93

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Posted 18 June 2017 - 08:31 PM

Sometimes when I regret not starting my 403b contributions sooner, I realize I may have just been with AXA if I had done it uninformed.

 

Roth IRAs are so good for those just starting out with savings, zero fees in doing that at Vanguard, Schwab, etc. (besides the low expense ratios).  I wish the word would get out for people to start with that as well.  Even with the low limits, using that your entire career would make a great impact and might then motivate one to move to the 403b for additional savings. 

 

This was such a good story to read (or listen to), so glad they shared it with everyone! One most hope that even when people do not post here they may search google, read a handful of posts like these, and then make a much better decision for themselves.  



#3 jebjebitz

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Posted 19 June 2017 - 06:17 AM

I appreciate how this guy pursued this even though he was told he was making waves with administration. This was after years of being let go from different districts and considering a career change. I know if I'm in the same boat I'm backing off after hearing I've rattled folks in the main office out of fear for my own job security. Congrats to this guy for getting this done. Hopefully his colleagues appreciate the risks and effort that went into this and also take advantage of a better 403b plan

#4 sschullo

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Posted 19 June 2017 - 06:41 AM

I appreciate how this guy pursued this even though he was told he was making waves with administration. This was after years of being let go from different districts and considering a career change. I know if I'm in the same boat I'm backing off after hearing I've rattled folks in the main office out of fear for my own job security. Congrats to this guy for getting this done. Hopefully his colleagues appreciate the risks and effort that went into this and also take advantage of a better 403b plan

 

Do you have tenure? 


Steve Schullo

Author and Co-Author of two books:

1. Late Bloomer Millionaires: A Financial Story and Investment Guide for the Late Starter (2013)

2. Fighting Powerful Interests: Educators Challenge Tax-sheltered Annuities and WIN! (2015)


#5 sschullo

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Posted 19 June 2017 - 06:48 AM

Sometimes when I regret not starting my 403b contributions sooner, I realize I may have just been with AXA if I had done it uninformed.

 

Roth IRAs are so good for those just starting out with savings, zero fees in doing that at Vanguard, Schwab, etc. (besides the low expense ratios).  I wish the word would get out for people to start with that as well.  Even with the low limits, using that your entire career would make a great impact and might then motivate one to move to the 403b for additional savings. 

 

This was such a good story to read (or listen to), so glad they shared it with everyone! One most hope that even when people do not post here they may search google, read a handful of posts like these, and then make a much better decision for themselves.  

 

We have to hope that the hundreds of lurkers who come here do make better decisions for themselves. We know we are doing the right thing, and we can support each other, and encourage those folks who learn from this forum will take the message to their districts. It's a lot to ask. But the more stories we share here on changing our district's pathetic 403b into a world class plan, then genuine reform might happen because those lurkers might get courageous. Right now we are a long ways from reform. So we keep pressing, on and on. 


Steve Schullo

Author and Co-Author of two books:

1. Late Bloomer Millionaires: A Financial Story and Investment Guide for the Late Starter (2013)

2. Fighting Powerful Interests: Educators Challenge Tax-sheltered Annuities and WIN! (2015)


#6 jebjebitz

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Posted 19 June 2017 - 07:26 AM


I appreciate how this guy pursued this even though he was told he was making waves with administration. This was after years of being let go from different districts and considering a career change. I know if I'm in the same boat I'm backing off after hearing I've rattled folks in the main office out of fear for my own job security. Congrats to this guy for getting this done. Hopefully his colleagues appreciate the risks and effort that went into this and also take advantage of a better 403b plan

 
Do you have tenure? 

I do have tenure.

#7 sschullo

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Posted 19 June 2017 - 09:13 AM

Do worry about your job. What you are doing is pretty tame really.

I have gotten more lame threats from my teacher's union than from the district. A friend told me he heard the president say that "Schullo is not welcome around here." I went anyway. Be firm and never raise your voice, because we are the outsiders, and always remember when you talk about investing, and low costs etc. always assume that the person you are talking to doesn't know a thing. Really dumb it down, and that is the hardest to make your case without intimidating people.

 

I failed it badly because 20 years ago, there were no 403b forums to get advice. I had to learn this on the job, and I was alone, at the time. BTW, I am still not good at it.

 

Perhaps I am a better consultant than an activist practitioner. You will carry our message much better than I did.  


Steve Schullo

Author and Co-Author of two books:

1. Late Bloomer Millionaires: A Financial Story and Investment Guide for the Late Starter (2013)

2. Fighting Powerful Interests: Educators Challenge Tax-sheltered Annuities and WIN! (2015)


#8 tony

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Posted 19 June 2017 - 09:39 AM

I do not understand why anyone should fear for their jobs trying to get others educated about better  investing options  currently not available to them. If you can engage others to understand that the change is in their best interest why should you feel threatened?  I think that is what led me to  finally make a connection and eventually open the gate to better investments in my school system. I even had the superintendent call me about how to dump his insurance annuity and sign up with Vanguard when it first became available. Just be armed with the facts, be polite, and go forward!!  Like I have overstated here over and over again, you will meet resistance usually from people who are lacking in knowledge or who are the "all -in"  status quo types. You need to look past them and engage with those who do "get it". In some way people are like sheep. The herd has to get moving before some will follow. 



#9 EdLaFave

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Posted 19 June 2017 - 10:11 AM

With regards to not understanding why people fear for their jobs/careers...

 

I talk a lot about the 403b/457b scheme as a sophisticated, clever trap that was designed specifically with educators in mind. At least in Florida, the state has pushed the "model plan", which couldn't be more ironically named. Districts go through a formal process to hand pick a select group of vendors. Principals are the CEOs of their schools with absolute authority to allow or deny the vendors access to campus. So the entire public school system (principal, benefits department, superintendent, school board, and state representatives) is standing behind, endorsing, and helping these vendors. It is entirely reasonable to think that fighting against exploìtative vendors is, by proxy, fighting against the entire power structure of the public school system. Our good friend, Steve Banks from TSA Consulting Group, has already vaguely threatened me with some kind of legal liability associated with teaching people about these retirement plans (I of course told him I'd never stop). Intimidation is alive and well both in implicit and explicit forms.

 

With regards to being polite...

 

It is easy to let anger take over. Very easy. Still, I don't try to stamp out my anger. I intentionally try to keep my anger alive and well, but in a controlled way. Without anger I'd probably walk away from this whole thing because my investments are just fine. However, it is important to keep that anger hidden and internal almost 100% of the time. I don't want people to see my rage, I want them to see the deeper principles that cause my rage. I want them to see how fundamentally unfair it is that educators are being viciously exploìted. I want to appeal to their sense of humanity. I want to appeal to their sense of right and wrong, their sense of morality. These forces have the potential to convert a would be enemy to an ally, but anger/rudeness would only push them further away.


Navigate and reform OCPS' 403b and 457b.

#10 jebjebitz

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Posted 19 June 2017 - 11:17 AM

Do worry about your job. What you are doing is pretty tame really.

I have gotten more lame threats from my teacher's union than from the district. A friend told me he heard the president say that "Schullo is not welcome around here." I went anyway. Be firm and never raise your voice, because we are the outsiders, and always remember when you talk about investing, and low costs etc. always assume that the person you are talking to doesn't know a thing. Really dumb it down, and that is the hardest to make your case without intimidating people.

 

I failed it badly because 20 years ago, there were no 403b forums to get advice. I had to learn this on the job, and I was alone, at the time. BTW, I am still not good at it.

 

Perhaps I am a better consultant than an activist practitioner. You will carry our message much better than I did.  

 

I do not understand why anyone should fear for their jobs trying to get others educated about better  investing options  currently not available to them. If you can engage others to understand that the change is in their best interest why should you feel threatened?  I think that is what led me to  finally make a connection and eventually open the gate to better investments in my school system. I even had the superintendent call me about how to dump his insurance annuity and sign up with Vanguard when it first became available. Just be armed with the facts, be polite, and go forward!!  Like I have overstated here over and over again, you will meet resistance usually from people who are lacking in knowledge or who are the "all -in"  status quo types. You need to look past them and engage with those who do "get it". In some way people are like sheep. The herd has to get moving before some will follow. 

Not sure why I would have concern for my job security by offering financial advice but I do.  I think it has something to do with not understanding how these vendors are chosen and why it would be a big deal to add new vendors.  When I contacted my business administrator about adding new vendors I received an answer along the lines of, "these are our vendors and we're not interested in adding any more."  I talked to my union and they kind of repeated the B.A's reply and said their hands were tied.  



#11 sschullo

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Posted 19 June 2017 - 07:13 PM

 

Do worry about your job. What you are doing is pretty tame really.

I have gotten more lame threats from my teacher's union than from the district. A friend told me he heard the president say that "Schullo is not welcome around here." I went anyway. Be firm and never raise your voice, because we are the outsiders, and always remember when you talk about investing, and low costs etc. always assume that the person you are talking to doesn't know a thing. Really dumb it down, and that is the hardest to make your case without intimidating people.

 

I failed it badly because 20 years ago, there were no 403b forums to get advice. I had to learn this on the job, and I was alone, at the time. BTW, I am still not good at it.

 

Perhaps I am a better consultant than an activist practitioner. You will carry our message much better than I did.  

 

I do not understand why anyone should fear for their jobs trying to get others educated about better  investing options  currently not available to them. If you can engage others to understand that the change is in their best interest why should you feel threatened?  I think that is what led me to  finally make a connection and eventually open the gate to better investments in my school system. I even had the superintendent call me about how to dump his insurance annuity and sign up with Vanguard when it first became available. Just be armed with the facts, be polite, and go forward!!  Like I have overstated here over and over again, you will meet resistance usually from people who are lacking in knowledge or who are the "all -in"  status quo types. You need to look past them and engage with those who do "get it". In some way people are like sheep. The herd has to get moving before some will follow. 

Not sure why I would have concern for my job security by offering financial advice but I do.  I think it has something to do with not understanding how these vendors are chosen and why it would be a big deal to add new vendors.  When I contacted my business administrator about adding new vendors I received an answer along the lines of, "these are our vendors and we're not interested in adding any more."  I talked to my union and they kind of repeated the B.A's reply and said their hands were tied.  

 

 

Never, I repeat never say you are offering "financial advice." Only a licensed CFP can offer "advice." Speak for yourself and show them why you think they should add such and such low-cost company. Have the copies of the NY Times articles available. Every employee will benefit not just teachers. Not just low costs but annuity vs. mutual fund is a huge concern too. Annuities are inappropriate for tax-deferred plans because the 403b is already deferred by the IRS, and they do not grow enough to beat the inflation rate because of their extremely high costs. Ask them if selling a high-cost annuity which has pathetic returns is a good deal for a new 22-year-old teacher? Don't let them skirt around the questions by a replay such as what the vendor and any employee does is their private business. NO, It's NOT Private. 

 

Ask if there is an advisory committee with reps from the employee unions? If not, could they start one, and be prepared to volunteer. 

 

My union was useless, most of them just go along with what the district does because they don't know what to do publically. Privately is another matter, because some make decisions behind closed doors. 


Steve Schullo

Author and Co-Author of two books:

1. Late Bloomer Millionaires: A Financial Story and Investment Guide for the Late Starter (2013)

2. Fighting Powerful Interests: Educators Challenge Tax-sheltered Annuities and WIN! (2015)


#12 jebjebitz

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Posted 19 June 2017 - 08:47 PM

Never, I repeat never say you are offering "financial advice." Only a licensed CFP can offer "advice." Speak for yourself and show them why you think they should add such and such low-cost company. Have the copies of the NY Times articles available. Every employee will benefit not just teachers. Not just low costs but annuity vs. mutual fund is a huge concern too. Annuities are inappropriate for tax-deferred plans because the 403b is already deferred by the IRS, and they do not grow enough to beat the inflation rate because of their extremely high costs. Ask them if selling a high-cost annuity which has pathetic returns is a good deal for a new 22-year-old teacher? Don't let them skirt around the questions by a replay such as what the vendor and any employee does is their private business. NO, It's NOT Private. 

 

Ask if there is an advisory committee with reps from the employee unions? If not, could they start one, and be prepared to volunteer. 

 

My union was useless, most of them just go along with what the district does because they don't know what to do publically. Privately is another matter, because some make decisions behind closed doors. 

 

So I have a few questions here.  I am confident that I made the right choice by switching to the Lincoln PDP and investing in Vanguard funds using the three fund portfolio.  I guess my question is, is this definitely better than everything the insurance companies have to offer?  I don't know enough about all of the products being pushed by the vendors to say whether or not they're a bad investment for someone.  For example, the MetLIfe rep that visits my building has put a number of teachers in an annuity with a guaranteed return of 6%.  Now, I'm pretty sure there is something wrong with that but, I can't necessarily prove it.  

 

Another question I have is about the advisory committee.  What is this?  Would this be a group of employees in my school district dedicated to helping people choose a vendor?  I don't think we have something like this.

 

My last question has to do with vendors.  If I wanted to suggest better vendors, which ones would I suggest?  I was told, (by the AXA rep that was trying to keep me in the horrible Equivest contract ) that the reason districts don't have vendors like Vanguard and Fidelity is that they don't assume any of the cost associated with running the 403b program.  The AXA rep said that the insurance companies willingly take on costs to get in the game basically.  I don't know if this is true.  Anyway, I've read about a lot of teachers who fought to get better vendors and I often hear about Aspire and TIAFF Cref (?not sure if that's right).  With those two companies, are the good plans self-directed like the Lincoln PDP?  Also, I know of one company sponsored by the NJEA (NJ teacher's union) named Security Benefits but their good plan is also self-directed. 



#13 EdLaFave

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Posted 19 June 2017 - 10:07 PM

is this definitely better than everything the insurance companies have to offer?  I don't know enough about all of the products being pushed by the vendors to say whether or not they're a bad investment for someone.


Well you'd have to take the time to look into each plan to make a definitive statement. I feel more than comfortable making the following declarations about our plans at OCPS...

Security Benefit's NEA DirectInvest allows you to build a completely diversified 3 fund portfolio with rock bottom costs. The other plans based on mutual funds are clearly inferior because they charge more and most also offer inferior funds. What about the annuities that offer a guaranteed return, could somebody argue those plans are best for people who are VERY risk averse? Well the guarnateed returns for these annuities are far lower than a 100% bond fund is expected to return. So it doesn't make any sense to accept subpar guaranteed returns with the possibility of surrender fees when you can have a super safe 100% bond portfolio. So yeah, I feel incredibly confident when I say Security Benefit's NEA DirectInvest is hands down the best plan at OCPS, I suspect you'll find the same pattern when/if you dig into all of the details.

Imagine a district had Vanguard, Fidelity, and Security Benefit's NEA DirectInvest, it would be quite difficult to definitively claim one is superior to another. Your investment preference (1 fund vs 3 funds) will dictate which vendor is cheapest. Either way the expenses for all of these vendors are so low that picking the "best" vendor based on which company you philosophically align with, who has the better web site, and other personal preferences isn't at all unreasonable. Unfortunately, my district isn't blessed with such excellent vendors and I suspect neither is yours.
 

the MetLIfe rep that visits my building has put a number of teachers in an annuity with a guaranteed return of 6%.  Now, I'm pretty sure there is something wrong with that but, I can't necessarily prove it.


I'm hoping one day you'll do some investigative reporting and get to the bottom of this one because I simply don't believe this is true. I'm curious to know if people are misunderstanding the plan or if the rep has reached expert levels of immorality and is flat out lying to people.

 

It would be easy, call the rep up or meet with him and push for every detail. Present yourself as a potential customer (if this likely fictitious world of guaranteed 6% returns actually exists then you probably are a potential customer) and you'll get the bottom of it.
 

Another question I have is about the advisory committee.  What is this?


I imagine every district does things differently. Here at OCPS we have what is called a "fringe committee" that gets together once every five years to decide which vendors will be allowed to participate in the 403(b)/457(b) plans.

Our fringe committe has people from the district (head of retirement services, director of risk management, etc), people from the instructional staff union (I'm not even sure they send somebody), and people from the non-instructional staff union (I'm not even sure they send somebody).
 

My last question has to do with vendors.  If I wanted to suggest better vendors, which ones would I suggest?  I was told, (by the AXA rep that was trying to keep me in the horrible Equivest contract ) that the reason districts don't have vendors like Vanguard and Fidelity is that they don't assume any of the cost associated with running the 403b program.  The AXA rep said that the insurance companies willingly take on costs to get in the game basically.  I don't know if this is true.  Anyway, I've read about a lot of teachers who fought to get better vendors and I often hear about Aspire and TIAFF Cref (?not sure if that's right).  With those two companies, are the good plans self-directed like the Lincoln PDP?  Also, I know of one company sponsored by the NJEA (NJ teacher's union) named Security Benefits but their good plan is also self-directed.


People speak highly of TIAA around here but I'll just say it, I'm opposed to them. Are they better than AXA? Sure, but that is a low bar. TIAA charges a 0.58% yearly fee. I find that to be unacceptable.

There may be nuggets of truth in what the AXA rep has told you, I don't know the gory details. But whatever they are, Vanguard and Fidelity are in many districts in Florida so it is quite possible to add them.

I studied all of the districts in Florida and I came up with a Top 5 of Vanguard, Fidelity, Security Benefit (specifically for NEA DirectInvest), ASPIRE (specifically for their self directed option), and PlanMember Services (specifically for their self directed option). I broke down each of these plans on my site: https://educatorsfig...3b-457b-vendors


Navigate and reform OCPS' 403b and 457b.

#14 jebjebitz

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Posted 20 June 2017 - 06:09 AM

 

Security Benefit's NEA DirectInvest allows you to build a completely diversified 3 fund portfolio with rock bottom costs. The other plans based on mutual funds are clearly inferior because they charge more and most also offer inferior funds. What about the annuities that offer a guaranteed return, could somebody argue those plans are best for people who are VERY risk averse? Well the guarnateed returns for these annuities are far lower than a 100% bond fund is expected to return. So it doesn't make any sense to accept subpar guaranteed returns with the possibility of surrender fees when you can have a super safe 100% bond portfolio. So yeah, I feel incredibly confident when I say Security Benefit's NEA DirectInvest is hands down the best plan at OCPS, I suspect you'll find the same pattern when/if you dig into all of the details.

 

 

What are you thoughts on telling people about Self Directed 403b plans?  I feel like when I tell people I choose my own funds they instantly decide this is something they are not capable of.  I think a lot of people need, or think they need, that "financial" person that will come to their house and tell them their money is safe and sound.  I suppose when telling people about choosing the three fund or one fund approach it's important to deliver the message in a way that says, "this is the way I did it, this is what I was comfortable with, here is some information on three fund portfolios and index funds," versus "you should pick these funds here".

 

 

 

the MetLIfe rep that visits my building has put a number of teachers in an annuity with a guaranteed return of 6%.  Now, I'm pretty sure there is something wrong with that but, I can't necessarily prove it.


I'm hoping one day you'll do some investigative reporting and get to the bottom of this one because I simply don't believe this is true. I'm curious to know if people are misunderstanding the plan or if the rep has reached expert levels of immorality and is flat out lying to people.

 

It would be easy, call the rep up or meet with him and push for every detail. Present yourself as a potential customer (if this likely fictitious world of guaranteed 6% returns actually exists then you probably are a potential customer) and you'll get the bottom of it.

 

 

 

This is something I've seriously been considering.  The whole process of leaving AXA and realizing how shady the reps can be kind of lit a fire in me.  I just felt like an idiot and would like to help out my colleagues.  I know there are other vendors who have given teacher's some questionable advice based on what they have told me.  There are only seven vendors offered by my district.  It might be worth it to take the time to call through that list and see what is being offered.  I'm especially curious about the MetLife 6% guarantee.

 

There may be nuggets of truth in what the AXA rep has told you, I don't know the gory details. But whatever they are, Vanguard and Fidelity are in many districts in Florida so it is quite possible to add them.

I studied all of the districts in Florida and I came up with a Top 5 of Vanguard, Fidelity, Security Benefit (specifically for NEA DirectInvest), ASPIRE (specifically for their self directed option), and PlanMember Services (specifically for their self directed option). I broke down each of these plans on my site: https://educatorsfig...3b-457b-vendors

 

 

This was a great way to break down the cost of each plan.  I know there was at least some interest from the union and the B. A. about Security Benefit.  I'll have to talk with my union leader again and see if she can get an open discussion started with the B. A. about adding this vendor.



#15 sschullo

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Posted 20 June 2017 - 07:03 AM

 


People speak highly of TIAA around here but I'll just say it, I'm opposed to them. Are they better than AXA? Sure, but that is a low bar. TIAA charges a 0.58% yearly fee. I find that to be unacceptable.
 

 


Morning Ed,

 

You wrote: People speak highly of TIAA around here but I'll just say it, I'm opposed to them. Are they better than AXA? Sure, but that is a low bar. TIAA charges a 0.58% yearly fee. I find that to be unacceptable.

 

And you expressed your opinion on Bogleheads too. 

 

Ed I know you despise TIAA. For the record, our committee (and I was shocked and angry too!) was extremely angry at them for publishing a biased anti-public pension "research study" some years ago, and TIAA paid a huge price and did not get their contract renewed for Pension2 and LAUSD (actually they did not bother to apply). TIAA has never understood the k-12 culture. 

 

Despite my negative experience with them as our TPA for our 457b plan, I still like them. Our financial professional friends, Scotty D, and I believe Dan does too. Last year, I transferred about 20% of my fixed account allocation (which is a lot of money) with their TA paying a guaranteed 3.0% with 0.00 fees! I used TIAA over a decade ago with my 403b, with good results until I retired and transferred everything to Vanguard. TIAA is a million miles higher than your low bar analyses when compared to AXA! I will NEVER invest my money with AXA EVER!

 

Please don't paint a broad stroke over one fund that costs 0.58%. Remember in the 403b world, there are not other expenses, and for a K-12 public school district when TIAA is the only choice I would choose them again. Their philosophy is very similar to Vanguards. 

 

I will call them today to find out what their fees on their 403b products. I had a Roth with REIT and they charged a hideous .99% and I got out of that fund after a couple of years. That's too much!  

 

So I hear you about costs, but TIAA is not in the same arena as all of the other large insurance carriers or broker-dealer firms. 

 

The other concern expressed by teachers that don't know TIAA well is that they sell annuities, but their annuities are constructed the right way, no surrender fees, no commissions, and no hideous high-cost, and useless M&E fees (M&E cost .005%). If I were to annuitize my account to get a guaranteed payout for the rest of my life, I would use TIAA in a heartbeat, but I already have a pension. I don't need another one.

 

Unless I missed something as you may have had a bad experience investing with them? Whereas I had horrible experiences with annuities with two large carriers, costing $6000 in surrender costs to get my $33,000 out! Now that is a cost!

However, I had nothing but a great experience with them as a 403b investor, and now with my rollover 403b in the TA. What I talked about above is when they were the record keeper for our 457(b) plan, and their performance to getting our 457b plan to our employees was sub par.  

 

Have a great day,

Steve


Steve Schullo

Author and Co-Author of two books:

1. Late Bloomer Millionaires: A Financial Story and Investment Guide for the Late Starter (2013)

2. Fighting Powerful Interests: Educators Challenge Tax-sheltered Annuities and WIN! (2015)