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#1 Michelle55

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Posted 01 November 2006 - 12:34 AM

I am really confused. I have been talking to an agent from LSW concerning a 403b annuity. She says there are no hidden fees. You put your money in you are credited on your anniversary. The cap is 8% and low is 3%. I am thinking about investing 200 in this and 200 in a Roth IRA through a different company. What are your thoughts. If you get out early you pay anywhere from 14% until 0% after 16 years. I am only 34 and will be teaching for at least 20 more years. I am eligible for retirement at 56. Help- Please!

#2 403bagent

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Posted 01 November 2006 - 06:58 AM

Run for your life away from LSW. The Roth IRA is great idea.

#3 JMacDonald

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Posted 01 November 2006 - 07:39 AM

Hi Michelle,
403bagent is correct: Don't even go there!

Any company that charges a surrender fee is bad news. And that surrender fee ("14% until 0% after 16 years") is one the worst I have ever seen.

If that is the only vendor available to you, then go with a Roth IRA with Vanguard. Best Wishes.

Joe

#4 Guest_Sierra_*

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Posted 01 November 2006 - 09:15 AM

STAY AWAY FROM COMMISSIONED SALESPEOPLE...AND FOLLOW THE NO-LOAD ROUTE TO FINANCIAL SECURITY!

#5 apteacher

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Posted 01 November 2006 - 09:33 AM

Run, don't walk, away from that agent. Anyone who would put you into a plan that charges a surrender fee for 16 YEARS does not have your best interests in mind.

I am amazed that anyone could sell such a product with a straight face.

#6 Scottyd

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Posted 01 November 2006 - 10:14 AM

LSW is selling you an Equity Index Annuity - the minimum rate is most likely not 3%, but 3% on 85% of your deposit (in other words no real guarantee). Any product with such a long surrender period is inappropriate in almost any situation, if you are going to committ to a 16 year program, you might as well be in equities. Of course, this is not a recommendation to buy equities, just don't buy this product. LSW came to my office once (a week before the actual scheduled appointment) and tried to get me to take down my article on Equity Indexed Annuities from my website, they said it was costing them sales and that they were actually the good guys. I reviewed their product that they showed me and it was clear they weren't the good guys. The person selling you this product is either Naive (a very good possibility), Stupid (another possibility), or fully informed and out to hurt you financially.

ScottyD

#7 troublebruin

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Posted 17 March 2010 - 02:26 AM

QUOTE(Michelle55 @ Nov 1 2006, 12:34 AM) View Post

I am really confused. I have been talking to an agent from LSW concerning a 403b annuity. She says there are no hidden fees. You put your money in you are credited on your anniversary. The cap is 8% and low is 3%. I am thinking about investing 200 in this and 200 in a Roth IRA through a different company. What are your thoughts. If you get out early you pay anywhere from 14% until 0% after 16 years. I am only 34 and will be teaching for at least 20 more years. I am eligible for retirement at 56. Help- Please!


Michelle,

I'm so sorry I didn't learn of this post until years later. The comments you have been receiving are malicious and misleading. There is a turf war out there for your retirement dollar. Mutual fund companies versus insurance companies. Mutual fund companies would have you believe that the evil insurance companies are the villains. But I would ask you to google or youtube a 60 Minutes segment called "401k Fallout." What you'll discover in this segment is that the mutal fund companies are every bit the crooks they would have you believe the insurance companies are. They gripe about surrender charges, yet they won't disclose the fees that they charge. Often times they deliberately mislead you, the consumer. I don't want to ruin the segment for you, but please do check it out. You will see that these companies will charge you an annual undisclosed, non-surrender fee.

So let's talk about the surrender charges. Insurance companies, as long as we are not talking about variable annuities, will make the following deal with you. They promise not to lose your money and will guarantee your contributions and interest gained from loss. What does that mean to you? You put money in and you get every penny back. They share in the growth. LSW offers equity indexed annuities which means that they link the growth of your account to a market, typically the S&P 500. I am a former teacher with LAUSD and when I sit down with people I show them my own LSW account that I contributed to while I was teaching. What they see is that in 2007 I earned around 6.5% on my account. In 2008 and 2009 when everybody was losing, my account stayed safe. I didn't earn much, but I didn't lose anything either. THE ONLY WAY A COMPANY CAN GUARANTEE YOU THAT YOUR MONEY WILL BE SAFE, AND NOT CHARGE YOU ANNUAL FEES, IS IF YOU ALLOW THEM TO HOLD ONTO IT FOR A PERIOD OF TIME... WHICH YOU CHOOSE. In most cases, the surrender fee is a non-issue because your goal is to maintain and grow the account over time so that it will provide you with a lifetime of income. The surrender charge gradually goes to zero over a period of 7 to 15 years, and if your agent is doing the right thing by you, he/she will match the period to your needs.

Let's do the math. You put your money in an LSW annuity with a 14% surrender charge that goes down 1% every year. You have $20,000 dollars in it. You hold onto it for even 5 years. That surrender charge has gone down to 9%. In the mean time, let's say conservatively you have made an additional $5000 over that 5 year period. That brings your account to $25,000. That means if you were silly enough to move all of your money, you would lose less than $2,500 for doing that. Meanwhile you haven't lost any of your money to volatility in 5 years and and the company hasn't taken any "non-surrender fee." But if you are smart, you will leave it there for as long as you possibly can and won't get sucked into the pie in the sky sales practices or the misleading banter. By the way, the alternative is to allow a company to charge you around 2% (or more) per year to manage your money. If you do the math, that's about $400+ per year, totalling around $2,000 to $2,500 over 5 years anyway... and you didn't even have to surrender it to have the privilege of paying that out. And those annual fees stay with you whether you have the account for 1 year or 40.

One last thing. Don't be mislead with the notion that you would earn a lot more with a different account. I've seen plenty. I don't believe I have seen one that has performed much better than 6 to 10% in any one year. And when they lose, guess what, it all goes back. If you're going to play the risk game, you have to be making serious advances to be able to weather the inevitable down turns. Ask around. Ask people who are not biased if they have noticed a substantial enough gain in the up times to off-set the losses in the down times. Most haven't.

#8 sschullo

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Posted 17 March 2010 - 07:58 AM

Trouble,
Your post is a typical sale pitch and misleading. You have NO idea how investments work and how they work over long periods of time.
I will be taking your post to the defined contributions oversight committee meeting as an example of what is being told and sold to many of our hard working LAUSD employees.
BTW, I am not the only one who says this that annuities, especially indexed, are inappropriate, wrong and a ripoff, for a 403b: http://allfinancialm...exed-annuities/.
Thank goodness the OP is long gone.

#9 Scottyd

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Posted 17 March 2010 - 11:09 PM

QUOTE(troublebruin @ Mar 17 2010, 02:26 AM) View Post

QUOTE(Michelle55 @ Nov 1 2006, 12:34 AM) View Post

I am really confused. I have been talking to an agent from LSW concerning a 403b annuity. She says there are no hidden fees. You put your money in you are credited on your anniversary. The cap is 8% and low is 3%. I am thinking about investing 200 in this and 200 in a Roth IRA through a different company. What are your thoughts. If you get out early you pay anywhere from 14% until 0% after 16 years. I am only 34 and will be teaching for at least 20 more years. I am eligible for retirement at 56. Help- Please!


Michelle,

I'm so sorry I didn't learn of this post until years later. The comments you have been receiving are malicious and misleading. There is a turf war out there for your retirement dollar. Mutual fund companies versus insurance companies. Mutual fund companies would have you believe that the evil insurance companies are the villains. But I would ask you to google or youtube a 60 Minutes segment called "401k Fallout." What you'll discover in this segment is that the mutal fund companies are every bit the crooks they would have you believe the insurance companies are. They gripe about surrender charges, yet they won't disclose the fees that they charge. Often times they deliberately mislead you, the consumer. I don't want to ruin the segment for you, but please do check it out. You will see that these companies will charge you an annual undisclosed, non-surrender fee.

So let's talk about the surrender charges. Insurance companies, as long as we are not talking about variable annuities, will make the following deal with you. They promise not to lose your money and will guarantee your contributions and interest gained from loss. What does that mean to you? You put money in and you get every penny back. They share in the growth. LSW offers equity indexed annuities which means that they link the growth of your account to a market, typically the S&P 500. I am a former teacher with LAUSD and when I sit down with people I show them my own LSW account that I contributed to while I was teaching. What they see is that in 2007 I earned around 6.5% on my account. In 2008 and 2009 when everybody was losing, my account stayed safe. I didn't earn much, but I didn't lose anything either. THE ONLY WAY A COMPANY CAN GUARANTEE YOU THAT YOUR MONEY WILL BE SAFE, AND NOT CHARGE YOU ANNUAL FEES, IS IF YOU ALLOW THEM TO HOLD ONTO IT FOR A PERIOD OF TIME... WHICH YOU CHOOSE. In most cases, the surrender fee is a non-issue because your goal is to maintain and grow the account over time so that it will provide you with a lifetime of income. The surrender charge gradually goes to zero over a period of 7 to 15 years, and if your agent is doing the right thing by you, he/she will match the period to your needs.

Let's do the math. You put your money in an LSW annuity with a 14% surrender charge that goes down 1% every year. You have $20,000 dollars in it. You hold onto it for even 5 years. That surrender charge has gone down to 9%. In the mean time, let's say conservatively you have made an additional $5000 over that 5 year period. That brings your account to $25,000. That means if you were silly enough to move all of your money, you would lose less than $2,500 for doing that. Meanwhile you haven't lost any of your money to volatility in 5 years and and the company hasn't taken any "non-surrender fee." But if you are smart, you will leave it there for as long as you possibly can and won't get sucked into the pie in the sky sales practices or the misleading banter. By the way, the alternative is to allow a company to charge you around 2% (or more) per year to manage your money. If you do the math, that's about $400+ per year, totalling around $2,000 to $2,500 over 5 years anyway... and you didn't even have to surrender it to have the privilege of paying that out. And those annual fees stay with you whether you have the account for 1 year or 40.

One last thing. Don't be mislead with the notion that you would earn a lot more with a different account. I've seen plenty. I don't believe I have seen one that has performed much better than 6 to 10% in any one year. And when they lose, guess what, it all goes back. If you're going to play the risk game, you have to be making serious advances to be able to weather the inevitable down turns. Ask around. Ask people who are not biased if they have noticed a substantial enough gain in the up times to off-set the losses in the down times. Most haven't.


Amazing, someone trying to justify a 14% surrender charge. Then comparing an Equity Indexed Annuity to an investment in the stock market as opposed to a straight fixed annuity or something comparable. Unbelievable.

ScottyD


#10 troublebruin

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Posted 18 March 2010 - 11:42 AM

QUOTE(sschullo @ Mar 17 2010, 07:58 AM) View Post

Trouble,
Your post is a typical sale pitch and misleading. You have NO idea how investments work and how they work over long periods of time.
I will be taking your post to the defined contributions oversight committee meeting as an example of what is being told and sold to many of our hard working LAUSD employees.
BTW, I am not the only one who says this that annuities, especially indexed, are inappropriate, wrong and a ripoff, for a 403b: http://allfinancialm...exed-annuities/.
Thank goodness the OP is long gone.


Easy for people to say they know something but then not articulate anything. Glib answers are more sales pitchy than anything. Why not respond with some real meat. And tell me what is so inaccurate about what I posted.

QUOTE(Scottyd @ Mar 17 2010, 11:09 PM) View Post

QUOTE(troublebruin @ Mar 17 2010, 02:26 AM) View Post

QUOTE(Michelle55 @ Nov 1 2006, 12:34 AM) View Post

I am really confused. I have been talking to an agent from LSW concerning a 403b annuity. She says there are no hidden fees. You put your money in you are credited on your anniversary. The cap is 8% and low is 3%. I am thinking about investing 200 in this and 200 in a Roth IRA through a different company. What are your thoughts. If you get out early you pay anywhere from 14% until 0% after 16 years. I am only 34 and will be teaching for at least 20 more years. I am eligible for retirement at 56. Help- Please!


Michelle,

I'm so sorry I didn't learn of this post until years later. The comments you have been receiving are malicious and misleading. There is a turf war out there for your retirement dollar. Mutual fund companies versus insurance companies. Mutual fund companies would have you believe that the evil insurance companies are the villains. But I would ask you to google or youtube a 60 Minutes segment called "401k Fallout." What you'll discover in this segment is that the mutal fund companies are every bit the crooks they would have you believe the insurance companies are. They gripe about surrender charges, yet they won't disclose the fees that they charge. Often times they deliberately mislead you, the consumer. I don't want to ruin the segment for you, but please do check it out. You will see that these companies will charge you an annual undisclosed, non-surrender fee.

So let's talk about the surrender charges. Insurance companies, as long as we are not talking about variable annuities, will make the following deal with you. They promise not to lose your money and will guarantee your contributions and interest gained from loss. What does that mean to you? You put money in and you get every penny back. They share in the growth. LSW offers equity indexed annuities which means that they link the growth of your account to a market, typically the S&P 500. I am a former teacher with LAUSD and when I sit down with people I show them my own LSW account that I contributed to while I was teaching. What they see is that in 2007 I earned around 6.5% on my account. In 2008 and 2009 when everybody was losing, my account stayed safe. I didn't earn much, but I didn't lose anything either. THE ONLY WAY A COMPANY CAN GUARANTEE YOU THAT YOUR MONEY WILL BE SAFE, AND NOT CHARGE YOU ANNUAL FEES, IS IF YOU ALLOW THEM TO HOLD ONTO IT FOR A PERIOD OF TIME... WHICH YOU CHOOSE. In most cases, the surrender fee is a non-issue because your goal is to maintain and grow the account over time so that it will provide you with a lifetime of income. The surrender charge gradually goes to zero over a period of 7 to 15 years, and if your agent is doing the right thing by you, he/she will match the period to your needs.

Let's do the math. You put your money in an LSW annuity with a 14% surrender charge that goes down 1% every year. You have $20,000 dollars in it. You hold onto it for even 5 years. That surrender charge has gone down to 9%. In the mean time, let's say conservatively you have made an additional $5000 over that 5 year period. That brings your account to $25,000. That means if you were silly enough to move all of your money, you would lose less than $2,500 for doing that. Meanwhile you haven't lost any of your money to volatility in 5 years and and the company hasn't taken any "non-surrender fee." But if you are smart, you will leave it there for as long as you possibly can and won't get sucked into the pie in the sky sales practices or the misleading banter. By the way, the alternative is to allow a company to charge you around 2% (or more) per year to manage your money. If you do the math, that's about $400+ per year, totalling around $2,000 to $2,500 over 5 years anyway... and you didn't even have to surrender it to have the privilege of paying that out. And those annual fees stay with you whether you have the account for 1 year or 40.

One last thing. Don't be mislead with the notion that you would earn a lot more with a different account. I've seen plenty. I don't believe I have seen one that has performed much better than 6 to 10% in any one year. And when they lose, guess what, it all goes back. If you're going to play the risk game, you have to be making serious advances to be able to weather the inevitable down turns. Ask around. Ask people who are not biased if they have noticed a substantial enough gain in the up times to off-set the losses in the down times. Most haven't.


Amazing, someone trying to justify a 14% surrender charge. Then comparing an Equity Indexed Annuity to an investment in the stock market as opposed to a straight fixed annuity or something comparable. Unbelievable.

ScottyD


A straight fixed annuity has surrender charges equal to or more than an EIA. Obviously you don't have a clue.

#11 Scottyd

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Posted 18 March 2010 - 02:37 PM

Fixed Annuities may have surrender charges shorter, longer or the same length as an Equity Index Annuity (which is just a fixed annuity with a different crediting method). I'm not the one who compared EIA's to stock investments, which is an apples and oranges comparison. You want to go toe to toe, lets go, bring your best arguement in favor of EIA's (and of course evidence). Telling someone that they wouldn't have lost money in a stock crash in an EIA is a diversion from the fact that the EIA is not invested in the stock market (of course a stock market crash could have an adverse affect on an EIA as it could put an enormous amount of pressure on the issuer) and should not be compared as such.

You've brought nothing of value - you're the one selling - you prove yourself.

ScottyD

#12 cindy1

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Posted 25 March 2010 - 05:44 PM

QUOTE(Sierra @ Nov 1 2006, 09:15 AM) View Post

STAY AWAY FROM COMMISSIONED SALESPEOPLE...AND FOLLOW THE NO-LOAD ROUTE TO FINANCIAL SECURITY!




I have many clients who took the "no-load" approach; and was paying twice the expense fees of those that have an up front cost. Not worth it in the long run.


#13 Scottyd

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Posted 25 March 2010 - 06:17 PM

QUOTE(cindy1 @ Mar 25 2010, 05:44 PM) View Post

QUOTE(Sierra @ Nov 1 2006, 09:15 AM) View Post

STAY AWAY FROM COMMISSIONED SALESPEOPLE...AND FOLLOW THE NO-LOAD ROUTE TO FINANCIAL SECURITY!




I have many clients who took the "no-load" approach; and was paying twice the expense fees of those that have an up front cost. Not worth it in the long run.


OK Cindy, you're right, its better to pay loads - real convincing.

ScottyD

#14 Groundswell

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Posted 25 March 2010 - 06:57 PM

I think that Cindy was trying to state that, over time, buying A shares and paying a load up front is less expensive than buying C shares and paying higher annual expenses - year after year. If I recall correctly, the crossover point is about 6-7 years.

What Cindy is not considering is that Educators have the option of investing in no-load, low fee funds and, therefore, skipping the front-end load of A shares as well as the higher annual expenses associated with C shares.

In my humble opinion this whole thing gets set up by the average school employee's desire for a risk free investment. They want something that will always go up and never go down. This leads them right into the hands of the fixed annuity salesman.

The few that come to this site and are told they should be investing in passive index funds might get intimidated by the process and that too can lead them right back to the FIA salesman who says "I know, the stock market is a scary place...how 'bout stock market returns without the risk" and the employee feels like they found a solution.

So, "if" my hypothesis is correct. Let's help these school employees out right here right now.

Let's tell these school employees that are looking for a risk free investment, something that will never go down and always go up what they should consider instead of a fixed annuity or fixed index annuity.

#15 sschullo

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Posted 25 March 2010 - 07:49 PM

Very strange thread. The OP is long gone.
Cindy, of course, some no load mutual funds have very high ERs. Isn't that how you get paid, 12b1 fees, revenue sharing?
Steve