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jebjebitz

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  1. jebjebitz

    Help deciphering fees

    Awesome! Thank you! Could you break down how you got to the $70,925? I’m awful at math. This was more familiar to me. When the rep says, “you won’t see this this in your return,” he’s being purposefully misleading and deceptive. He’s right, I probably won’t see the effects of a 1% expense ratio on a statement from his company but, as you’ve pointed out here, the expense ratios could cost a Teacher over $100,000. It’s no surprise to contributors on this forum that the salesman would twist the facts in this way but, when I explained this to a teacher who asked me my opinion, she was surprised to learn that the expense ratios would effect her return so dramatically. Unfortunately, she had recently signed a contract with this guy. She had no idea about the 5.75% finance charge on the transfer or the 5.75% on each contribution. She was only made aware of the fact that it’s mutual funds vs. annuities and that she’d be saving money by switching from AXA. She also has to pay a surrender fee to AXA. It makes me really upset to see decent people placed in these situations where they’re not fully aware of the real cost of these investments.
  2. jebjebitz

    Help deciphering fees

    So, there’s a rep (Forster’s Financial) in my district who has been pretty successful at scooping up teachers looking to leave AXA. To find out more about what he’s selling, I pretended to be a teacher looking to transfer from AXA to Foresters. I just need help using the numbers to point out that this plan is also bad. Here’s what I learned: His pitch started out by pointing out that AXA sells annuities and Foresters uses mutual funds. They charge a 5.75% finance charge to funds being transferred in. There is a 5.75% charge on all contributions. He claims this is great compared to the 1-2% AXA is charging on total funds. The 5.75% gets lowered as your total funds increase. For example, the charge goes to 4.75% one you get to 100,000, down to 0 when/if you get to 1,000,000. I’ve seen Foresters fund options on 403b compare. The expense ratios are up around 1%, some are north of 1%. When I asked him about expense ratios his response was along these lines, “Expense ratios just give you an idea of how much it costs to run a fund. I assure you, you won’t see this in your return.” Anyone able to show how these fees would effect an investment over time? Or, does anyone have a link to a calculator? Thank you.
  3. Great article thank you. Also, I thought you were Tony Isola.
  4. jebjebitz

    457 question

    Great information thank you Krow.
  5. jebjebitz

    457 question

    Thanks Krow. Is the main benefit/difference between 457 and 403 that you have better access to your money in the 457? I know for some, 457 options offer better investment options but, in this case I’d have access to the same funds.
  6. jebjebitz

    457 question

    I recently asked the business administrator at my district about who our 457 provider was. She said that any vendor plan could be used as a 457 plan we just needed to let them know we wanted to invest in a 457 instead of a 403b. Does anyone know if Security Benefit DirectInvest can be used as a 457?
  7. I have a hard time telling people this. I feel like most teachers think that these guys will help them somehow if there’s a market crash? Or, maybe they believe these guys are carefully watching their investments and they’ll swoop in and help them change their investments so they’ll avoid a loss. Like you said, after signing up you never see these guys again. In my case, when I finally had questions about my AXA account it was a different guy then the one who set up my account. My friend has an account with Valic and there have been five different “advisors” since he first opened his account.
  8. The salesmen I’ve talked to recently often say the self direct plans are great but then add,”...if you want to do it all by yourself.” My question is, after the salesmen sign teachers up for these plans, what else do they do for the teacher?
  9. jebjebitz

    Advisors related to district employees

    Thanks Ed. There was a point where I felt bad for possibly getting in the way of this guys business. However, I kept reminding myself that he is in the business of getting teachers into an annuity, so he can realize the highest commission, whether teachers need an annuity or not. I appreciate the responses on here that helped confirm this.
  10. jebjebitz

    Advisors related to district employees

    Hi Krow. Yes you are right. They are considering an alternative along the lines you described, not an annuity. Good to hear you have seen it as a positive thing in your state.(WA) NJ and I think Kentucky are at the bottom when it comes to unfunded pension liabilities.
  11. jebjebitz

    Advisors related to district employees

    Is the annuity always bad? Is there any circumstance where the teacher is better off putting their money in an annuity and guaranteeing some form of income for life. In NJ, pensions are underfunded. There’s talk of moving new hires, and even teachers with five years or less into something other than a traditional pension plan. Would these teachers benefit from a plan like this?
  12. jebjebitz

    Advisors related to district employees

    I started this thread because of an interaction I had with a salesman and my thought process followed a similar pattern as your quote above. i sent an email blast to the teachers in our building as a heads up about this vendor. Basically, the email mentioned that there was one good product ( a self-directed plan) and the other products were confusing, costly and to be avoided at all costs. Well the salesman got word of it and asked me why I had sent it. He was upset because as he put it, “these people know me and my wife. I can save them a lot of money. No one has come to see me.” on one hand, I believe to some degree, this guy genuinely feels he will help teachers invest toward a retirement goal. And, for some people, they may not invest in anything without being put in contact through the networks this guy has in place due to his wife and her friends. He seems like a genuine person and, I’m sure there are teachers who would benefit from the peace of mind they would feel investing with someone they”know and trust”. Finally, like you said, everyone has a right to make a living, who am I to get in the way of it. on the other hand, I recognize his first move is to steer teachers toward the expensive annuity when I know for a fact his company offers better, cheaper products. I would rather not see fellow employees blindly sign off on this product because this guys wife is a teacher in the district. I’m torn on the whole thing but my gut tells me teachers should at least know what they’re signing up for.
  13. Just wanted to get some thoughts on this. My district has at least two vendors that have sales reps that are related to teachers in our district. I know this because they referenced these relations in their sales pitch to me. In both cases, the reps are married to a teacher in our district and, in both cases, the reps use this information when talking about why teachers should transfer assets/invest with their company. Example: “Look, I want to help teachers, my wife is a teacher here in town, my kids went to these schools.” In at least one of these conversations, the rep followed this with a pitch on an annuity that returns 8% and has fees as low as 1.5%!! And, he added, if you have assets above 100,000, expenses could go even lower, .90%!! Just wanted to hear your thoughts on this. Do you think on some level these guys think they are doing right by teachers in the district? Also, does anyone know if there are laws against this?
  14. So the rebalance process is their way of buying stocks at a lower price? So, in a scenario like the 2008 crash, would investors consistently rebalance every day the market goes down? Or do they wait a few days and try to rebalance when they think it’s at its lowest? I know this is describing market timing to a certain degree but, I honestly don’t know how people react in these situations.
  15. Ok. But if the FIRE people follow the age formula,(assume it’s a 30 year old allocated at 70 stock 30 bond) and the market crashes, they could lose a substantial chunk of money. They don’t have an income to put towards purchasing more stocks at bargain prices. So what do they do?
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