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403bannuitysalesman

403b Annuity Salesman Perspective

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Hello all,

I am a 403b annuity sales representative and am in agreement there needs to be massive changes in the way 403b annuities/custodial accounts are sold to non-for-profit employees. In the schools, teachers have no clue what they are being sold to them by us, as we explain it like a 401k for teachers (which is half-truth). We are told  to dumb it down and explain it like in the most elementary terms possible.  Most teachers don't even know what they have when they sign up for it (call it a 401b or something like that).  Fees and surrender charges are rarely mentioned and when they are, the teachers look at you like a deer in the headlights.  Employees are under the impression the 403b provider has been vetted by the school and endorsed by the administration, however, many in the administration don't even know the difference between a ROTH and a Traditional IRA, let alone what to endorse when picking the right retirement vehicle.  I have been told by administrators not to mention fees and expenses to staff because some can't even balance a checkbook, let alone understand what I am trying to explain. 

It can be like a kid at Christmas for the annuity salesman in the schools. Where else can you walk the halls, knock on doors, introduce yourself, and get an appointment all at the same time.. You can tell the teacher anything and there is little accountability.    We call ourselves advisors, even though we are working as brokers selling commissions and no one knows the difference.  Teachers open their whole financial portfolio to people who call themselves "advisors", who they just happened to meet, in a teacher's lounge the week before.  Annuity salesman compete with other companies for rollovers and rarely explain the consequences of moving the money to a new contract. I have seen individuals move their money to three different annuities in 4 years and pay thousands in surrender charges two or three times, chasing a better return shown by the newest 403b salesman (and these where administrators by the way).

To the 403b salesman, it is all about enrollments and rollovers.  Rollovers are where the big money is and the way to get that big pot of money moved to you is to show better returns than the current annuity company.  One of the easiest ways to get them to move the money is by showing all the small cap returns of the last year and showing what the current client is missing in this current bull market.  Another way is to show the weaknessof the current client's 403b. This has been presented by some salesmen by showing the quarterly returns as the annual returns (many teachers don't know how to read their statement) and to be critical of their current fund line up.  This is how they get the teacher to move immediately most of the time.  They don't realize they can just change the fund line up and you don't have to take out a new contract.  Some teachers have two or three annuity contracts at one time and like to  see which one performs best.

Broker/dealers of some of these insurance companies approve some of the craziest rollover requests .  I have seen rollovers approved by a company going from a lower cost annuity to a higher cost annuity AND the teacher paying surrender charges to make this switch and this be their second or third rollover in 5 years (chasing small-cap returns shown to them).

Many of the annuity salesman I work with are young and right out of college   Some I think are using this as a stepping stone and don't realize or care of the financial consequences of who they might be hurting with their recommendations. 

I would be reticent of anyone I met in the teacher's lounge giving out financial advice...this is just my opinion of course from working in this field everyday..

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403b Annuity Salesman

True confessions!!

You haven't told us anything  that we didn't already know about the 403b industry,but I have never heard it stated with such clarity and candor before from someone in the industry. Most  403b salesman who visit here and those I have confronted face to face get very defensive when confronted with some of the statements you yourself have made. For that I commend you. Your examples ring true because I have had some of these techniques used on me . I fell for the small cap technique and regretted the move  and yes I was never told about expense ratios or surrender fees when I signed on the dotted line.It was all for free!! I was also "begged" by salesman to roll over a pot of money despite the  negative consequences  of doing so . Now I know why.

I don't think teachers are any less informed than the general public is when it comes to investing and retirement saving. Its sad that school administrations are complicit in this deceptive behavior and would demean the very people they should be working to support. Isn't it sad that Administrators themselves think teachers are stupid and unable to grasp the concepts of successful investing.Yes we do need more financial literacy in our communities but we also need the financial industry to find a model of distribution that isn't so dishonest. Why can't you make a living selling an honest product at a reasonable cost? 

My question to you is do you try and rise above all this deception when dealing with teachers by being transparent or do you fall in line and go with the dishonest flow, lining your pockets and hurting poor teachers who are trying to get a head in life.????How can you live with yourself doing this to others? Just because you are getting paid to present this deception doesn't make it right.

Tony

P.S You are right about rollovers. Rollovers aren't just big money for advisors.The big money for teachers is rolling out of these high fee plans and into low cost index funds through Vanguard, Fidelity, Aspire and others. Ha Ha.

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14 hours ago, 403bannuitysalesman said:

Employees are under the impression the 403b provider has been vetted by the school and endorsed by the administration

The employees are correct in believing vendors have been "vetted"...they're just incorrect in believing that the vetting process is in any way rigorous, ethical, or legitimate.

Here in Florida there is something called the "Model Plan". It is a collection of handpicked 403b/457b vendors selected by the state. It literally comes with something called the "Seal of Approval", which according to them means every vendor was, "vetted to ensure they provide high-quality, low-cost supplementary investment options — guaranteeing top value for all public school employees in Florida." Literally the first "Selection Criteria" listed is, "expense charges." Therefore the state has "vetted" these vendors.

Here in Florida each district gets to handpick the 403b/457b vendors their employees are allowed to use (surprise, the vendors from the "Model Plan" are often used). That means the district, the school board, the retirement services department, and so forth are all standing behind these selections as "vetted."

Here in Florida administrators have a large degree of autonomy in their schools. They alone decide which, if any, vendors are allowed on campus to sell their products. So anybody on campus has the implicit consent/endorsement of administration.

So yeah, teachers rightfully believe vendors are "vetted" because the state, district, and school have all signed off on it.

1 hour ago, tony said:

Its sad that school administrations are complicit in this deceptive behavior and would demean the very people they should be working to support.

Believe me, I would love to see the world in terms of "good guys" and "bad guys"...especially in the context of 403b/457b vendors. However, I don't think we can assume administrators are complicit in deceptive behavior...I believe a mixture of inattention, ignorance, and incompetence are the more likely culprits here.

In our culture there is a tendency to believe that the people who earn more money or have more education are smarter or possess better decision making skills...and in that context it would be reasonable to conclude that administrators are complicit for not protecting the teachers. However, in my anecdotal experience administrators have arguably been less knowledgeable and lose even more money to vendors than the teachers do. I personally believe the less you earn, the more experience forces you to learn how to manage your money. I basically grew up poor and as an adult I now know a lot of people that are on the lower end of rich and believe me the poor people would be shocked at how foolish the rich are with their money.

I'm not even sure how many of the sales reps are "bad guys". It wouldn't surprise me at all if a huge percentage of them were incredibly ignorant, received minimal training, were brainwashed with false and misleading information, and just parrot whatever their company tells them to say/do. To some degree every problem we face boils down to a lack of education/knowledge and I don't think this is any different.

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ED,

Administrators are somewhat complicit because of their own financial ignorance.  If you were self employed and a business owner with employees would you allow an anything goes benefits package without first totally understanding what you are giving to your employees? I have also had administrators /principals bring in their "buddies " to make presentations to the faculty hawking some very questionable products. I know the 403b landscape is varied but don't believe for a moment that all administrators are innocent bystanders in this deception.Also there are administrators who actually sell these plans themselves to their employees. Hard to believe its true but some do get away with this. 

This reminds me of one of the sleaziest attempts at getting teachers to sign up for an annuity. A yellow very official  looking postcard was placed in our box. It had the school division name on it. Then it said something like this " Your school system and school board has just approved a 403b option for all teachers to save for retirement. Please call the number below to take advantage of this offer". I brought this post card to the attention of administrators who did not have the card removed from teachers mailboxes and didn't see the big deal. Basically they had nothing to do with it but they allowed this deception to go on so yes they are complicit.

Just to add, the outfit  ( I called that number)using this yellow card technique had a very high fee structure even higher than what insurance annuities charge. Its lowest fund had a 1.75% expense ratio.

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I personally believe the less you earn, the more experience forces you to learn how to manage your money. I basically grew up poor and as an adult I now know a lot of people that are on the lower end of rich and believe me the poor people would be shocked at how foolish the rich are with their money.

I'm not even sure how many of the sales reps are "bad guys". It wouldn't surprise me at all if a huge percentage of them were incredibly ignorant, received minimal training, were brainwashed with false and misleading information, and just parrot whatever their company tells them to say/do. To some degree every problem we face boils down to a lack of education/knowledge and I don't think this is any different.

Totally agree!!  Well stated
 
  •  

 

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You're absolutely right, administrators have a responsibility to every employee at their school (arguably at any school) and they're failing to live up to that responsibility. Some are failing for innocent reasons, while others are failing for more sinister reasons. People have called me a pessimist my entire life, but I truly believe more administers fall into the former category than the latter.

I'd also add that ignorance isn't shameful so long as you're willing to learn and change when new information presents itself. I've repeatedly voiced my frustration that too many teachers and administrators fail this test with regard to 403b/457b plans. If not for these failings, we could solve this problem ourselves, in spite of institutions operating against us.

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 I truly believe more administers fall into the former category than the latter.

I agree with this too!! You are not pessimistic. You are realistic.

 

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lol, that's exactly what I say with amusement and it is always met with a shrug.

I hope the original poster replies. I'm quite interested to know exactly what they're selling, how they confront what appears to be a moral dilemma for them, and generally what their perspective is on this whole thing.

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I wish he would reply.  It'd be nice to pick his brain some.  I'm impressed that he took the time to post at all!

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I agree with Tony that 403bannuitysalesman’s post doesn’t tell us anything we didn’t already know. I would like to thank  him for describing the Wild West K-14 403b scene from the inside. I doubt he would have posted if he didn’t think doing so might help change the scene. 

We are dealing with a 403b system with many different factors that can be and usually are conflicted. The sales reps, the insurance and finance companies the sales reps work for, the district HR office, the district’s elected governing board, the TPA, the unions both local and national, the state legislature, the IRS and DoL and Congress. And of course most teachers are not bothering to educate themselves on the basics of what they are buying. 

How can we make use of 403bannuitysalesman’s post? It looks like a powerful educational tool to me!

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We've talked about all this before, how these guys are taught sales techniques and insider tactics that work in getting people to part with their money. Not much different than how car salesmen are trained to sell cars. At least with a car salesman you get a car. I won't say what happens to you when you buy an annuity.

Please Mr Salesmen, tell us more of what you know!!

 

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 I have been told by administrators not to mention fees and expenses to staff because some can't even balance a checkbook, let alone understand what I am trying to explain. 

This statement really gets me. Why would an Administrator say such a thing and display so little  faith in his/her  employees? What if teachers felt this way about their students.  Doesn't make me feel very good about the state of affairs in education.Still it is true the insurance companies want things to sound complex and not simple.

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