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403b Annuity Salesman Perspective

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4 hours ago, KFord said:

I show all prospects Aspire & FTJ ( some have access to TIAA-Cref)  platforms and tell them they can go direct or hire me to manage the investment models. No sales pitch necessary

make the change

Quick aside: My employer uses FTJ. I know FTJ has a .3% fee to FTJ itself, but there's a 'mandatory' .5% 'advisor fee' even though I use self-directed brokerage. Is this normal? All I did was push the guy off the annuity pitch and say I wanted to select my own investments. I listened to the podcast episode about Aspire, which mentions a .15% fee to Aspire, and the ability to choose investments without an advisor. Do you know if something comparable is even available at FTJ? 

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1 hour ago, tony said:

I can understand why Ed would feel a certain level of disgust

Sure I'm disgusted by people getting ripped off, especially people who don't have much money to start with and especially when those people are performing a foundational service for our country.

I'm not disgusted by the OP and obviously he can keep posting...most people seem to like it. I'm just saying I've read tons of troll posts over the years and I've known people who troll message boards. If somebody wanted to successfully troll a message board their posts would sound very much like the OP.

A 'good' troll isn't going to take an outrageous position that is hostile or diametrically opposed to the board because the last thing they want is to be written off as an unreachable jerk and then subsequently ignored. No, their goal is to pick some kind of conflicted middle ground that'll suck people in and illicit an earnest, taxing, and upsetting conversation; a conversation that the troll doesn't take seriously at all (and thinks you're a fool for taking seriously). The troll will never specify a clear or obvious reason for their posts (despite being asked) because they don't want it to end, they just want it to bounce around from one "trigger" to the next. They make sure to just stop by every now and again and drop a new post that'll get a rise out of people and keep things going. Ideally the troll can get the message board to argue among themselves so they don't have to keep posting and can just sit back and watch the show.

...that may not be what is happening, but it is certainly the vibe I got.

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Yeah Tony, I know that most teachers don’t even contribute to a 403b or 457. And that the vast majority of those who do, contribute to an annuity! If a bunch of county school districts in Missouri can get together and work out 403b and 457 plans that are fiduciary based, very low-cost custodial accounts, there’s hope. And they are continuing to add county school districts to the consortium. Check out the link! 

As long as a district has multiple vendors, even if a Fidelity or Vanguard is included, I don’t think the vast majority of teachers will be end up with a low-cost custodial account which is our long term goal I hope. The states that have laws that prevent a district moving to a single-vendor 403b (CA, WA, TX etc.) will eventually see the light.

Tony you say it’s not happening, but I think it IS happening! All those state based 457 plans are evidence that the message is getting through and action has been taken to give K-14 employees a fiduciary-based plan. 

There are school districts with excellent fiduciary-based 403b plans—they do exist. So it’s possible, and I think we need to publicize the districts where it has happened. Let's emphasize the victories as well as pointing out the outrages. I only know of a few but there are no doubt more. (Chicago, NYC, Montgomery County, MD, and those MO county districts).
 

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48 minutes ago, Ozark1990 said:

Quick aside: My employer uses FTJ. I know FTJ has a .3% fee to FTJ itself, but there's a 'mandatory' .5% 'advisor fee' even though I use self-directed brokerage. Is this normal? All I did was push the guy off the annuity pitch and say I wanted to select my own investments. I listened to the podcast episode about Aspire, which mentions a .15% fee to Aspire, and the ability to choose investments without an advisor. Do you know if something comparable is even available at FTJ? 

there is no mandatory advisor fee. You need to call FTJ and take the advisor off if they add no value.

here are the two ways:

https://ftjfundchoice.com/strategist-directed

https://ftjfundchoice.com/advisor-directed

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Krow

I do not disagree  with you, its great to see things happen the way you say. Progress is being made but the statistics sadly show otherwise, that there is only minor change overall. Take  index funds for instance. We get excited that more people now own them,  invest in them, and that they have become a force, but they still trail investments in managed funds some with very high fees. Once within an insurance company 's greedy grasp, even index funds get corrupted with much higher expense ratios. When I say its not happening I say that after a 30 year career in education and much personal effort ,  I see only minor improvements in small circles. Overall  the education system has failed to stand up and stop the sales of these annuity products and still allows them to be sold dishonestly in their schools.

Why?

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The only was a fiduciary or fee-based FA is going to be allowed in the school is if he or she is invited, like @Ken Ford and Aspire advisor's. Otherwise they don't get in and they don't gain trust. The only ones who go into schools are the FA who are like 403bannuitysalesman and others like him. And they are going to be the ones gaining trust simply because their faces are 'known'.

The right advisor is not going to get face time without a ton of marketing and networking, unlike the commissioned FA's. 

Ken, how much work did it take on your end to get in to present to the 3 schools? It takes a movement to do that.

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12 hours ago, MoeMoney said:

The only was a fiduciary or fee-based FA is going to be allowed in the school is if he or she is invited, like @Ken Ford and Aspire advisor's. Otherwise they don't get in and they don't gain trust. The only ones who go into schools are the FA who are like 403bannuitysalesman and others like him. And they are going to be the ones gaining trust simply because their faces are 'known'.

The right advisor is not going to get face time without a ton of marketing and networking, unlike the commissioned FA's. 

Ken, how much work did it take on your end to get in to present to the 3 schools? It takes a movement to do that.

In one word  "frustrating"  trying to get through to teacher union presidents, district businesses office &  superintendents is one of the hardest task I've taking on in my 23 year career.

But I'm beginning to make progress.  I think the key is discussing the Model disclosure form

Please read this letter & give me some feedback: Why is there no school districts that apply this process if that was the goal?

https://www.sec.gov/divisions/investment/noaction/2015/american-retirement-sssociation-021815-482-incoming.pdf

 

 

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Let's not highjack this important thread. Ken your letter deserves a thread of its own. It's not easy reading but I'm working at it (although it's way above my pay grade). 

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On 1/30/2018 at 10:02 PM, Ken F said:

there is no mandatory advisor fee. You need to call FTJ and take the advisor off if they add no value.

Gotcha. Called a bit ago; they said I need to go through the adviser and have him sign off on a fee reduction. FTJ said they cannot have an account without an adviser (perhaps he acts as plan admin? Not sure...).

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On 1/27/2018 at 6:21 PM, 403bannuitysalesman said:

Personally, I don't like taking advantage of people.  I see so many individuals listening to the wrong individuals when it comes to investing their hard earned money.  There is no screening as to who can come into the teacher's lounge.  Personally, I think 403b sales agents should be banned from school districts.  I think vendor fairs should go the way of the dinosaur.  I think 403b sales agents should work on salary and not commission.   I find it amazing that there are agents that have worked 40 plus years in the financial industry and have not helped one educator start a mutual fund or low cost retirement platform - only annuities. Annuities are only for a specific type of person...there is no way that 80% of teachers under 30 need a 403b pre-tax annuity instead of a mutual fund ROTH IRA or 403b-7 custodial account.  But that is basically the only product that an insurance agent pushes because of the huge commissions they generate. 

 

I think many of us would agree with you on most of the above. However AXA, MetLife, Security Benefit are not going to hire salespersons on salary to sell custodial accounts and Roth IRAs are they? Don't you think a single-vendor 403b is the only fix for the current K-14 403b mess? 

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I am not a troll and I have not sold an annuity in an unethical way intentionally.  I always tell my client there maybe better alternatives to this product and that this is a high cost vehicle that locks their money up for a long time.  Unfortunately, many don't seem to care as they are told to get an annuity by the teacher down the hall and that it was the best thing ever.   I am just vetting my frustration at how unethical this practice can be and how some of these 403b reps are presenting this product. Some of these teachers are only putting $12.50 a check and a lot of it going to pay the fees/expenses.   There were over 1500  403b Variable annuity contracts written by just one company in my small area last year and there are more than 4 companies that sell the 403b variable annuity..  The average fee/expenses on these contracts were around 2.2%, $30 admin fee, and a 12-year surrender charge. I don' t know if they are being trained this way or are just willing to say anything for a dollar.  Maybe they want to make a trip, get a bonus, or are afraid of losing their benefits. I don't know how long you can go on misrepresenting a product (lying about expenses, guaranteeing returns, calling it a mutual fund, etc) before it catches up with you. 

I have approached superintendents about putting in a low cost, self-directed 403b-7 alternative, but after talking to their principals, they say there is no interest.  The principals don't even know the difference between an annuity and custodial account, so I don't understand how they know enough info to say there is no interest. So they keep on promoting the 2.2%, $30 admin fee, 12-year surrender charge, 403b-1.

We have been told not to come into certain school districts, but some reps totally ignore whatever the district says and still sneak in (they work by their own rules).  Many have been kicked out numerous times, but come back again and again. What can the districts do, as some of these companies are the largest providers in the district, and even though they have been told countless times not to come on the school grounds, they completely ignore the district's rules. 

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I think eliminating the surrender charges on 403b-1 annuities would be a positive first step.  If the teacher becomes better informed or leaves the district, they can move their money at will. I also think that single-fee vendor should not be self-directed.  The reason is most teachers will not sign up for anything unless they have face-to-face contact.  They want their hand held.  I think the single vendor should be fee-based, not commission-based,and the wrap-fee/advisory fee should be around 20 basis points all in.  They should use institutional shares rather than retail shares and there should be over 100 funds available out of 36k at any given time to choose from.  I have heard this is not an unheard of request if there are enough assets transferred over.

This is just my opinion of course and there are better ideas out there .

 

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I have approached superintendents about putting in a low cost, self-directed 403b-7 alternative, but after talking to their principals, they say there is no interest.

WE have the solutions here at 403bwise but no-one is listening. Its so aggravating. There is a ton of resources on this site for schools and teachers to make better decisions. 

The districts should establish a no solicitation policy and then post it in every school entrance and inform principals. Agents that keep coming despite the rules should be escorted out of the building by the school resource officer.  If they persist have them arrested.That will get the message out real quick.They can even claim its for school safety reasons. After all these people are strangers. Who is to say a person with evil intentions couldn't use a salesman's guise to do evil?  Any contact should be off school grounds unless a particular single payer non insurance, low fee option is endorsed by the school system. Or at least streamline your choices to a few good ones. No school  needs 24 or more vendors.  Less is more!! I can see your point that an advisor then could be assigned to help teachers set up a portfolio . I've been in education to know a lot of what they do  or don't do   make no sense. So I am not holding my breath.  I still feel it is school administration responsibility to prevent these sharks from invading the school system by allowing them to so easily be added to their provider list and then allow them to be in -school sharks.. School system and their school boards are failing their teachers just as much as teachers are failing themselves by their inattention to financial details. 

I need to understand better the psychology of why so many people make irrational decisions  or no decisions with their money and are incapable of saving. $12.50 a month? Really?I have known teachers who made the same amount of money that I made, with the same years of service, and identical family size who retired basically broke outside of their pensions.  I am a mile ahead of most of my colleagues. Why? what are they doing with their money? These teachers are not living in expensive homes or driving expensive cars or taking lavish vacations. I don't see any lavish spending period . I just see teachers who are broke!!   I'm no genius so it must come down to personal initiative and letting compounding work for you over time and having a better vision of your future. I guess if you don't have a plan you will lose ground to inflation. fees, and general inattention.

So we need to blame Insurance companies for taking advantage, school systems for not doing right by their employees, and teachers failing to learn what they need to learn so as not be be taken. Can't blame us here that is for sure!!  Sorry for sounding like a broken record. We all are talking in circles here.

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42 minutes ago, tony said:

what are they doing with their money?

This question has fascinated me for a long time because, assuming average growth and assuming the upcoming recession doesn't hit just yet, we're on course to, in two years, hit a million by 35 years old. We're "pound-foolish" in the sense that we bought a 500k house when a 180k house (or renting) would have done just fine. We're 'penny-foolish' in the sense that we literally eat out every single day. We go on vacations. So we aren't living an austere life filled with deprivation.

There are a lot of families that make as much and sometimes significantly more than us, but they talk about maxing out their 401k as if it were an unachievable fantasy. They talk about the possibility of early retirement as if it were a pure delusion. There is never an answer as to where all the money goes and I simply can't imagine an answer that would explain the disparity in results...it doesn't seem like it should be possible.

This of course is widespread...you see it on a teacher's income, I see it on an engineer's income, and I think we all read about it on the income level of the solidly rich. So I've always been fascinated by where people spend their money and to what degree (if any) it brings them happiness.

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Ed

You are the poster child for success at your age.  You are damn smart for your age.At your age I had maybe a fourth of what you have if that. At  your age I did not have the knowledge of investing you already have. I was still buying annuities and falling into all the traps of 403b investing. The difference for me was that I learned from my mistakes and found the truth here at 403b wise.  So its never too late to correct and move in the right direction. I tell my son though who is 23 years old that the sooner you start the less you will need to save. So many folks don't get that. He didn't get that either until I explained the magic of compounding to him, the rule of 72 and why costs matter.

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