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jebjebitz

Advisors related to district employees

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4 hours ago, jebjebitz said:

 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?  

 

jebjebitz, are you sure NJ is considering an annuity to replace the traditional pension? The trend seems to be to move to some form of defined contribution plan (the DCP), often part pension and part defined contribution. Of course the DCP would be  like an ERISA governed 401k, and requires the employee to assume responsibility for level of investment risk and amount of contribution. My state of WA now has this type of plan.

I think it's possible that teachers might benefit from this type of plan. It's flexible and you would hope that it might stimulate teachers to take an interest in investing for their retirement?? John Bogle doesn't believe in pensions and prefers more portable DCP. Hmmm. 

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jebjebitz, this really is a black and white issue. High cost annuities are always bad and I support you in doing everything you can to kill the sale of any such product.

There are three types of annuity sales reps. The first is entirely ignorant. The second is a total shark that embraces the immorality. The third is somebody we’ve heard from recently who attempts to justify their immorality.

...but at the end of the day, all three affect teachers in the same way. All three exploít teachers and severely damage their retirement prospects. The world would be better off if there were a bunch of jebjebitz’s running around and forcing these financial predators into new careers.

You’re looking for nuance and extenuating circumstances, but I have none to offer.

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Nicely and concisely put Ed.   Pardon the meme everyone but I just couldn't resist. This thread brought back horror stories from my past dealings with these annuity pushers. 

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8 hours ago, krow36 said:

jebjebitz, are you sure NJ is considering an annuity to replace the traditional pension? The trend seems to be to move to some form of defined contribution plan (the DCP), often part pension and part defined contribution. Of course the DCP would be  like an ERISA governed 401k, and requires the employee to assume responsibility for level of investment risk and amount of contribution. My state of WA now has this type of plan.

I think it's possible that teachers might benefit from this type of plan. It's flexible and you would hope that it might stimulate teachers to take an interest in investing for their retirement?? John Bogle doesn't believe in pensions and prefers more portable DCP. Hmmm. 

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.  

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7 hours ago, EdLaFave said:

jebjebitz, this really is a black and white issue. High cost annuities are always bad and I support you in doing everything you can to kill the sale of any such product.

There are three types of annuity sales reps. The first is entirely ignorant. The second is a total shark that embraces the immorality. The third is somebody we’ve heard from recently who attempts to justify their immorality.

...but at the end of the day, all three affect teachers in the same way. All three exploít teachers and severely damage their retirement prospects. The world would be better off if there were a bunch of jebjebitz’s running around and forcing these financial predators into new careers.

You’re looking for nuance and extenuating circumstances, but I have none to offer.

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.

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The 403b industry is adapting though.  They are coming out with their own 403b-7 now, which is actually more expensive than the annuity product they are selling.  They either place you in loaded funds or charge a yearly 1.25% wrap fee.   Unlike annuity products, however, 403b-7 applicants have to pay the TPA fee out of their contract, which can range from $35 to $60 a year, in addition to the contract fee on these products.  So be careful about saying the 403b-7 is always better than a 403b-1 annuity, because in some instances, it is actually the lower cost product.

The only good option is the self-directed 403b-7.  Everything else is a rip off in my opinion.

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403b Annuitysaleman

You seem to get it in terms of the damage these investment vehicles do. I don't think you are a troll. But why do you continue to work in a position that challenges your ethics? It's one thing to come on here and bare your soul but if you are collecting a pay check doing the things you think are morally wrong how do you continue on? 

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MnGopher and Tony,

Books and hundreds of articles have been written about the appropriateness of an annuity. Don't confuse the accumulation stage and the distribution stage when discussing the appropriateness of an annuity. Annuities in the accumulation stage are NOT an investment, only a contract with an insurance company. The company takes your money and gives you a pathetic return that will not keep pace with inflation, and you have to pay ordinary income taxes (not capital gains). You will lose money over time. When the stock market crashes the return of 2% or 3% goes to 0.00% in most annuity contracts.

Again this information did NOT originate with me. I called my pension plan and asked them why they don't use an annuity, and they said the same thing we say here, too expensive, low returns, etc. I doubt if any endowment, pension plan, foundation, and bank invest in annuities. It is sold to scared people who are radically risk-averse by an extremely aggressive sales force who are VERY GOOD at what they do. 

Nobody that comes on this board and discusses investments has the kind of radical risk adverse as the millions of people who know very little about investing. 

One last thing about annuities, they are similar to renting an apartment, condo or a house, etc. Renting is NOT an investment, OWNING your house or condo IS! 

Distribution phase: Once again we teachers do not need an annuity in the distribution phase in retirement either because we have a pension. The only place an annuity, which can be purchased by TIAA and Vanguard, by the way, is with the millions of people in the private sector that does not have a pension. But that retirement purchase is after you money is invested in properly balanced stock and bond portfolio with genuine investments. 

Steve

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14 hours ago, tony said:

How I feel about Annuity selling so called  "financial advisors". 41271537_1926949270677630_6741616452916215808_n.jpg

I love it. And EVERYBODY is also calling themselves Fiduciaries! It's the latest trend, but it is also losing status because of the fees even genuine fiduciaries charge. 

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2 hours ago, sschullo said:

Don't confuse the accumulation stage and the distribution stage when discussing the appropriateness of an annuity. Annuities in the accumulation stage are NOT an investment,

Yup, I totally get that and understand the difference. When I talk annuities and show disdain toward annuity salespeople,  I am talking about the ones being sold to teachers in the accumulation stage for no good reason and at high cost. Beyond annuities, I don't much care for any investment/retirement product being sold by insurance companies. 

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