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jebjebitz

Advisors related to district employees

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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?

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Hi Jebjebitz,

The annuity industry loves spouses of teachers or teachers themselves who either want to moonlight or start a new "career." Our colleagues are very trusting. There is a built-in trust because our colleagues believe that the former teacher-agent is giving the teachers something for nothing because teachers are kind and giving to their students. Its a bit complicated but you understand what I am trying to say. I know one teacher who is still friends with his annuity sales person even the salesperson suggested investing in racehorses (I KID YOU NOT!).  This teacher's story will be on my blog soon. It is incredible that he is still friends with this agent!

Laws against this? Are you kidding, our states insurance code not only allows this, but supports this behavior whereby agents can SAY ANYTHING because they know teachers will not read the fine print of the contract. And if they do, nobody, even attorneys are hard pressed to understand the legalize anyway. This has been going on for decades and its ALL perfectly legal. 

What you describe happens every day throughout the country. 

Just keep doing what you are doing, perhaps some of your colleagues will see the light. 

Steve

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When I was working I remember three fellow teachers who left teaching to pedal annuities and all those related products some folks did not need like life insurance. All of them returned to teaching after a brief unproductive stint selling these investments which tells us something about how difficult it must be trying to make it working on commission. But, during this time they were very active trying to get teachers to sign up for things that probably were not in the teacher's best interest. While these ex-teachers were nice folks who I liked, I pretty much confronted them in various ways about what they were selling to other teachers. I think they quickly figured out I had their "number" and got very defensive with me.  To be fair, they were young and inexperienced and  they themselves might not even have been aware of the sup-par products they were selling plus unneeded add-ons. They were trying to make a living and support their families . I was just trying to keep them from damaging the lives of teachers who were all too trusting.

I  don't have anything against these folks who sell the products. They too have a right to make a living. The problem I have is the corporate philosphy these insurance companies embrace , the strategies they use, and the sub-par products they are often selling . The fish rots from the head down so the problem starts at the top.  It really has to be up to the teacher to understand investments before they sign up for any retirement savings plan. It would also be nice if the school systems or unions would aid in screening investing options that are available to their teachers but they don't. But then again, they too don't often understand what the insurance companies are doing and have limited financial literacy themselves.  Also ,as you are aware these folks like to create complexity because that way they are "needed" to figure it all out for us.

I think you should do what I did. Communicate with the teachers about the hazards of believing what these guys are saying and pedaling. Arm yourself with the facts and hopefully you will save some of them and get them into the right investments. But be warned, my interference was not often appreciated and often viewed as negative but some will listen. If you can get the right people to listen then you have a chance to change the culture. I would educate the powers that be . Personally, I don't think these  sales folks should be allowed in the schools at all and spouses should not use school time to encourage colleagues to buy into products they themselves do not understand. But, this is America and its the wild West. It is up to us to be as financial saavy   ( in ALL areas related to money)  as we can possibly be and to keep learning. You can't save everybody but there is no excuse to not look after yourself.

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  • Quote

    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?

     
    •  
     
    I guess you can argue that they are helping teachers get started in investing but I still don't like the approach. The school system can keep these folks out of the schools by school board ruling. In our district they can now no longer enter or call a teacher during school hours . After school hours they are allowed in as long as they check in the front office. Also, because of yours truly creating awareness , the annual investment fair held  before each school yearin our district no longer happens. It was a free for all of every insurance annuity company giving teachers free pens and stuff and signing them up for appointments with salespeople who represent their companies.  No Vanguard or Fidelity there of course, just all the insurance companies. It was painful to watch. I once went to a table and faked interest and got myself two free coupons for pizza which I gave to my son. That is no way to sell investments products but eventually the school was full of pens, pencils, pads, calendars littered with their names and phone numbers on it. Made me sick.

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4 minutes ago, tony said:

 

  • I guess you v=can argue that they are helping teachings get started in investing

ABSOLUTELY NOT! It is horrible what these people do to teachers. It is NOT right, not ethical or moral in any way.  The agent walks away with a $1000 to a $4000 commission and that young teacher will pay hideous fees for the rest of their career.  No genuine fiduciary would ever sell a fixed annuity to any age teacher! It is not an appropriate product. 

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I apologize but my web browser Safari works differently than Chrome on this site and I didn't mean to make so many empty posts.  I added to my post above as something went haywire before I could finish.

 

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I agree.  I wish the agents could sell what is best for the teachers and not be hindered by what the company makes them sell.  It is disgraceful.  They should be able to sell quality products to teachers.  My peers always say they are worth that extra 1% because they are CFPs or they are helping them with retirement planning and no one does anything pro-bono.  Most of us though, just set up the teacher with a 2% a year fee product and never talk to them again. 

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14 minutes ago, 403bannuitysalesman said:

Most of us though, just set up the teacher with a 2% a year fee product and never talk to them again. 

That is not Financial Planning and Advising. Anybody could do that. Where does the CFP certification/license come in then? Seems like its a license to steal.

 

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1 hour ago, tony said:

While these ex-teachers were nice folks who I liked, I pretty much confronted them in various ways about what they were selling to other teachers. I think they quickly figured out I had their "number" and got very defensive with me.  To be fair, they were young and inexperienced and  they themselves might not even have been aware of the sup-par products they were selling plus unneeded add-ons. They were trying to make a living and support their families . I was just trying to keep them from damaging the lives of teachers who were all too trusting.

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.

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6 minutes ago, jebjebitz said:

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.

Yeah, I got this crap too from established vendors years ago. Just listen and keep doing the right thing by sharing all choices including the self directed option. You did nothing wrong. Your teachers NEED TO KNOW THEIR OPTIONS! 

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2 hours ago, sschullo said:

Yeah, I got this crap too from established vendors years ago. Just listen and keep doing the right thing by sharing all choices including the self directed option. You did nothing wrong. Your teachers NEED TO KNOW THEIR OPTIONS! 

Agreed. You did nothing wrong. This needs to be a business decision and not a based on a frienship decision.  The only obligation is to yourself and your family when it comes to saving money for future needs.

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3 hours ago, sschullo said:

ABSOLUTELY NOT! It is horrible what these people do to teachers. It is NOT right, not ethical or moral in any way.  The agent walks away with a $1000 to a $4000 commission and that young teacher will pay hideous fees for the rest of their career.  No genuine fiduciary would ever sell a fixed annuity to any age teacher! It is not an appropriate product. 

 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?  

 

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50 minutes 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?  

 

I think they would always benefit more by investing OUTSIDE of an annuity.  In their old age, if they are worried about running out of money, they could always purchase a Single Premium Immediate Annuity (SPIA) and create their own homemade pension from a bucket of cash.  This would only be advisable well after retirement, not during the working years.

 

 

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I agree as others have said that during the accumulation stage while you are working you don't need them and are much better off investing in low cost index funds.  You will come out ahead with out them .

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