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Herbert

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Everything posted by Herbert

  1. Sierra; I resisted responding to your comments about annuities because I saw them as purely negative. However, I am going to assume that you are seriously asking me to reply to the things you have said. I cant get to all of them today, but let me respond to some of your comments: Service; the first rule of service is: "know your customer", which includes, but not limited to, understanding goals, risk tolerance, financial security, family and/ work issues. I would tend to disagree that Product Suitability is the first step in service, knowledge of the client is first. In fact, knowledge of the client can lead to refusing the sell to the client or referring the client to another provider. Annuitization: this contract benefit is disclosed in discussion and in writing by way of company provided Disclosure forms and brochures. Annuitization is rarely used in tradtional annutities, but is required in "two tier annuties"in order to receive the full value of the annuity. (Thank goodness "two tiers" are few and far between) Annuitization is usually ignored in the pricing of traditional, fixed annuties as it is rarely used. You are correct that annuitization requires returning the contract and receiving a series of checks. The relevant fact of annuitization, though, is that the arrangement can not be modified once begun. It is this unchangeable feature that makes annuitization unattractive to many annuity purchasers. Tax Qualified Plan and Annuities: the correct caution on using annuities in tax qualieifed plans is that there is no additional tax benefit to using annuities for tax qualified plans, not cost. This is all I can get to today. Let me get to you in a couple of days and I will comment on M/E fees. ps: You got me on that Stable Fund thing. Dont know what that is; I am not licensed to sell/discuss it
  2. Sierra; it is tiresome to deal with someone who cant see that there just might be another point of view. It is always displeasing to deal with someone who presumes he or she knows eveything about everyone. You truly dont like insurance agents, the products they sell, and, most surprisingly, you truly dont like the people that buy the products. There is no middle ground, or common ground, to discuss 403b issues with you. So, discussion is pointless. I do know this; you hurt your own case by taking so extreme a position. The teacher that visits this site has just been called ignorant. Just been told he doesnt have a clue. Too bad. He wont be back. And, that's the last I will say about this.
  3. Sierra; Is your position that all people that buy annuity products are ignorant and dont have a clue? Do you really believe that? Really?.....
  4. Hi Steve; ".....and no contact for the rest of the teacher's career." This is a servicing problem. This is where the agent is completely wrong. This is where he is most vulnerable, because the client doesnt hear from him, this is where the client does not see value in what he bought, and the fees he paid for the product. This is, also, exactly what insurance companies tell agents NOT TO DO. This is where complaints are born. This is where agents find out just how good their E & O coverage is. The other side of the coin is there as well; when an agent sells a product AND services his clients, the clients are happy. There is a cost to the product, the client understands that. But, when serviced, the client sees value in what he has paid for. But, without the service, a cheap product costs too much. Consider the hundreds of thousands of teachers that have purchased insurance products. If the level of dis-satisfaction is as a high as others here believe, the insurance industry would be awash in class action law suits. They are not. Therefore, the level of service, and satisfaction with that service, must be sufficient. I bring this up because, I fear, that focusing on product and investment advice, the forum may be missing the larger driving issue--service. That being said, I hope you have a good and relaxing weekend. For me, I have to find a way of dealing with the heat. Best to you.
  5. There is another point that is routinely missed here; investment performance is not predictable (OK, unless your are talking about fixed annuity accounts), but service is predictable and expected by the client. Service is the reason that the client works with an agent/rep. This is the reason why people use full-service brokerage houses. They expect and hope for a fair rate of return based on the product they purchase. However, they will DEMAND service. There is an important fact that Sierra brought up- that investments are to become more conservative as the client ages. Therefore, in his view, fire the full rep and do it yourself. If product were the ONLY issue, then Sierra is absolutely correct. But product is not the only issue. The other one is service. That is why client stays with the rep. And, this is why they leave. Look at the dissatisfied-with-agent-do-it-yourselfers that are at this site. They left because the agent did not take care of their needs. That is a service issue. Casting the argument in terms of only investment and investment advice is to miss the point entirely on why the client chooses to work with an agent or rep. But, if the client does not need the service, he should be able to invest as he wishes. He is knowledgable to handle his own account, and is does not need assistance. This is great for him or her. Herb, the Self Serving (hats off to Sierra)
  6. Sierra; I think that's great about NY teachers. Just because I am agent does not mean that I can't see and appreciate another point of view. I understand that there are many people that dont need my services and people that do. Just as there are people that go to Fidelity and people that want to work with Merrill Lynch. The most important thing is that the individual's needs are met. What say you, Sierra?
  7. You have it the nail on the head; that people that want one option (just high cost or just low cost) are not looking out for the best interests of the teachers. It is important to admit something that some people here resist; that there is more than one type of participant. there are at least two-people that can go-it-alone and those that want to work with a rep. Educators know that there are different types of intelligences, and different learning styles. The same goes for saving for retirement; there are different types. To be critical of one style is to fail to appreciate the the situation another person comes from and the goals they may set for themselves.
  8. Mark: there are problems to be sure with what is provided by insurance companies to the 403b market. We all know the "usual suspects" Though I am an agent, I am aware of the limitations of the insurance companies. But my point is this: the companies are there ALREADY and they are not going to leave. The question is: how to improve the service, the product and advice that supports the efforts of the insurance companies. Many on this forum take the postion that the insurance companies are all bad, and arent worth anything. This is wrong.
  9. This is a good thread. I find the comments realistic: the small investor is not going to be served by the advisor. So, maybe its time to stop beating up on insurance companies. They are doing the work that the fee-advisor does not. And, they are doing the work now.
  10. Herbert

    Irs Rules

    Sierra; as I re-read this, what comes to mind is this: it sounds like the company is attempting to distance itself from the agent. It seems to be saying that the company sells products, but, if advice is given to the client by the agent, the company sees that as "incidental" to its core business. Thats how I read it. How do you? Also, these disclosures can be very different from state to state. Is this from NY? Also, is this found on the application or a specific product? Herb
  11. Herbert

    Irs Rules

    Sierra; wow, that's pretty clear. I havent seen one like that before but that is pretty direct.
  12. Herbert

    Irs Rules

    Sierra; I havent seen that disclosure, what does it say?
  13. Herbert

    Irs Rules

    App; Okeydokey. (This is why I enjoy chatting with you; we can disagree without being disagreeable) Herb
  14. Herbert

    Irs Rules

    My point is that the client can and should expect the best level of service from their advisor, be that an commission guy or for-fee guy. I dont know, in general terms, who is good out in the market. The issue is not that one is better than the other; they are both supposed to be good at what they do. If there is dissatisfaction, it is incumbent upon the client to make sure the advisor performs as advertised. If that means filing complaints, writing the GA, or calling the homeoffice (ask for Compliance), this is good. I believe that the root cause of problems with the 403B plan is a lack of accountabilty, top to bottom. This is why, in opinion, that PCG got as far down the road as it did before anyone knew about the internal problems. This is why inapproprate products are sold in the market place. And, this is why the level of customer service is poor. For me, I am glad that the changes in the regs are coming. At least, under them, someone will be responsible. As friend of mine in the business described it; "right now, its like the Wild Wild West.."
  15. Herbert

    Irs Rules

    AP: It comes down to what the client believes the agent or for-fee advisor is providing. There is no actual difference between the two professions. It comes down to what the client believes. If the client believes that the person they are talking to IS providing retirement information that the client can rely on, and does rely on; then that person is an advisior. Specifically, that person is the client's advisor. Trying to draw distinctions between the professionals based on compensation is to define a difference that doesnt exist. Both professions provide information that the client relies on. I am concerned that making that kind of distinction in a public forum may give people the incorrect impression that only one of the professions is a "real" profession, and that does a disservice to the agent that does a good job. Also, statements like that can create the impression that the for-fee guys are called to a higher standard. The standard is the same. Hold them both to it. That's the small point I was trying to make. Hope you are having a good day, AP Herb
  16. Herbert

    Irs Rules

    AP: I would disagree one very important point: if the sales person is presenting himself as knowledgable about the 403B plan, if he is selling products to be used in the plan, and if he is in "the business" ; then he is a financial advisor. That being said, if the client is not happy with the level of service, then file a complaint against the agent. I have said the before, and I believe it deeply. If the client feels his needs are not met, file a complaint with the insurance commissioner, the insurance company, and/ or broker dealer. I believe the problem is NOT how the agent is compensated. There are good agents and poor agents who are paid by commission. Just as there are good and bad for-fee advisors. The issue is not the compensation. The issue, in my view, is accountabilty. Herb
  17. Mark; I am sure you know that TPA's are moving from record keeping and remittance to more fiduciary work. Do you want to work the fiduciary side of the TPA street? With the 403b changes that are coming, I am guessing that many 403b plan sponsors are going to be looking for that role to be assumed by the TPA. In our work with non-profits and private schools, we push them to get together with an ERISA skilled attorney to get to speed on the coming revisions, then, we encourage (STRONGLY) then to work with a TPA on the record keeping and fiduciary side. Works well. Herb
  18. Hi Mark: We havent met before, but, "hello". I work on the 403B market, on the vendor side. I think you have a good idea that would be helpful to the individual participant, and, especially, the plan sponsor. You mentioned PCG. I know that situation well. What a shock. Our state is still trying to figure out how to get past that issue. Best wishes, Herb
  19. AP: I am glad that you got the information, but that is the problem; that figure is not in the article. In fact, the rebuttal appears to state the opposite of what the article says, though it makes a vague referrance to the NEA getting a small fee from the insurance company. Herbert Hussey
  20. AP; there is a huge rebuttal in the NEA's response; Under Facts About Fees' the article states that the NEA receives no income from the endoresement. This statement is a direct refutation of the LA Times article whichs states that NEA received nearly 50M from insurers. It is possible that one statement is correct, and one is false. It is possible that both statements are correct. What are the facts here? Herbert Hussey
  21. Thank you. I have a retty good idea on what forms I need to fill out so Vanguard could get the funds. I will contact M of A, but my question seems to be, should I be more afraid of fees or the fact this vendor would switch my funds into variable annuities? One more monkey wrench, the organization just changed its name, and a revised plan agreement is going through the pipeline. I just talked with the plan administrator with the organization, and she said, "call Mutual of America, they'll know about surrender fees and transferring funds." So it looks like I have to call... I cant answer the question about fees; my partner is securities licensed, I am life licensed. Strongly suggest you research this issue with M of A and Vanguard. Each annuity is a contract, and the company and their reps are the only ones qualfied to interpret the contract. The administrators comment make sense; as M of A is acting as the vendor, and would understand the plan your organization has put in place. Be sure to ask about how the matching works for taxation and vesting purposes. Best of luck, Herbert Hussey
  22. So my account rep at Mutual of America will help transfer my money from his company to another? Instead of taking the time to ask my company whether or not they'd offer a no-load alternative, I'm going to pop some popcorn, make a long-distance call to my rep four states away, put it on speakerphone and ask him to transfer that money out. I'll let you know what sage advice his voice mail says... Jackrabbit: we posted at the same time, but, your idea of contacting M of A first, is quite good. M of A would keep information on the type of plan that you have, and can describe what your options are in terms of moving the funds. They can go far in telling you about your plan. Now, please know that you, if you do move funds, you will have to contact the receiving company and have them send you paperwork to start the process. You must send the paper work back to the receiving company, and they would, in turn, contact M of A. But, we are getting ahead of ourselves here; first see "what the lay of the land" is. Best Regards, Herbert Hussey
  23. Jackrabbit: First, lets you and I stay away from the whole "agent vs. non-agent" argument that is always found here,and let's focus on your question. Unless I am wrong, this would matter most to you, am I correct? There isnt enough here to answer completely, but let ask some questions: 1. Is your plan subject to ERISA? If so, there is a plan document that governs the plan, and sets up rules on when, how and where you can move your funds. Please ask your employer if there is a document that governs the plan. 2. Why are you concerned about American Mutual? You dont need to answer this question on this site, but it is helpful to you, if you are clear on what your issues are with the company. Please consider contacting American Mutual and running your concerns by them. If there is no local rep, please contact the company directly. 3. One more question for the employer; how does the match work? Do the two accounts have to be kept separate for tax purposes (some states work like that), when are you vested in the match (ERSIA isseu): just make sure you get the answers before you make a decision. I hope this helps, and let me know how it works out for you. Take care, Herbert Hussey
  24. Herbert

    Galic

    Goodness, what's next? The Gallic Notes?
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