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JudyS

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Posts posted by JudyS


  1. Tony, congratulations on your appointment to this important position and your efforts to ensure your colleagues get a fair deal. I found Loeper's book called "Stop the 401k Ripoff" to be excellent, and he now has a newer book called "Stop the Retirement Ripoff". This gives good advice and methods for discovering the hidden fees. Available at Amazon.

     

    For many years I figured the reps, advisors, etc. were liars when I wanted to know about fees. I was wrong. All they know if what their companies teach them, and 99% of them have NO IDEA of what the fees are. Really, they don't. Unfortunately, that means you have to do the homework... hopefully you can get a colleague involved with you to help!

     

    Judy S.


  2. OMG! I never understood the deleterious effect of women in financial circles!! This is certainly an eye-opener and leads us to question the very idea that women should be allowed in the workforce at all, especially at the upper end of administrative (in banking) circles. It's good to see that a man finally understand us and will take appropriate measures to ensure that women return to their proper place -- behind aprons!

     

    Oh, I do love Michael Lewis. Don't tell him so, tho.

     

    JudyS


  3. Oh, Dan! You are so fortunate! I got to meet my hero Mr. Bogle at a Boglehead convention a couple of years ago (Schullo didn't come -- I wanted to meet him, too!), and my p######o with him is one of my most treasured possessions. To me it's like having the honor of meeting Ghandi, Lincoln, or Mother Teresa; I couldn't prioritize the 4 of them!!

     

    JudyS


  4. Steve --

    Sure, I understand that ERISA has some valuable provisions that some might see as "bendable" to 403(b)s and 457s, but the issue for me is that fact that there are attempts to HIDE the fees, to make them nearly invisible, or present them as "only to be expected", leaving the participant ignorant of the notion that accounts can be had WITHOUT most of those fees. In fact, I had one VERY sincere (snicker here, please)salesshark imply that I should be pleased, that these wrap fees were usually only available on accounts for wealthy folk.

     

    It's the deception, the hiding, the unavailability of information that seems a reasonable basis for a lawsuit. To legally naive little old me, anyway.

     

    JudyS


  5. All --

     

    There's got to be something here that I don't understand. Why do these attorneys keep bringing these suits in a manner suggesting that 403bs fall under ERISA when they clearly do NOT? What am I missing? The NEA lawsuit was dismissed at least partly for the same reason.

     

    This website specifically addresses several unique audiences. Why not attorneys? Can't there be a workshop of something that would bring together ideas to increase the likilihood of not losing these suits and not having them dismissed? This is so SAD!

     

    JudyS


  6. All --

     

    There's got to be something here that I don't understand. WHy do these attorneys keep bringing these suits in a manner suggesting that 403bs fall under ERISA when they clearly do NOT? What am I missing? The NEA lawsuit was dismissed at least partly for the same reason.

     

    This website specifically addresses several unique audiences. WHy not attorneys? Can't there be a workshop of something that would bring together ideas to increase the likilihood of not losing these suits and not having them dismissed? This is so SAD!

     

    JudyS


  7. Tony --

     

    Hooray!! This looks like actual progress in the 401(k) fees issue!!!! Any sensible person who has a 401(k) should go ahead and make input to the SEC requesting that the investment firms be denied their requests for exemption. However, if you have a 401(k) and think you know all the fees you are being charged, I do have a lovely bridge in Brooklyn to sell you!

     

    JudyS


  8. Tony

     

     

    Tony --

    Long term care is so complicated; you have to assess your risks and then just jump in -- or not. In our family, 3 of our 4 parents have landed in a nursing home... we're not sure what's going to happen with the 4th. But my FIL was in a nursing facility for about 8 years. Almost no LTC policy would cover that length of stay (I THINK), so a person like this would end up on Medicaid anyway. My father got his LTC policy when he was older and alread ill, so it covered just a year. He used it all and still ended up on Medicare for the last few days of his life. And my mom was as I told you before. That was a confusing case because she was hospitalized several times, each followed by nursing home for a while (which is covered by Medicare for a short period of time) and once -- or was it twice? -- in assisted living. The records needed by Genworth were huge, and they couldn't really figure it all out.

     

    My husband and I have decided to put our heads in the sand. Maybe not wise, but we won't know 'til the end.

     

    Best wishes as you try to figure this out...

     

    JudyS


  9. Yep, the crash of 2008 and the bailouts have changed everything. I like to think that investing in index portfolio is the strategy to take the risk that you need for growth while simultaneously, you bypass the managers, Wall Street, big banks and brokerage firms. Last I heard both TIAA CREF and Vanguard have not had any bailout dollars cause they make money the old fashion way, they earn it the slow methodical way of average market returns over decades, NOT the high flying hedge funds and short term speculatory "beat the market" active managing crap.

    I also like the think that the trading has slowed down because so many of us are in index funds and by definition we hardly trade at all. YES!

    Steve

     

    Tony and Steve --

    I believe that the no-load fund families are a different breed of cat. I can't recall any of them receiving bailout $$, being the subject of investigative reporting, or being held up for examination. None have been involved in high profile tell-all books like Lehmann Bros, Citi, Morgan Stanley and the rest of the criminal element. They run on a different ethical code,it seems to me.

     

    But if I am mistaken, please tell me so... wou;nd't want to be hanging onto an erroneous idea...........JudyS


  10. Tony -- Long time no see!

     

    My mother had Genworth LTC insurance, and as in so many cases, the insurance paid out FAR less than she paid in. They were difficult to work with, to say the least, and in the end they had to pay us an extra percentage because they took so long to pay the claim; this is the law in Maine. ANyway, when you send stuff in for the claim, you send it to North (or is it South?) Carolina, it gets scanned into their computers (if the staff gets around to it) and then the people y ou talk to, who make decisions, are in CA. They have no access to the original data or a paper file, and that can (and did) make a mess of it all. After dealing with them again and again and again, I wrote a LOVELY letter to the CEO with some BRILLIANT suggestions about some changes that would make things more efficient and user-friendly. All I got was a call from the sales department. Apparently that's as far as the letter got. Not happy7. Would never again do business with this company.

     

    Am I being too vague?

     

    JudyS


  11. Great! So let's see if we can start a movement and have a few OTHER things named after our hero. Like how about a retirement plan (not a Roth, not a 401(k), but a "Bogle", which would require all funds be invested in no-load funds)? Or how about a similarly constructed college savings plan?

     

    Our pets have typically been named after politicians we admired (Hairy Truman, Bella Abzug, Tip-O) but the next ones could be Bogle or Buffet... we'll see.

     

    My husband says we are too old to change our committments, so the next dog that barks a lot might just be named "Biden".

     

    JudyS


  12. Tony and Steve --

     

    Remarkable, isn't it? What type of investment firms seemed to have avoided the scandals in the last year or two? How could you pick a good class of funds? Well, if I have read correctly, I can't think of any no- load fund family (Vanguard, Dodge and COx, Fairholme, Ariel, and many many others) that has been involved in the scandals. Remarkable coincidence.

     

    JudyS


  13.  

    Any taxes assessed on banks will be passed on to consumers. Also Barney Frank admitted that it made no sense to impose a tax on banks to pay for the 120B in outstanding loans to non bank entities- AIG, Fannie Freddie, GM, GMAC and Chrysler.

     

     

     

    I am a bit confudsed, Steve. What article did you want us to see here? It didn't seem to relate to Intruder's comment.

     

    BUT in regard to Intruder's comment, let me posit that there is an alternative; for years and years we have not had any dealings with banks (except those that are inescapable for those of us who have credit cards). We only deal with Credit Unions. It's been a pleasure, I must say.

     

    JudyS


  14. Dear Comrades:

    I was in a building the other day and discovered the local Valuebuilder agent in the staff room putting up sign-up sheets so people could choose a time to talk about their Flex Plans and other available benefits. I can't imagine what else she miight bring into the conversation :{{{{{{{{{{. This agent is pushy and good, very good.

     

    So this brought to mind a question someone recently asked of me. I could not find this information... so does anyone here know which states have the highest #s of Valuebulder clients? Or the highest # of $$ in Valuebuilder?

     

    I will be waiting for any wisdom with baited breath.

     

    JudyS


  15. 40pirate --

    Unless your wife gets a "match" from her employer on her 403b contributions, it would seem most adviseable to go for the Roth. There's nothing wrong with after-tax savings, really, except that you pay some taxes on the gains (make sure you don't put bonds in these at this time of your life).

     

    Given that things change and no one here has been successfully able to predict the future, I have often thought that while it makes sense to distribute your investments among asset classes, it ALSO can make sense to diversify the types of accounts -- 403bs, 401ks, 429s, Roths, taxable accounts and so on... it seems like sooner or later each class has it's advantages.

     

    And I BELIEVE that if she leaves her job she can roll her 403b into an IRA.... that could happen.......

     

    The new laws have made 403bs worse than ever in most cases. Sorry.

     

    JudyS


  16. On Your Own: Investing in An Era of Irrelevant Regulation

     

     

    Speech by Edward Siedle at Sage Advisory Services "Perspectives on the Future" conference, Austin, Texas, September 2009.

     

    Since the 1980s the financial services industry has experienced explosive growth. Over the decades dealing with brokers, money managers and other financial advisers ceased to be limited to the wealthy few. As a result of shifting responsibility for retirement planning onto workers and financial product innovation, virtually all Americans (and foreign investors for that matter) that had accumulated any degree of wealth turned to financial services firms for expert, independent investment advice and investment products.

     

    As banks and boring CDs were left behind, brokerages and registered investment advisers proliferated.

     

    1. For decades, the advice investors got from Wall Street was hardly independent and the products marketed were generally high cost, as well as poor performing. This massive transfer of assets to brokers and money managers was good for them; not so good for investors.

     

    The investigations my firm has undertaken on behalf of institutional investors over the years reveal that when you scrutinize financial products and services and identify conflicts of interest and hidden financial dealings, you can predict poor performance. We've investigated investment consultants; 401k, 403b and 457 defined contribution plans; variable annuities; hedge funds and funds of funds and funds of funds of funds. Our investigations reveal that:

     

    2. The harm to investors that resulted from Wall Street's products and services was both foreseeable and preventable.

     

    Less transparency, greater conflicts, results in poorer performance. This should come as no surprise.

     

    Here's the irony of where we are today:

     

    3. In 2009, investors bailed out the very firms that profited for decades providing conflicted or bad advice to Americans on how to invest.

     

    In 2009 hard-working, financially unsophisticated Americans provided financial assistance to the very same highly compensated, financially sophisticated people they had relied upon for decades for advice!

     

    I would submit that when your trusted financial advisor comes to you to borrow money on the brink of bankruptcy, this should be a wake-up call. It's time to closely review the advice this so-called "expert" been giving you over the years.

     

    Many of the most commonplace products Wall Street firms foisted upon the American public over the decades caused devastation. For many Wall Street professionals, their worst financial troubles may be behind them. They have survived and the money they gambled and lost has been replenished by taxpayers.

     

    4. We can debate whether the government bailout of Wall Street was right or wrong; however, there is no question that there will be no massive bail-out of taxpayers. Taxpayers will carry the scars of the financial industry's excesses and regulatory failures for some time to come. Residential real estate and 401k accounts that have fallen 50% in value will not recover quickly. Any taxpayer recovery will likely take a decade.

     

    For older Americans and the nation's millions of aging Baby Boomers, the situation is grave. Those who can continue to work will do so; some will delay retirement and others may never be able to retire. Those who are sick or can't find work or health insurance may join the ranks of the elderly poor.

     

    5. We have just experienced the cruelest blow or breach of trust dealt a generation since the Great Depression. Again, most of this was foreseeable and preventable.

     

     

    What will happen next?

     

    6. Wall Street will seek to re-invent itself.

     

    You can see it happening already. Wall Street will come up with new products and services to convince investors to hand over their money for "better advice."

     

    One firm has taken out ads saying, "You've re-thought wealth management ... so have we." Of course what's left unsaid is that the firm had it wrong before.

     

    The industry will say, "This time you can trust us" or "This time we'll treat you better-we'll agree to a higher standard now-a fiduciary standard instead of suitability."

     

    Whether Wall Street's new sales pitches will succeed or not, I don't know.

     

    The greatest obstacle Wall Street must overcome is its horrific track record. Investors have been burned and want to see change. Change or the illusion of change is required at this time.

     

    7. Investors want "change." They'll get the "illusion of change."

     

    Some right-wing pundits and financial services insiders are grumbling that the new administration will impose new regulations and come down too hard on Wall Street. That is not about to happen and if you look behind the rhetoric the very opposite seems more likely.

     

    8. Why the SEC has become irrelevant.

     

    In 2006, I was invited by forbes magazine to share my views about why I believed the SEC was on the verge of becoming irrelevant to investors. I opined in the column that in the future investors would have to turn to the private sector for any meaningful protection. I regard the Madoff case, a few years later, as the moment in time when my prediction of SEC irrelevancy was confirmed.

     

    Ironically, this agency founded upon the premise that compelling disclosure is the best means to ensure investor protection, e.g. "sunshine is the best disinfectant," now opposes almost every meaningful effort to enhance disclosure to investors. Now that computers and the internet have accelerated the speed at which information may be provided to investors and the depth of such information, the SEC, siding with industry, has sought to limit the information available to investors to the statutory minimums. For example, 98% of information about the money management industry collected by the SEC is not available to investors.

     

    Leadership at the SEC is a mess. For example, the former head of the brokerage industry's self-regulator, FINRA, is now head of the SEC. Self-regulation is chocked full of inherent conflicts of interest and has proved contrary to investor protection in the brokerage industry.

     

    While it would make a great deal of sense for FINRA to seek to enhance its regulatory credentials by hiring the former head of the SEC, a true regulator, to head-up its operations, it makes no sense for an already discredited SEC to turn over the reins to a conflicted self-regulator. Indeed, FINRA has a history of being sued by the SEC for failing to adequately enforce the securities laws.

     

    At the time of her nomination as Chairman, Schapiro and FINRA were being sued in a class action on behalf of all FINRA members for issuing a misleading proxy statement in connection with the merger of the NASD and NYSE.

     

    My firm is the lead plaintiff in a related case and I can't tell you how ironic it is that I, as a former SEC attorney, am suing Schapiro and FINRA for violating the federal securities laws. When I began my career at the SEC 25 years ago I would never have imagined it.

     

    9. Brokerage industry mandatory arbitration eliminated? Not likely.

     

    The brokerage industry and FINRA wants to see mandatory arbitration remain the rule and you can guess how Schapiro and the SEC will come out on that issue. For decades the brokerage industry has argued that mandatory arbitration is good for investors-so good that, for some reason, it has to be made mandatory. Go figure.

     

    10. Self-regulation of Money Managers? Coming soon.

     

    FINRA will seek to expand into the world of money management as all brokers become investment advisers or subject to the same fiduciary standards. Given that the barriers to entry to the world of money management are far less than the brokerage industry; the ongoing compliance burden is less; and the assets under management compensation scheme is more lucrative, it's hard to imagine that many brokerages will fail to register as money managers in the future. On the other hand, it seems likely that the number of stand-alone brokerages will shrink.

     

    FINRA has long dreamed of becoming the self-regulatory organization for money managers and I think it looks like that dream will likely come true. With its membership dwindling and having lost credibility with investors, FINRA needs to expand or risk losing influence.

     

    11. Why FINRA now supports a fiduciary standard for brokers.

     

    FINRA will lead the effort to make brokers appear as reputable as money managers by lobbying for a watered-down federal fiduciary standard, as opposed to the stricter state fiduciary standards supported by state securities regulators and consumer groups.

     

    When FINRA, an organization that has consistently opposed fiduciary standards for brokers suddenly starts supporting such standards, there's got to be a reason and that reason has nothing to do with what's good for investors and everything to do with what's good for the brokerage industry.

     

     

    Again, having lost credibility with investors and aware of the growing influence of investment advisers that have always been subject to fiduciary standards, FINRA and the brokerage industry have no choice but to embrace change. Will it be change or the "illusion of change?" It will be, must be, for a variety of legal reasons, the illusion of change.

     

    12. State securities regulators offer investors little protection.

     

    Aside from Massachusetts and New York, there are no state securities regulators seeking to follow in Spitzer's footsteps. By that I mean state regulators generally are not interested in challenging the federal regulators to provide the investor protection that is lacking.

     

    I was recently involved with a retirement plan that had a problem the state securities regulator investigated; now the state AG has taken the case away from the state regulator.

     

    We've been asked to contact the SEC to bring the matter to the Commission's attention.

     

    In summary, the state and federal securities regulators have failed to provide investor protection; a private sector firm must be interjected into the process to force a satisfactory outcome.

     

    13. DOL Still AWOL.

     

    The DOL, throughout the disastrous 401ks "experiment" of the past decades, did nothing but enable financial vendors to fleece plan participant by granting prohibited transaction exemption after exemption from the statutory provisions of ERISA, based upon misleading representations by the industry. Conflicts of interest of every variety, lack of adequate disclosure of fees and revenue sharing have all been "blessed."

     

    Recent action by DOL reveals that the new administration still fails to grasp that the agency's purpose is to protect retirement funds, not respond to industry special interests.

     

    Today DOL positions and judicial interpretations of ERISA often prevent plan participants from seeking meaningful redress. In my opinion, 401k plan participants would be better off without the so-called protections offered by ERISA. ERISA has been so narrowly construed (and whatever it fails to specifically address presumed acceptable) that it more of an impediment than a safeguard. State fiduciary standards are far more straight-forward and less compromised.

     

    But if ever there was an indictment of the DOL, it's got to be the demise of 401ks.

     

    In March we issued a 28 page research report entitled, Secrets of the 401k Industry: How Employers and Mutual Fund Advisers Prospered as Workers' Dreams of Retirement Security Evaporated. Our conclusion will sound familiar at this point: the recent 401k meltdown was foreseeable and preventable.

     

    My firm recently drafted a 401k advertisement that read: 401k: That's no retirement plan. Below it read, "With only $10,000 in the median 401k account invested in high cost retail mutual funds earning 5% annually, you'll have less than $50.00 a month in retirement. You and the boss need to talk.

     

     

    14. In conclusion, there will be no meaningful regulatory crackdown.

     

    The very fact that Washington is debating creating new agencies, as opposed to improving leadership at the existing agencies, suggests to me that this is an effort to distract attention and there is no serious intention to fix the problems. We don't need any new agencies or regulations to improve the integrity of the financial markets. All we need is the political conviction to enforce the rules. Therefore any regulatory reforms will change little other than perception.

     

    15. The sales-repair-return cycle.

     

    America is entering into what will be a protracted period of close examination of what went wrong over the past 30 years.

     

    Think in terms of the sales-repair-return cycle. In the past financial product sales was the place to be. That is, selling standardized financial products that held the promise of outstanding returns was where the easy money was to be made. These products almost universally disappointed buyers.

     

    Now we are in a repair-return mode. Some investments can be "tweaked" to improve net performance, such as through lowering fees. What cannot be repaired may be returned under warranty theory, i.e. lawsuits.

     

    16. Today investors go it alone.

     

    It's critical now that investors (and financial services firms for that matter) take the time to understand what went wrong over the past decades. Investors must take matters into their own hands.

     

    The bad news is that regulators, law enforcement and others cannot be relied upon or looked to for guidance. There are too many conflicts, too many secret financial arrangements, too many political compromises involving regulators.

     

    We are living in a new world now, very different from the 1930s or 1940s when our regulatory scheme was created.

     

    The good news is that in the new world order, where information flows freely and quickly, intelligent affluent investors can prosper, i.e. access greater information and resources than regulators could provide-if they wanted to.

     

    Get used to living in this new world where the old rules no longer apply.

     

    17. Public pension investigations of money management wrongdoing are here to stay.

     

    This new scrutiny is as a result of (a) public pension benefits exceeding private pensions; (b) the market melt-down exacerbating underfunding of public pension funds and exposing mismanagement of these funds; © the erosion of taxpayer wealth; (d) state Attorneys General investigations of certain investment industry practices related to these pensions. There is not a single public pension fund in this country which doesn't have some arrangement that should be investigated more fully.

     

    There is only one reason why investigations and negative revelations regarding public pensions have not been commonplace:

     

    The problem has been that there is no one who has legal "standing" to compel an investigation: the participants in these plans have no right to do so because, no matter how poorly the plan is run, the taxpayers are on the hook to pay the benefits. Therefore, the participant has suffered no loss. Taxpayers have no standing because they only have a remote relationship with the plan. The Boards of these funds generally resist for their own reasons. The very fact that public pensions almost never seek an independent review of the integrity of their investment process should tell you something. Therefore it's up to law enforcement and other investigators to tackle the problem. The SEC is not interested in getting involved in thorny public pension matters. DOL doesn't have jurisdiction. Until now law enforcement has been reluctant to pursue these cases. Now that the taxpayer monies have run out and the market will continue to underperform the assumptions the plans operate under, criminal investigations may become more common. So widespread is public pension investment management wrongdoing that the threads law enforcement is pursuing around the country today could yield results for the next 10 years.


  17. Tony --

    This is an interesting article. I have some agreement with his conclusion, but not necessarily the tenets of his argument. We are seeing stocks go up, but most people have not learned a blessed thing about living at a little lower standard relative to their income. We still are losing manufacturing in this country, and you have to in the end make some STUFF in order to keep the economy going. No economy is going to grow on services alone. People are filling the Walmart parking lost buying cheesy stuff made elsewhere, thinking that having LOTS of cheap stuff is better than having pricier STUFF THAT LASTS. How many of these storage units do you think are filled with junk from cheap stores selling poorly made items? Lots, I'd bet.

     

    It's always interesting to me to see people in certain regions of the country that use shopping as a sport and a pasttime. Weird. In fact, sometimes I use a wonderful catalog called Sierratradingpost.com. When you evaluate one of their pieces of clothing, you are asked what activities it's appropriate for and one of the popular choices is "shopping". Now does this make sense? People go and buy things to wear when they go and buy things?

     

    I am anxious about stocks maintaining their ascendancy and I for one think it will be a good long time before we reach the highs we saw a while back. Lucky for you, though, I am usually wrong!!

     

    Good to see you're still at it, Tony! You've become a real hero to so many people... well, not Bogle, but a little bit of a hero at least!!

     

    JudyS


  18. febarnes --

     

    Take all those pages of documentation that you presented to the board, copy them,a nd forward them to the attorney who is advertising for clients.

     

    I actually got involved (peripherally) in one of those large suits because of posting on this board... you never know who's reading this!! I do believe there are some decent people out there fighting the likes of the annuities firms and the Valics of the world.

     

    Go for it... whatcha got to lose?

     

    JudyS

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