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JudyS

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Everything posted by JudyS

  1. Russ -- Yes, teachers might (MIGHT) need advice early on, but there are many sources of such advice. The worst place to get advice, IMHO, is from a salesman who works for an insurance or annuity firm. There are folks out there who give untarnished advice... look around among fee-only advisors or planners for one that suits you. Then pay for the advice. It might hurt a little as the dollar bills ease their way out of your pocket, but it will hurt far more when you don't know how you are paying or how much -- as in loaded funds and fund or families with high expenses. 95% of what you need to know you will find in Bogle's Common Sense On Mutual Funds and Swenson's Unconventional Success, A Fundamental Approach To Personal Investment. Otter's book will provide all the nuts and bolts for 403(b)s as well as the philosophy, too. What a lovely summer you will have, what with all that reading! Judy Schneider
  2. Nice to read this thread, as I have thought about this a good deal. Every once in a while I consider switching to a career in financial services / advice, so your comments are interesting to follow. One comment re: agents / brokers/ salespeople who work with insurance companies delivering "advice" re: 403 (b)s. The basic problem, it seems to me, is the inherent conflict of interest they have (recommend what's "best" for the client vs. what brings in a good commission) means that no matter what, a client cannot be ASSURRED that the advice they receive is truely unbiased. The trust simply cannot be there, and anyone with any degree of a "critical eye" will be uneasy. Another related issue is that the advisors can only tell the client what they know, and these folks are generally ONLY trained and informed by the company for which they work. They simply don't know any more than that most of the time. A story... I always thought that advisors KNEW that no-loads would be the most effective choice (all other things being equal)... but a couple of years ago I got to know quite well a young, handsome and brilliant math teacher. He taught for a couple of years and then decided that his growing family needed more $$ so he changed careers and went to work for one of those investment firms that try for an office in every town. He loved that work, but the hours were so long that the family had $$ but none of his time, so after a year he came back to teaching. We talked about his 403(b) one day, and I brought up the idea that we had a couple of choices that were advantageous, being no-loads. He protested, saying that they get their pay some way (that's the company line he had been taught), but with a little more information, he was surprised, and maybe even shocked. HE JUST PLAIN DIDN"T KNOW ANYTHING AT ALL ABOUT NO-LOADS. I think both he and his wife, a teacher also, changed their vendors. So that's the deal -- the advisors have only the information they have been taught and much of the time they don't even KNOW enough to suggest something not provided by their companies -- even if they wanted to. So a lot of advisors are like mushrooms... they're kept in the dark and fed bullsh__ by their companies. Judy Schneider
  3. Annie -- You have another choice, as well, with even more freedom. YOu can roll your old 403(b) into an IRA, and they you have your choice of ANY fund -- though you surely will be smart enough to go for a no-load family, I am sure. Keep reading... you will learn that expenses are the one thing you really can control, and you should. It isn't rocket science, but you need to do some homework. Some sites were mentioned above. Another one would be at www.bobbrinker.com. Then go to mutual funds and then to expenses... Keep reading... Judy
  4. Hi, Josh, You have been given some good advice by some seasoned investors here... mostly people who have paid their "dues" in this investing business in one way or another. I have one simple thing to add -- we often talk about Vanguard, TIAA-CREF, and Fidelity, but you should know that there are some fine smaller mutual fund companies (families) that are also no-load; it's possible that some of these may be available to you. A disadvantage of the smaller fund families will be that they might not have a broad selection of specific funds from which you may choose. If you're going to do some research, look up some of the smaller companies, too. Fund families like Fairholme, Ariel (this is a really interesting company that I find highly appealing for many reasons), Baron Funds, and Dodge and Cox. By and large these are mutual funds that are bought by thoughtful investors who do research -- not mutual funds with high costs (part of which is sales commissions, usually) that are SOLD to poeple by salesmen. You can find information on line. Try going to Finance.yahoo.com then to "investing", then to "mutual funds" then to "fund screener" and then to "fund calculator". I'm not a techie, but I think that will work. Play with those for a while. You're on the right road. Keep reading, keep learning. You'll not be sorry you did so, because the salesmen might take some of your money, but they can never take away what you have learned. Judy
  5. JudyS

    Irs Rules

    Hi, Joe, Thanks for your support of my response! I would like to point out that Deerhunter and 403bagent have their own reasons for their opinions -- we can only guess. But back in the day, my husband and I had advisors and 403b agents, too. They seemed like nice guys and they seemed to make a fine living. Unfortunately, we didn't. Once we began to study and read, we began to make real money too -- and it ain't rocket science! One of the most cogent statements I ever heard about financial advice is paraphrased here: Unlike any other field of endeavor, in personal finance the free advice is consistently better than the advice you pay for. FREE??? you say! How can that be???? Well, Bob Brinker is free every weekend on the radio. This website is free. The major no-load mutual fund families have TONS of free and fine advice on their websites. And if you want a fine reading list (my family Christmas shops there!) check out the Recommended Reading List at www.bobbrinker.com. Thanks again, Joe Judy
  6. JudyS

    Irs Rules

    Tony -- You have asked good questions, and no one has answered them -- probably because you are wondering about complicated issues. Apparently there is a change coming due to a change in the IRS rulings around 403(b)s. I don't know what they will be other than the districts will have more responsibilities for educational components. Payroll people that I know seem to be shaking in their boots, but my guess is that some of the insurance and annuity folks are feeding their concerns. Not sure, you understand, but it's historically consistent to guess that, I believe. So use your Vanguard now. Get to it. Once you get yourself set up with them, there are some things you can do with an eye to the future. Get involved with your union or bargaining unit. Become a rep locally and for your region. Maybe even at a state level. Ask questions again and again. Become known as someone who has concerns and ideas and maybe some wisdom on these issues and get on appropriate committees that select options. There are many fine ones besides the giant Vanguard, but position yourself such that you will have a voice. And read. Bogle's books and the new (wonderful) tome by Swenson, UNCONVENTIONAL SUCCESS. Keep in mind that even in a worst case scenario for 403(b)s, there will still be other options. IRAs, Roths, your partner's investment options, and so on. Not to worry -- Judy Schneider
  7. AP Teacher -- Thanks for looking at the Security Benefit site and trying to figure out the expenses. I, too, could not establish any sort of a reasonably accurate estimate of what it will cost the next poor who decides that the NEA endorsement should actually mean anything. The expenses in this thing are horrendous... there are MANY, some of which the actual buyer makes himself thinking he's protecting himself, and many more are surreptitious. I would suggest that you might find more honesty and straighforwardness in your local jail than in a conversation with one of these salesmen! Judy
  8. Herbert, NEAMB (a wholly owned subsidiary of NEA) receives $$ from Security Benefit, but NEA itself does not. I think that's the distinction. Judy
  9. Hi, apteacher, Well, there you are! You found a link to the article that I had been asked NOT to put here... and I agree that their arguments are weak, flawed, and indicate a misunderstanding of the issues. For instance, because schools as "decentralized" there's a problem? PuLEEEEEEEZE! Like big companies with 401(k)s aren't?? No, no, no. The difference is that 401(k)s are OFFERED, and 403(b)s (at least as designed by Security Benefit) are SOLD. Big difference. Judy
  10. Hi, Josh, Gee, that Joe is a smart guy! Not surprisingly, then, I agree with everything that he said. But here's another deal. You're 29, and you have lots of important things to do right now (educationally, housing, relationships, building family, getting squared away in your career and so on). You are asking all the right questions about 403(b)s and investing. You will spend many years finding and refining the concepts, so you don't have to have "all the right answers" right now. You can make a good start by visiting with your payroll office for the list of 403(b) vendors, take the list to the library and look them up in Morningstar, and pick a "family" of funds that's no-load. Or go to a fee-only advisor for advice on picking a no-load family; in the end you will pay far less than you will with Edward Jones, Primerica or other investments that offer an advisor to talk to in person. Either way, transfer those $$ you have into a no-load family; once in, you can move around between funds as you refine your allocation and build your portfolio. Then you can relax and your investing education can proceed... it will be an fascinating and mind-expanding trip. And you will meet lots of smart and interesting people along the way -- like Joe! Judy Schneider
  11. I was thrilled with the Kristof article, as well, and the idea that you all were in the trenches behind it tickles me pink! Nice work, Crystal and others! Some of you may be interested to know that I have obtained a copy of NEAMB's response to the Kristof article. This response apparently was sent to state union officials; I asked NEAMB for their permission to reprint it on this site, but they viewed it as an internal document and asked that not be shared in its entirely. I will honor that, but would like to tell you all that their response was, IMHO, very weak and they appear to fail to understand that it's time to take another approach entirely to the idea that teachers (and everyone else in the USA) is becoming more and more responsible for their own retirement savings and planning. If they and others of their ilk had done a better job, we wouldn't be looking forward to the IRS putting it's sticky fingers on the 403(b) problem in another year or two! NEAMB continues to believe that members have indicated a need for financial advice, and that's the cornerstone of their produce thru Security Benefit. They fail (obstinately?) to understand that once teachers and others truely understand the way the financial world works, the need for an advisor tried to the specific investment "product" goes away because those "in the know" can get good, unbiased advice from fee only planners and other sources. Teachers simply don't know any better, much of the time. NEAMB states that the advisors provide advice at a "reasonable and disclosed price". Well, my experience is that I could not get a straight answer from a Valuebuilder agent. And I defy ANYONE to read the prospectus that was sent to me and understand ANYTHING about the expenses!!! Of course, I only have a Masters' Degree and personal finance has only been my passion for about 10 years; perhaps my brain has been addled by the straightforward information from those "silly folk" at Fairholme, Dodge and Cox, Fidelity and Vanguard. Interestingly, their response uses the following terms in what appears to be an interchangeable manner: advisors, brokers, agents, financial planners, sales agents, representatives, and salespeople. May I be so bold as to suggest that the most salient terms for NEAMB products include the word "sales"? We're in trouble, folks. NEAMB still isn't getting it. Can we get Kristof back for another round? In an even bigger newspaper? Judy Schneider I was thrilled with the Kristof article as well, and the idea that you all were in the trenches behind it tickles me pink! Nice work, Crystal and others! Some of you may be interested to know that I have obtained a copy of NEAMB's response to the Kristof article. This response apparently was sent to state union officials; I asked NEAMB for their permission to reprint it on this site, but they viewed it as an internal document and asked that not be shared in its entirely. I will honor that, but would like to tell you all that their response was, IMHO, very weak and they appear to fail to understand that it's time to take another approach entirely to the idea that teachers (and everyone else in the USA) is becoming more and more responsible for their own retirement savings and planning. If they and others of their ilk had done a better job, we wouldn't be looking forward to the IRS putting it's sticky fingers on the 403(b) problem in another year or two! NEAMB continues to believe that members have indicated a need for financial advice, and that's the cornerstone of their produce thru Security Benefit. They fail (obstinately?) to understand that once teachers and others truely understand the way the financial world works, the need for an advisor tried to the specific investment "product" goes away because those "in the know" can get good, unbiased advice from fee only planners and other sources. Teachers simply don't know any better, much of the time. NEAMB states that the advisors provide advice at a "reasonable and disclosed price". Well, my experience is that I could not get a straight answer from a Valuebuilder agent. And I defy ANYONE to read the prospectus that was sent to me and understand ANYTHING about the expenses!!! Of course, I only have a Masters' Degree and personal finance has only been my passion for about 10 years; perhaps my brain has been addled by the straightforward information from those "silly folk" at Fairholme, Dodge and Cox, Fidelity and Vanguard. Interestingly, their response uses the following terms in what appears to be an interchangeable manner: advisors, brokers, agents, financial planners, sales agents, representatives, and salespeople. May I be so bold as to suggest that the most salient terms for NEAMB products include the word "sales". We're in trouble, folks. NEAMB still isn't getting it. Can we get Kristof back for another round? In an even bigger newspaper? Judy Schneider
  12. Hi, Gardner, There is another, easier choice, I believe, unless you have some unrelenting passion for the Roth over the 403(b). If you would be willing to leave your wife's $$ in a 403(b) vehicle, you can go to your payroll office and ask for the ENTIRE list of companies the district allows you to use. Find a no-load company you would be comfortable with (if you don't know a no-load family when you see it, you can go to the library and sit a while with the Morningstar manual and do a little research), give the new company a call and ask for an enrollment package. Once you have completed and submitted that, the new company will contact the old company and automatically, painlessly and without your involvement "suck" the $$ out of the old company into the new company's account. ("Suck" is not the technical term, just in case you were confused by that!) It's easy as pie. Good luck... you will inevitably make a few mistakes along the way, but you are off to a fine start!! Judy Schneider
  13. APTeacher --- Oh, I am so delighted you put this together! Again, we deserve better from NEA and we should demand it. Perhaps the LA TImes article will have some impact back there in Washington, DC. It really is time to evolve!!! Judy S
  14. JudyS

    401k Misery

    . Hi Judy, You and the good educators in Washington are very lucky. We have no such option of adding any company we want in LAUSD and most other districts in California. We are way behind the times here. We have begged, cajoled, yelled and sceamed to get Vanguard added to the list. No way, says LAUSD, unless VG signs the infamous hold harmless agreement. We do have Fidelity, Tiaa-Cref and Nuerburger. The problem we have with the current system is that even if we had Vanguard available, very few people would know about it because of our districts' "mums the word" regarding anything 403b. I get emails all the time from employees who say that they did not know these fine companies were available. Having good choices doesn't automatically mean that employees would know about it. Thats the way it is here in California. Enjoying your posts. Very happy you have joined us. regards, Steve Steve -- Thanks for the welcome. That's amazing that the teachers in LAUSD have so few choices. One has to wonder, though, about the hold harmess agreement. Here in WA, too, school boards, administrations and payroll departments were running scared for a while and trying things like the hold harmless agreements. One has to wonder -- who could be scaring the good folks at school boards, administrations and payroll. Hmmmmmmmmm.... I know there were rumors and workshops where rumors were promulgated for those folks... Hmmmmmmmmm.... suppose it might be some of the insurance firms, fearful of losing their grip? Just a theory, of course. About 7 years ago I switched districts and asked about their 403(b) choices. The payroll clerk handed me the list and I was appalled at the choices -- there were none of the no-load choices I might have wanted. When I questioned her, she admitted there was ANOTHER "secret" list and gave me a copy of that, and there I found Vanguard, The American Century and some others. The school board had been frightened about giving people choices that did not involve an advisor (i.e. loaded funds). For a while I had to pay someone to sign off for me, but more recently there is just a form you sign stating that you understand the risks are yours and you are acting as your own advisor. Truthfully, I am of two minds about teachers using the better choices. So many of them don't care... they don't want to talk about it, they don't think about it, and they don't want to. Many teachers I know will say that they have a 403(b), but they don't know the name of the company they're with. Others do better because they wish to investigate, as least to some degree. Sigh! Judy
  15. JudyS

    401k Misery

    While I remain dissatisfied with the idea that so many teachers are taken advantage of in 403(b)s, in this state we can have any provider added to the list in any district if 5 people ask for it. We have choices, and "good" ones can be added to our list in any district. With a 401(k), however, the employee has very little choice in terms of provider, and as the years pass, the providers fingure out more and more ways to make $$ of the participants. Right now, we are asking why the distributions from one of my husband's fund choices in his 401(k) have never appeared on his statement. It's thousands pf $$. We're quite curious about what happened, since there is no increase in shares and no increase in the share value although we know distributions were made. At least I can have a company to work with that I personally have vetted and can verify their trustworthiness. Judy Schneider
  16. It has been interesting to read this set of posts and then think about the issues I have struggled with to put together my own 403(b) portion of our portfolio. I sounds like some of you are suggesting that the educational entities (school districts) issue some sort of qualifications that advisors must meet. Come on. There are a million "qualifications", some practically meaningless, and we'd be asking someone with NO qualifications to make the decision. (In the end it would come back to the payroll department, at least in any district I have worked with. These are certified employees we would be asking to enact this, with no qualifications of their own to decide upon provider qualifications, even if there were a committee.) I HAVE seen business managers, school boards and payroll departments who were simply at the mercy of insurance companies and their representatives, who fully intended to increase their business by scaring the daylights out of school officials. It worked really well. The system we have now is not all that bad as long as the members push the districts to offer a menu of no-load options. NEA and AFT should be on board pushing districts in that direction, too. AND educating educators. The DIY crowd as well as those who are learning or just suspicious, currently have every right to use ANY advisor they want, including (hopefully) the fee-only planners who offer advice, not products. I wouldn't want to lose that option. As long as we have some good choices on the 403(b) menu, we can manage nicely if we have some basic investing knowledge. I strongly believe that the financial services industry is reminiscient of the wild west, and the advisors with real credentials and actual integrity are few, far between; most of us have difficulty distinguishing between them and the bad guys. Let's get behind the idea of educating our colleagues, not developing another system that will allow the wild west's sharpshooters access to staff members who are naive and vulnerable -- and all the rest of us, too. Gotta go -- I am fresh out of cliches :)) But for interesting reading on the subject, try Swenson's book, Unconventional Success, a Fundamental Approach to Personal Investment. (I was cynical before reading this book, but now I'm rabid! It's a great read!) Judy Schneider
  17. Hi, R., A house, a baby AND a 403(b)? What a year you have coming!! From this list of mutual fund companies you have available, make sure to choose a company (a fund family) that offers NO LOAD funds. A few of those might be American Century, Vanguard, TIAA-CREFF, Rydex, Muhlenkamp, and Dodge and Cox. Take each of the names and go to Google and get to the websites and spend a couple of hours looking around (you will be dizzy!). Pick a good family (one for you and one for your spouse, maybe?) and you will be 1/2 way home. Choose a fund or two in whichever family you decide on and get started. These are no load funds, so you won't have a salesman to talk to. That's okay. You can figure it out. With a baby and a house and full time jobs, you might not have much time for reading!! However, when that occasion arises (when you can't get back to sleep after a 2 AM feeding?) have a book or two on hand... Bogle's Common Sense On Mutual Funds and Dan Otter's book (you can find it on this site) would be fine places to begin. With either of those under your belt, you can begin to establish your asset allocation and refine your mutual fund choices. Good luck... which you probably won't need since you are so smart to start this process so young! Judy Schneider
  18. JudyS

    Nea And 403(b)s

    AP Teacher, Let me clarify, please, at least as much as I can. NEA Members Benefits (NEAMB) is a wholly owned subsidiary of NEA; it's mission is specifically "to make members' lives better" and it was formed about 40 years ago. It offers products to educators. They work with a number of companies. I do not pretend to understand the whole relationship, and I don't actually think NEA is taking $$ it shouldn't. I used to think so, but no longer. At this point in history, I just believe NEAMB has outlived it's usefulness and purpose and they need to evolve. We members don't need them to provide us with mortgages, insurance, and investment products. There are plenty of products out there, many that might be better than the ones with whom they have contracts (Minnesota Life, Prudential, Security Benefit and others). Time marches on... if I may be so bold, let me suggest two things. (1) Stop giving our names to these companies and spending so much of what we have paid for (through our purchases of these products) to sell us more. and (2) As a business that serves educators, EDUCATE us. Give educators more information and resources such that we become more knowledgeable about products and become better consumers. That's a big project.... most staff members I talk to just don't even try. They're busy so they throw up their hands with frustration, look no further, and become vulnerable to salesmen. To assist them in becoming better consumers is a far tougher task than selling them something, I think. What do YOU think? Judy Schneider
  19. JudyS

    Nea And 403(b)s

    AP teacher, Thanks for your supportive comments. You mentioned the annual expenses for the variable annuities, but remember there are also "loads"; the typical load seems to run around 5% on Valuebuilder products. Once you pay this expense, of course, the money is no longer in YOUR account and for the life of your savings, there will be no earnings on that amount ever. That expense is huge, it seems to me. When I talked with the person who heads up the 403(b) part of the business at NEAMB, I asked about that $3 million that had been reported by Forbes (and I have to keep in mind that Forbes has never been a real friend of educators or NEA or union activities), he stated that he had been interviewed for the article and the amount was actually $2 million. That didn't feel a LOT better to me, so I asked what that $2 million was used for, for goodness' sake. He denied that it goes directly back to NEA. He stated that the $$ is used for "overhead", including salaries, advertising and promotional activities for the Valuebuilder products. Since then I have tried to keep an open eye, and sure enough, NEAMB is doing the advertising (some? all?) for the Valuebuilder program in many of the publications that come my way. And every time I see one of those ads it again occurs to me that we are being sold down the river by our very own organization to whom we pay substantial amounts of money to support us in a variety of ways. IMHO, we should be asking them to work on our behalf, not sell us a product that is, in the most optimistic and positive terms, "mediocre". Judy Schneider
  20. Hi, there, For the educators on this site, you may be interested to know that a few of us from Washington (the state) have had concerns about the 403(b) and 403(b)7 products available through NEA Member Benefits. Not only do those products appear to be very expensive, but there is some thought that perhaps NEA should be supporting members by offering educational opportunities to members such that they may become better consumers of these products. Thus, we are hoping that NEA will be challenged to do a better job for members in terms of both products and investor information. At the recent Washington Representative Assembly, we asked the “documents and resolutions” head to pursue this idea. If that doesn’t work, I have been told that that this will become a new business item at the NEA Representative Assembly in Florida this summer. I will certainly welcome aboard anyone else who is challenging NEA to do a better job for all of us! This is the committment I got back from my regional office in regard to the consideration of this set of ideas: That WEA: *Request NEA and NEAMB publish comprehensive comparisons of their programs with others available to members while remaining business sensitive *Request NEA feature a member’s forum on their website so members can exchange ideas and comparisons. In the event 1 and/or 2 proceeding requests are not successful, WEA will file appropriate New Business Items a the NEA RA (in Florida this year). JudyS
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