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FrenchTeacher

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Posts posted by FrenchTeacher


  1.  

    Hi dlazic,

     

    Steve is right, I think, when he talks about raiding your 403(b) as a last resort only. The penalties are too high, and the opportunity cost is extensive.

     

    A "middle ground" might be to borrow some of the funds that are in your account, as opposed to taking out a loan. Many providers offer loans, often up to 50% of the balance, and in many cases the interest you pay is paid back directly into your account, so you wind up effectively paying yourself the interest. Whether or not this is a workable idea depends entirely on who your provider is, and whether they even allow loans against your account in the first place. You should call your agent if you have one (and call the company directly if you don't), and find out the details: how much of a loan is permissible, what the interest rate would be, how the payback would work, etc. A loan would DEFINITELY be preferable to a withdrawal, though from a retirement planning point of view, of course, it would still be preferable to find the money elsewhere if at all possible.

     

    Hope this helps.


  2. Have you used the knowledge that you gained from the book to reevaluate your potfolio, and if so have you made any changes to it as a result, or did you find that the portfolio that you have does not require change based on the informaton that you learned from the read. I guess the question is, do you find the book useful to you in your personal investing?

     

     

    Definitely helpful, yes. I had only paid lip service to the concept of rebalancing before reading the book; I hope it'll be a more regular recurrence in the future. I was generally pleased that my asset allocation still made sense to me after reading the book (pleased inasmuch as it meant that the asset allocation had been done reasonably well the first time through).

     

    Short answer, though, is that the book was helpful. More knowledge is always helpful. Different points of view are always helpful, frankly, even the ones you disagree with; in defending your own point of view, it makes you reexamine it, and sometimes alter it, sometimes reaffirm it.


  3. And that's why we have Elliot Spitzer.

     

     

    ...to see a crime where none exists? Ummm...OK.

     

    You have cherry-picked so many different items in this argument that you've lost sight of the fact that virtually every objection you've made has been refuted.

     

    * When the FERA letter was posted and praised, I pointed out that it was completely inaccurate in its charge that NYSUT fails to disclose its fee arrangement.

     

    * When you characterized this as an "omission," I corrected you that it was not an omission, but rather a complete mischaracterization.

     

    * When you said that "The union should be endorsing the importance of investing in a 403(b) plan. It should (at its own expense) be drilling this principle into the mindset of its membership. At its own expense it should be giving educational seminars about the basics of investing. It should explain what the ME fee is in a variable annuity and emphasize how this fee along with some others are a drain on the investment return." I pointed out that the union already does all that.

     

    * When you have repeated the assertion that NYSUT is illegally pocketing money, I asked you for evidence of this. Not surprisingly, you have no response. At this point, I would settle for a RUMOR of wrongdoing, as long as it had at least a little substance to it! But you have nothing.

     

    * When I have continually pointed out that no laws were broken, no crime has been committed, and the attorney general might therefore be forgiven for his complete lack of interest in the case since there appears to be NO JUSTIFICATION for pursuing it, no one has a response. Just the continued assertion that Spitzer should look into things, and a few vague rumblings about fiduciary responsibility. Ignored: the fact that no members were harmed financially or otherwise, since participation in a 403b program is voluntary, and the choices of providers are limited by the school districts, not the union. Why is there no call for Spitzer to open an investigation against the administrations of each and every school district in New York? Oh, that's right...because no-load funds are already available everywhere. Never mind.

     

    As with all "conversations" with you, Joel, this one has become a dead end: circular, tortured logic that leads you where you want it to lead you. So have fun.

     

     


  4.  

    (And to answer your question, yes, I did read the Bogle book. It was an interesting read.)

     

     

    FT, I wonder FT, do you or do you not agree with the information that he presented in his book?

     

     

    I agreed with some of what he said; I wouldn't say I regarded the entire book as holy gospel, but it was thought-provoking enough. As I said, an interesting read.


  5. So the FT, as an investor in NYSUT/ING is paying disproportionately more for union benefits than a NYSUT member that invests his 403(b) with a no-load firm. I find that terribly unfair to all those NYSUT members that invest in the union's edorsed product, ING. What would Elliot Spitzer say? Stay tuned.

     

     

    Here's one guess: "Hey, guys! Don't like paying more for union benefits? Choose one of the many cheaper options available to you! Problem solved. Also, please stop bothering me...there are REAL criminals to go after in New York."


  6. Just curious: does a union in fact have a fiduciary responsibility to its members when it endorses a financial plan? I would love to know the answer to this.

     

    If so, then NEA has failed miserably with its Valuebuilder plan.

     

     

    What an excellent question. Such a responsibility is IMPLIED, of course, but is it explicit? I have no idea.

     

     

    The union should be endorsing the importance of investing in a 403(b) plan. It should (at its own expense) be drilling this principle into the mindset of its membership. At its own expense it should be giving educational seminars about the basics of investing. It should explain what the ME fee is in a variable annuity and emphasize how this fee along with some others are a drain on the investment return. IT SHOULD NEVER BREACH ITS FIDUCIARY DUTY TO ITS MEMBERSHIP BY ENDORSING FOR A FEE ONE VENDOR OVER AN OTHER. BY SO DOING YOUR NYSUT HAS USED THE SPECIAL TRUST IT HAS WITH ITS MEMBERS TO RAISE REVENUE FOR ITSELF. THIS IS CALLED UNDUE INFLUENCE. THE MESSAGE IS LOUD AND CLEAR: YOU'RE DISLOYAL TO YOUR UNION IF YOU INVEST IN A 403B AND THE VENDOR IS NOT "OPPORTUNITY PLUS/ING/NYSUT"

     

     

    The union actually DOES do all the things that you wrote about in small letters.

     

    As for the stuff you yell about in ALL CAPS, hmmmm...NYSUT is "raising revenue for itself"? What becomes of that money? They claim it goes to the benefits department to administer their many programs...indeed, that since the benefits department is a non-profit trust, they use not a PENNY of dues money to run it. Do you have evidence to the contrary? Because if you can show me that NYSUT is somehow pocketing the cash, or buying yachts, or something other than what they say they are doing, I'll march in there right alongside you. Otherwise, of course, this is just another attempt to drum up outrage where none exists.


  7. I agree!! If they created this environment why didn't they remain neutral? Why are they recommending/endorsing one vendor/product, your Opportunity Plus/ING variable annuity over all the other offerings?

     

     

    Who, exactly, would pay the most attention to such an endorsement? I would argue that it would be the neophyte investor in the greatest need of assistance. someone relatively new to the 403(b) world. Clearly, someone such as yourself who already knows the ABC's of investing and needs no assistance from an agent will go right to the no-loads. No need to pay for help you don't need, right?

     

    Given that fact, you could argue that NYSUT would actually be committing a larger breach of its responsibility to its membership if their endorsement amounted to "Buy Vanguard, and educate yourself about it in your spare time!" Instead, mindful of the assistance that everyone here seems to agree most teachers need, they endorsed a product that provides that assistance, all the while doing nothing to restrict access to the no-load offerings that they know many people want.

     

     


  8. Here's a nutty legal concept - Fiduciary Responsibility. Perhaps the crime is that NYSUT has breached their fiduciary responsibility it has to its members to look after THEIR best interest and not line their own pockets.

     

    I am glad that NYSUT discloses the money they are getting (assuming it is all disclosed), however they fail to disclose that they could have recieved a better deal by doing things differently. I bet the subject of the Wisconsin Education Assocation Trust never comes up on those pesky NYSUT letterheads....

     

    NEA is guilty of non-disclosure (it isn't anywhere in any prospectus, website, and nobody will give you exact dollar figures) of 403(b) kickbacks - but they are also guilty of the same thing NYSUT is - and that is not working in their members best interest.

     

    I think the unions may start to see things differently as the leadership is barraged by its members about how they are currently doing things.

     

    I am no attorney either, but I can spot a breach of fiduciary responsibility when I see it.

     

    ScottyD

     

     

    Scotty, here's another nutty legal concept: Probable Cause. The last time I checked, an attorney general wouldn't waste his time trying to prosecute someone when even their most ardent opponents can't quite articulate a law that has been broken.

     

    You say that NYSUT could have received a "better" deal. Better, of course, is in the eye of the beholder. NYSUT has created an environment wherein people who want to buy annuities from full-service providers are free to do so, and people who want to buy mutual funds from no-load companies are ALSO free to do so. I know everyone here would love to see a system where Vanguard, TIAA-CREF, T. Rowe Price et al are not only available, but mandated. "In the best interests of the members," of course. Tell me, who are you to define anyone's best interests but your own? There are no guns to heads here forcing anyone to invest a certain way.

     

     

    FT: You reference FERA and me as being anti-union; yet the latimes is pro-union and they published the article. You need a dose of the : "logical thinking"

     

    Joel

     

     

    Oh, cool! We're using logic now? Thank God! Let's start right away. You all want Eliot Spitzer, an ATTORNEY GENERAL, to investigate NYSUT for possible violations of...what again? Which laws?

     

    Remember that sticky little concept of probable cause. Without that, heck, Dan Otter might be open to a similar investigation, despite my virtual certainty that he, too, is guilty of no wrongdoing. Still, he takes money from TIAA-CREF (the site's advertising), and he does tout their products...I mean, even if that is fully disclosed, that doesn't make it legal, right?

     

    (No offense intended at all, Dan. This is unfortunately the kind of absurdity we can face if people are allowed to initiate criminal investigations simply because they don't like a person, or a company, or a union, or a specific type of product.)


  9. FT.........As an accomplished, educated person who not only is a teacher but know French fluently and perceives himself as being an excellent investor as a result of the support that you receive from your SALES advisor who you consider an expert in the field of finance ( in spite of the extra drag on your investment return due to higher expenses from the product that you own), I'm sure that you would be open to having an expert(s) in the field of law look into this situation to determine if there is criminal activity or civil recourse.

     

     

    I certainly am open to that, as I said before. I just don't see what would be causing Spitzer to take this particular letter seriously, given that its primary point is completely false, and everything else contained therein appears to be completely legal. But as you say, that's a call for an attorney to make, not me.


  10. FT: You are placing great weight on the fact that once the $ arrangement is published in the Propectus both the New York State United Teachers and its partner the ING group have nothing legal to worry about. Again, full disclosure of a wrongful act does not make the act proper. WE WILL JUST HAVE TO WAIT AND SEE.

     

     

    "Waiting for Godot" is a book you might want to check out as you wait for this investigation to unfold.

     

    You refer to the NYSUT endorsement as a "wrongful act." I ask you again, what law is being broken here? If you are alleging wrongdoing, you must have at least a vague idea of the grounds upon which Mr. Spitzer can proceed.

     

     

    FT You talk about a disclaimer. Please forgive my ignorance about the "disclaimer", but where is the disclaimer? Is it in the advertisments that the insurance company has placed to hawk the product? Does the union present this information to union members in a newsletter that they might issue? Where is it? Is it buried in prospectus? If so how do the union member receive this prospectus?

     

    FT, do you think that the union is proud of their actions, and is sending information to the union members to brag about the good that they are doing?

     

    ( We need Marlon Brando to lead a fight against the union bosses- For those who don't know, he played in ON the Waterfront" and fought against a brutal system of corrupt boses to clean up his union.)

     

     

    Ira, the information is formally disclosed in the prospectus. It has also been talked about informally so much in the last year that no one who's paying any attention is unaware of it. And yes, there are MULTIPLE disclaimers issued from NYSUT with virtually every piece of mail they send that even mentions 403(b)'s. [Edit: I forgot that this arrangement has been written about multiple times in "New York Teacher," the union publication, and is mentioned regularly in advertising by the benefits department.] And finally, yes, my sense is that the union is quite proud of the benefits department and what they have put together, but I suppose you'd have to ask them that.

     

    I don't even know how to respond to the Brando stuff. The messiah complex runs a little thick here at times, no? If you honestly see parallels between "On the Waterfront" and NYSUT's endorsement of a Dutch conglomerate for 403(b) services, well...perhaps we are thinking of two different s? For the record, there was no "Johnny Friendly" to twist my arm to sign up for my account.


  11. Yes, the FERA letter to Spitzer omits the fact that the payment of $3 million annually is disclosed to the investors. Again, just because it is disclosed does not make it proper.

     

     

    No, Joel. The FERA letter does NOT "omit" the fact that the payment is disclosed. The FERA letter completely misrepresents the fact that it is disclosed. Specifically, the letter says (and I'm quoting it here), "NYSUT accepts $3 million annually...without disclosing its financial interest in the arrangement." That's not an omission. It's a complete fabrication.

     

    I wonder how nutty you would go if ING said in a press release that they had no M&E fee, then turned around and charged one. Would you call that an "omission," or a "complete and utter lie"?

     

     

    FT: You reference me as being anti-union. Well the New York City affiliate of the NYSUT, the United Federation of Teachers must also be anti-union because I am in total agreement with their decision to keep the Opportunity Plus/NYSUT variable annuity out of the New York City School System---the largest system in the country. This fact was in the FERA letter to Spitzer which you forgot to post. You also forgot to post that part of the letter which discloses to Spitzer that the NYSUT as EMPLOYER sponsors a no-load 401(k) plan for its employees.

     

     

    These are indeed important disclosures. Tell me, as Eliot Spitzer reads this laughable letter, what securities law should he have in mind as he contemplates his investigation? What law is NYSUT breaking by allowing the UFT to operate as an independent local, just like all their other locals, in determining their own vendor list? What law is NYSUT breaking by having a 401(k) provider that is different from the endorsed 403(b) provider?

     


  12. FT, I am not an attorney and neither are you, but Mr. Spitzer is, so he and his office are capable of determining if this can situation can be prosecuted in a criminal action. Additionally, the teachers who invested in this product may be able to pursue equity in a civil action.

     

     

    It's true enough that neither of us is an attorney. It's equally true that, despite not being a lawyer, I can identify possible criminal activity in everyday life, given the facts of the situation...but here I can't, and from the lack of anyone's ability to cite even a single law that may have been broken, apparently neither can anyone else! And the teachers should get "equity"? Is "equity" the same as a refund for all fees paid by all teachers everywhere to any provider anywhere? Whoopee! Free financial services for everyone!

     

    Whatever. Like I said before, I hope there IS an investigation, or a clear statement that none is required. If there is wrongdoing going on, obviously I would want to know about it. I just don't see the rationale for thinking so.


  13. I'm glad that this letter was written. I hope that Mr. Spitzer will take action .

     

     

    What action do you want him to take? The primary charge of the letter--that NYSUT takes money from ING without full disclosure--is demonstrably false! How is Spitzer supposed to take the letter seriously?

     

    Let me put it another way. Eliot Spitzer is the attorney general. His job is to investigate/prosecute criminal activity. Can ANYONE name a single law that has been broken here?

     

    You guys are all barking up the wrong tree. If you want to effectuate change, have a law passed barring such arrangements. Or at least cite the law that has been broken.

     

    Anyone?


  14.  

    It might be nice to put this letter in its context. It is posted on FERA's website, which also includes love letters to the notion of education tax credits, school vouchers, and charter schools. In short, it would be difficult to find a more anti-union presence on the web, unless Joel Frank runs a website that I don't know about!

     

    The letter itself is, much like the LA Times article, riddled with one major inaccuracy (and maybe more, who knows?). From the letter:

     

    According to the [LA Times] article, NYSUT accepts $3 million annually from a financial services firm in exchage for the union "encouraging its 525,000 members to invest in the annuity sold by the [firm]" without disclosing its financial interest in the arrangement.

     

    Read that last part again: "...without disclosing its financial interest in the arrangement."

     

    Mr. Carroll's letter is dated April 28, 2006. I'd be fascinated to hear how he construes prominent mention in the prospectus, as well as in at least a half-dozen disclaimers that I have seen on the NYSUT member benefits letterhead, as a failure to disclose the arrangement!

     

    This might be a more interesting conversation to have if NYSUT's and ING's detractors would, at the very least, manage to stick to the facts, something they appear incapable of doing.

     


  15. Prior to the establishment of the SEC in 1934 it was perfectly legal for a stockbroker to give a $10 tip to newspaper columnist for mentioning a certain stock or number of stocks in his column. Since 1934 it is against the law. IT IS AGAINST THE LAW BECAUSE THE COLUMNIST IS IN THE PUBLIC EYE AND THE READER ASSUMES HE/SHE HAS THE READER'S INTEREST UPPER MOST IN HIS MIND---THE COLUMNIST IS GUILTY OF USING THE INFLUENCE HE ENJOYS OVER THE LIVES OF HIS READERSHIP TO LINE HIS OWN POCKETS.

     

    I find this practice alive and well when a union takes money from a stockbroker in return for recommending a security to its membership---THERE IS NO DIFFERENCE! IF NOT FOR THE NEGOTIATED FEE THE UNION WOULD NEVER RECOMMEND AN INVESTMENT PRODUCT!!

     

    Did the newspaper columnist used to publish a disclaimer saying that he had accepted $10 from a stockbroker before touting a stock?

     

    Because otherwise, this already-thin comparison falls apart entirely.


  16. TC is somewhat reminiscent of the old Financial/INVESCO group, which at one point established 12b-1 fees because they would actually lead to a decreasein fund expenses! Really! That was the line they gave. So now TC is increasing fees because that is going to benefitshareholders.

     

    War is peace, ignorance is strength, slavery is freedom.

     

     

    Orwellian references aside, I can see where a fee increase MIGHT lead to increased benefits to shareholders. It depends entirely, 100%, on what is done with those fees. If they are used to construct new world headquarters for TIAA-CREF, then the shareholders got reamed. If they are used to hire a small army of salaried financial planners who have "asset retention" NOWHERE in their job description, then they may indeed provide a benefit.

     

    The answer probably lies somewhere in between, but it'll be interesting to see.


  17. I do not pretend to have all the information regarding TIAA-CREF advisors but it is my understanding that these are non-commissioned, full-time TIAA-CREF employees who are available to clients of TIAA-CREF. So participants would be using TIAA-CREF investments but instead of investing entirely on their own they would have access to these non-commissioned advisors. Fee structures, which are among the lowest in the industry, would not be altered. It is my sense that this an added value that TIAA-CREF is bringing to their clients. One could say that these advisors would be biased toward TIAA-CREF products. One could also say that access to both low-cost products and a non-commissioned advisor is an attractive approach to those in need of aid.

     

     

    Dan, if they're setting it up that way, then I agree that this is an attractive approach. The Wall Street Journal article seemed to place it more in the context of positioning such "wealth advisors" as a key component in an asset retention strategy, which would run counter to what you are suggesting here.

     

    One other caveat: while you say here that "fee structures...would not be altered," the fact is that they already have been. Fees on mutual funds skyrocketed last year (again according to the WSJ), which may or may not have been in anticipation of the hiring spree TIAA-CREF was about to embark on with these agents.

     

    It will indeed be interesting to see how it plays out, and whether this is a tactic that other no-load providers turn to in an effort to retain assets. Some variation of the full-service model may one day be apparent even within the no-loads.

     

     


  18. FrenchTeacher,

     

    It's my understanding that if an employee only makes say $15,000 a year he/she could actually contribute 100% of their salary. In this example it would $15,000. So Fs5390, who makes $35,000 a year, cannot contribute 100% of compensation--not that that is what he/she is suggesting--because that is more than the elective deferral limit ($15,000 for 2006), but he can contribute $15,000. He could do that if he/she made $15,001 a year. And if someone made $14,000 a year, they could not contribute $15,000 a year. In this case his/her salary--$14,000--and contribution--$14,000--would be 100% of compensation which would be less than the maximum deferral amount. If my thinking is correct--which isn't always the case--I think the IRS is letting investors know that if they do not make a substantial sum, say $10,000 a year, they could actually contribute the entire amount.

     

     

     

    I guess I was confused by the title of the thread: "Can I Contribute 50% of My Gross Income?" If he makes $35k a year, it still seems to me that he cannot contribute 50% of his income, which would be $17.5 and over the IRS limit.


  19. "Advice" is not present if their is no recourse. If I act on the advice given in a newsletter and the investment sours I have no recourse because the newsletter is not in the business of furnishing investment advice. Do you agree?

     

     

    I would agree with that. And I would add that the problem lies not with the financial newsletters, but with the rules governing them. It seems to me that there is a clear double-standard at work here. My stockbroker can call me, recommend that I buy shares in GM, and I have recourse to sue him when GM eventually goes bankrupt. By the same token, I can subscribe to "Gabby Huckster's Underpriced Stock Digest," read an article where Gabby jumps out of his skin screaming about what a bargain GM is at these prices (an article CLEARLY written for the sole purpose of touting GM stock), and have no recourse to that because after the enormous headline urging me to BUY GM NOW!!! and the 4-page article talking about how great GM is, there's two lines of teeny tiny print at the bottom reminding me that Gabby is not giving advice here.

     

    It seems to me that, in a perfect world, an individual who gives financial advice should be held accountable for that advice, whether he gives it in the form of a phone call or a newsletter, and whether he is making his money from the commission from the sale or the subscription price of the newsletter. Do you agree?

     

    [Note: all the advice given in THIS forum, of course, is worth exactly what the reader is paying for it. No liability should EVER be assigned for free advice, unless it comes in the form of these spam postings about penny stocks, which is of course criminal activity.]


  20. Now tell me how you consider the TC/advisors a potential conflict of interest but you can't see the conflict of interest present with the ING/NYSUT arrangement.

     

     

    If NYSUT demanded that all companies pay in order to be approved on their vendor list, and therefore ING was available while other companies were not, I would see the conflict of interest.

     

    If NYSUT mandated the use of their endorsed carrier, to the exclusion of all (or even most) others, I would see the conflict of interest.

     

    If it were as difficult to get a no-load provider on the vendor list in New York as it appears to be in California, I would see the conflict of interest.

     

    A question about TIAA-CREF's possible conflict of interest (and I say "possible," because I have no idea how it's actually set up). If TIAA-CREF hires "advisors" whose job it is to steer people into TIAA-CREF funds (and not to provide advice), will YOU be consistent and criticize them as heavily for their failure to provide impartial advice and their "real" status as SALES advisors, the same way you have criticized other full-service providers?


  21.  

    I've been thinking...one possible way around this "faux" reporting of holdings would be to report the fund manager's "average daily balance," sort of like my bank does on my anemic checking account. If a manager buys a million shares on Dec. 31st, his "average balance" for the quarter would be 10,000 shares, a much more accurate reflection of his "commitment" to his fund. And the manager who buys and holds his own stuff would also have his loyalty accurately reflected.

     

    How you would arrive at this kind of extremely helpful (and therefore highly unlikely to ever happen) disclosure is another matter entirely.


  22. Sharing in commissions without being licensed. Pay to play schemes. Anti kickback laws. I won't be surprised if he passes insofar as he is a key political ally of your New York State United Teachers---and the beat goes on.

     

     

    If I read the prospectus correctly, NYSUT does not receive commissions, but a fixed-dollar amount per member, which is a different thing. "Pay to play" hardly describes this, insofar as literally dozens of financial service firms (including your beloved no-loads) are available in New York without paying a dime to NYSUT. And you can hardly describe a fee that is fully disclosed in a prospectus as "kickback"!

     

    I like the circular logic at the end, here: if Spitzer pursues this, he's a hero. On the other hand, if he reads this situation the same way I just did, and concludes that there is no evidence to warrant an investigation, then it's just "politics as usual." Heh.

     

    At the end of the day, I hope he does investigate. If NYSUT has something to hide, it should be brought to light. If, as I suspect, there's nothing to hide, it'll be nice to see you acknowledge that here.

     


  23. One more thing: I don't want to see a meaningless figure that is disclosed, e.g., that the manager has "between $10,000 and $1,000,000 in the fund." Nope. I want to see the actual value of his/her holdings in the fund.

     

     

    The problem with this is the same problem that lies with the listings of a fund's "top holdings"...by the time it is actually published, the information is dated. I imagine that a lot of managers would buy a "window dressing" stake in their fund on December 29th in anticipation of the annual report, too, and flip them at first opportunity. But I like the idea itself, if there could be found a way to make it practical.

     

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