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sschullo

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  1. This case shows us that the defined contribution world is also a business, and very lucrative one, for the professionals who consult and keep records and unfortunately, teachers are the one group that is still unprotected. Its too bad we cannot find out more details such as who created this "system" that is suppose to be good for Florida's teachers?
  2. Hi Scott, Looks like you answered your question by Bogles speech. Here is another interview only about 7 months before his death: https://www.youtube.com/watch?v=3uJbHREmUs4 . I know you heard this before and I will repeat what Bogle preached, "Don't just do something, just stand there." There is plenty to worry about for our everyday life. These are terrible times. But the stock market operates differently from our ordinary life experiences, big shocker there! The stock market doesn't know how anything will affect our portfolios. Capitalization weighting vs. equal weighting of the indexes have been argued for 20 years. Who really cares? Nobody knows. I am wondering why the feds are buying up both government and corporate bonds. They never bought corporate bonds before. Is this move just to keep some companies in business when they should go bankrupt? Does all of the fed purchasing change the natural structure of how markets operate? The geniuses for the past decade have been warning us about fed's interference. I also wonder about my California muni bond fund when I hear that state governments are going to be in deep trouble because of COVID19 affecting their tax revenue. There is a lot to be worried about, but I let all of the emotions of other investors be expressed as it will certainly be expressed in some fashion that even investors don't know. The stock reflects the attitude and temperament of human beings, both professional and lay investors. As Newton said, "I can calculate the motions of heavenly stars but not the madness of crowds!" He was so upset when he lost a fortune in the 1700s tulip bubble. The madness continues to this day. Human beings, and their money, cannot help themselves. I am not changing a thing.
  3. Ben Graham's classic The Intelligent Investor (1973) has an entire chapter on seeking advice, he wrote: If the reason people invest is to make money, then in seeking advice they are asking others [Financial Professionals] to tell them how to make money. That idea has some element of naïveté. Businessmen seek professional advice on various elements of their business, but they do not expect to be told how to make a profit. That is their own bailiwick. When…non-business people rely on others to make investment profits for them, they are expecting a kind of result for which there is no true counterpart in ordinary business affairs.” On the other hand, Graham writes this which is out of date in 2020: We take a more critical attitude toward the widespread custom of asking investment advice from relatives or friends. The inquirer always thinks he has good reason for assuming that the person consulted has superior knowledge or experience. Our own observation indicates that it is almost as difficult to select satisfactory lay advisers as it is to select the proper securities unaided. Much bad advice is given free. The best financial information and advice has been FREE for over 20 years when this website 403bwise.com and Bogleheads forums were launched! Numerous tell-all books by everyday investors say that they are better off without an expensive adviser. In 2020 free investment information is everywhere on the internet. Also, index funds were not available until Bogle launched his S&P 500 in 1975.
  4. Did you know about this Ed? Good stuff and it's about time! \ SEC Charges VALIC Financial Advisors with Failing to Disclose Payments to Promote Services to Florida Educators SEC Also Charges VALIC Financial Advisors in Separate Action for Mutual Fund Selection Violations FOR IMMEDIATE RELEASE 2020-164 Washington D.C., July 28, 2020 — The Securities and Exchange Commission today charged Houston-based VALIC Financial Advisors Inc. (VFA) in a pair of actions for failing to disclose to teachers and other investors practices that generated millions of dollars in fees and other financial benefits for VFA. In the first action, the SEC found that VFA failed to disclose that its parent company paid a for-profit entity owned by Florida K-12 teachers’ unions to promote VFA and its parent company services to teachers. In the second action, the SEC found that VFA failed to disclose conflicts of interest regarding its receipt of millions of dollars of financial benefits that directly resulted from advisory client mutual fund investments that were generally more expensive for clients than other mutual fund investment options available to clients. VFA agreed to pay approximately $40 million to settle the charges in these two actions. In the first action, VFA agreed to cap advisory fees for all Florida K-12 teachers who currently participate (and, in some cases, those who prospectively participate) in its advisory product in Florida’s 403(b) and 457(b) retirement programs. This will result in significant savings for thousands of teachers. VFA Failed to Disclose Payments Made in Exchange for Referral of Teachers VFA is a financial services vendor in nearly every school district in Florida. According to the SEC’s order, VFA’s parent company, The Variable Annuity Life Insurance Company (VALIC), for 13 years made payments to an entity owned by the Florida teachers’ unions in exchange for that entity’s exclusive endorsement of VFA as its preferred financial services partner and the entity’s agreement to not promote or endorse VFA’s competitors. VALIC also provided the entity owned by the teachers’ unions three full-time employees to serve as “member benefit coordinators.” These coordinators – who deceptively presented themselves as employees of the entity owned by the teachers unions – promoted VALIC and VFA to Florida K-12 teachers, including at benefits fairs and financial planning seminars, and referred teachers to VFA for investment recommendations. The order finds that the member benefit coordinators increased VFA’s access to K-12 teachers in Florida, and that VFA did not disclose that the for-profit entity was paid to make VFA its preferred financial services provider. VFA (together with VALIC) earned more than $30 million on the products it sold to Florida K-12 teachers during the period covered by the SEC’s order. “Teachers need and deserve our attention, and we are dedicated to ensuring they receive all of the information they are entitled to when making decisions about their financial futures,” said Chairman Jay Clayton. “Too often educators are targeted with misconduct related to their investments. Our nation’s educators, and our Main Street investors more generally, are entitled to full and accurate information about the incentives and conflicts affecting their financial advisors.” “By failing to disclose to teachers that it was making payments to and providing employees for the union-owned entity in exchange for that entity referring teachers to VFA, VFA took advantage of the trust teachers placed in that entity,” said Stephanie Avakian, Co-Director of the SEC’s Division of Enforcement. “Like all investors, teachers need full and fair disclosure.” “Financial relationships and affiliations in the K-12 teachers’ retirement sector can impact teachers’ financial interests,” added Steven Peikin, Co-Director of the SEC’s Division of Enforcement. “It is critical that teachers get the information they need to make informed decisions about their retirement options.” The SEC’s Office of Investor Education and Advocacy today issued an Investor Bulletin with tips to help teachers make informed investment decisions, including about retirement plans. The agency offers resources for teachers and investing and provides outreach and education to teachers through its Office of Investor Education and Advocacy, Retail Strategy Task Force, and its San Francisco Regional Office. VFA Failed to Disclose Millions of Dollars in Financial Benefits It Received for Investing Clients in Certain Funds The SEC separately charged VFA for making false and misleading statements about, and otherwise failing to disclose, conflicts related to its receipt of millions of dollars of financial benefits from client mutual fund investments. According to the SEC’s order, VFA’s wrap agreements with its clients provided that the advisory fee the client paid to VFA included the costs to execute securities transactions. The order finds that VFA either directly invested or instructed its primary sub-adviser to select new mutual fund investments for clients that were part of VFA’s clearing broker’s no-transaction fee program (NTF Program), and thus would not incur a transaction fee VFA would be responsible for paying. The NTF Program mutual funds were generally more expensive than other mutual funds available to VFA clients, including instances when a less expensive mutual fund share class for the same fund was available outside the NTF Program. The order finds that VFA’s participation in the NTF Program generated three key financial benefits to VFA, and that VFA not only failed to provide disclosures regarding these conflicts, but also provided false and misleading disclosures concerning the conflicts. The order sets forth that VFA received both 12b-1 fees and revenue sharing from the clearing broker for client investment in mutual funds within the NTF Program. In addition, according to the order, for clients with wrap agreements in which VFA was responsible for client execution costs, VFA financially benefited by not having to pay any transaction fees for mutual funds in the NTF Program. Despite being eligible to do so, VFA did not self report its receipt of undisclosed 12b-1 fees as part of the Division of Enforcement’s Share Class Selection Disclosure Initiative announced in February 2018. “Investment advisers must disclose conflicts between their financial interests and those of their clients,” said Mr. Peikin. “Here, VFA for years reaped million in benefits at its clients’ expenses while not only failing to disclose the conflicts, but while providing false and misleading information.” “VFA misled clients by telling them that their advisory fee would cover execution costs without also telling them that VFA would put them in more expensive mutual fund share classes and thus avoid paying those costs.” Ms. Avakian added. “By not disclosing these practices as well as the other financial benefits VFA received, the firm deprived its clients of essential information about their relationship with their adviser and violated core fiduciary obligations.” Investors can find additional information about how fees and expenses may impact their portfolios at Investor.gov. Summary of Settlement Terms The SEC’s order concerning Florida teachers finds that VFA willfully violated Sections 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rules 206(4)-3 and 206(4)-7 thereunder. Without admitting or denying the SEC’s findings, VFA has consented to a cease-and desist order, a censure, and a civil penalty of $20 million. VFA has also agreed to set advisory fees for all Florida K-12 teachers who currently participate in its advisory product in Florida’s 403(b) and 457(b) retirement programs, or who currently or may within the next five years own certain other VALIC Financial Advisors products, at its most favorable rates in the Florida K-12 market. The SEC’s investigation leading to this order was conducted by Heather E. Marlow and supervised by Jeremy Pendrey, both of the Asset Management Unit and the San Francisco Regional Office, and supervised by Monique C. Winkler, Associate Regional Director, and Erin Schneider, Director, of the San Francisco Regional Office and C. Dabney O’Riordan, Co-Chief of the Asset Management Unit. The investigative team appreciates the assistance of Jill Persson of the San Francisco Regional Office Teacher Investment Outreach Team and Charu Chandrasekhar, Chief of the SEC’s Retail Strategy Task Force. The SEC’s order concerning VFA’s mutual fund fee disclosure practices finds that VFA violated Sections 206(2) and 206(4) of the Investment Advisers Act and Rule 206(4)-7 thereunder. Without admitting or denying the SEC’s findings, VFA has consented to a cease-and desist order, a censure, disgorgement and prejudgment interest of over $15.4 million, and a civil penalty of $4.5 million. The over $19.9 million in monetary relief will be placed into a fund for distribution to investors affected by this conduct. The SEC’s investigation leading to this second order was also conducted by the Asset Management Unit, including industry expert John Farinacci, senior counsel Frank Goodrich and senior trial counsel Jennifer Reece of the Fort Worth Regional Office, and supervised by Barbara Gunn and Ms. O’Riordan.
  5. That error message is getting annoying. I keep forgetting to report this to Dan Otter.
  6. And so does total stock market index and the s&p 500 are highly correlated, but I always and I mean always want as much diversification as possible. Not looking for a return, that's up to the Gods, fate, luck etc, etc, it is about risk reduction. That is not up to the Gods!
  7. The Roth IRA that's outside the plan. The one you have to write a check or do an electronic purchase from your checking account to Vanguard. The max is $6000 per year and $7000 if over 50.
  8. I want to chime in here. First off, you cannot just withdraw your 403b money and put it into a savings account. All tax-deferred plans are long term plans. There are situations you can for hardship reasons, but purchasing a home is not one of them. BTW, get away from that "financial advisor guy!" He is just trying to sell you another terrible high priced insurance product, an annuity, so he can collect a nice commission. They are not Financial advisers that look out for your best interests. Transferring from one annuity to another makes no sense! This site is 403bwise.org and we are all teachers here who have learned to invest and stay away from annuities that are still overwhelming sold to k12 teachers in the country. It is a terrible product. I agree with Whyme. You can post your question on Bogleheads.org and you will get lots of answers. In the meantime, we can still help.
  9. I have two commercial writing style grammar checks, Grammarly checks for spelling as I type here. But you have to pay for these programs. The free programs are crappy. The other one is Style writer, that I use when I write blog articles and when revising my book.
  10. Your new allocation looks fine. The problem with me is that the Vanguard Developed Market index invests in developed markets only, and not emerging markets. Unfortunately, an international fund index is not available on the 457B plan. Since I am retired I cannot access the brokerage window account, you might be able to get the Vanguard International Index fund through the Self-Directed Brokerage Account. Look for the ticker symbol: VGTSX. This international fund is popular. I have some of my money in this fund (not through the 457b as I am retired). But watch for additional costs. OR you could fund your Roth IRA with Vanguard International index fund. And leave the asset allocation above alone. No, you cannot transfer from a 403b to a 457b plan but YES you can transfer to Pension 2.
  11. Hi TanP Welcome to the forum. It is very good to see a fellow LAUSD teacher here. I am retired from LAUSD 12 years ago and I am a volunteer member of the advisory committee for the 457b plan. Congrats for stopping money going to that expensive and worthless annuity. I had two annuities way back and I got out and paid the surrender costs, and very happy I did. As I transferred the money into mutual funds that are genuine investments. As you found out, annuities are an insurance product that is NOT an investment, and the "adviser" who sold it to you is a salesperson, not a genuine adviser either. Congrats on starting with the district's 457b plan. Attached is the 457b plan with the fees that you will pay. Until you know a little more about asset allocation, I agree with Tony about selecting one of the Target Date Funds. You have a 100% stock allocation. That's fine if you are under 35 years old and can handle the volatility. Your allocation can be tweaked a little but there is no rush, as there might be some unnecessary overlap between you two large-cap funds. vanguard extended market index is a great fund. I have some of my money in that fund, as well as the total bond market index. Remember I am retired and most of my money is in bonds. I have a 30% stock allocation and 70% bond but that is appropriate for me but not for others. Everybody is different, different needs, different risk tolerance, different goals. My goal is for my money to last the rest of my life supplementing my CalStrs pension, so I have a very conservative portfolio that has been doing well. You also have Vanguard Wellington and Vanguard Wellesley. In the attachment, the table shows the allocation between stocks and bonds in Wellington And Wellesley. As a general rule of thumb Wellington is for younger investors and Wellesley is for older. I have some of my retirement money in Wellesley. Again welcome to the forum and its great to hear from an LAUSD teacher. Lets us know what you are thinking and we can help you decide your stock to bond allocation and your stock allocation. Steve
  12. I believe I did but don't remember the specific city. Yes, I knew that Vanguard's client's money is not directly with vanguard but it held in custodial accounts. I believe their brokerage accounts are held by another firm. But I never knew that these same companies can also receive direct contributions from employees. I have never seen either VG or Fidelity trust on a 403b list until now.
  13. If I am confused after all of these years now I understand why newbies are so confused for months and years. I have never seen a discussion here, at M* discussion, or even at Bogleheads about VG Fiduciary Trust Company and Fidelity Management trust, NEVER! Learn something every day. Thanks, Steve
  14. Hi Egg, Welcome to the forum. Very happy you came here to get more information because you already knew something was wrong. You were about to be sold one of the worst plans for retirement. Most of us, including myself, were sold two annuities in the dark ages of the 1980s, and the same thing is happening 40 years later, and very little has changed. There is a long history of this website going back 20 years trying to inform colleagues. What happened to you is still happening to the vast majority of public k12 teachers in California and across the country. Looks like you are in California because you have CalSTRS Pension 2 and TIAA CREF. Both are the best that I can see from your long hideous list. Typical for California. The bad guys are getting very clever when they start using the two companies we love around here, Fidelity and Vanguard. I looked up Vanguard Fiduciary Trust Company, and they say they are a subsidiary to Vanguard. I think it's a red flag to avoid, but others here may know more. Your best plan is CalSTRS Pension 2. They have Vanguard. We love Vanguard because unlike an expensive and inappropriate annuity, Vanguard decades-old reputation is its low costs and broad diversification across the domestic and international stock and bond markets. If you are new to this, you can read up on John Bogle who started Vanguard back in the 1970s and read any of his books. You can also go to Bogleheads.org and visit their Wiki to learn more about indexing and John Bogle, which is the passive strategy for investing: https://www.bogleheads.org/wiki/Main_Page Bogle just died last year at age 89. He was more than just an innovator, he always looked out for us, the regular investors. Vanguard has over 6 trillion in assets. I have my nest egg with Vanguard. Back to your question, as I said it looks like Pension 2 is where you can get started. https://www.calstrs.com/pension2 They have 3 types of portfolios, conservative, moderate or aggressive. Does your district have a 457(b) plan? Most California districts do. That's another option. In my district, Los Angeles Unified, the 457b plan has very low-cost target-date funds from Blackrock, which would be another place for you to start and begin learning to watch your money because nobody is going to do this better than you, educated in personal finance. Without knowing more about you and your current knowledge please let us know your thinking. We are here to help. We are not sales or advisers, but mostly teachers or spouses of teachers. I am a retired teacher from Los Angeles Unified. And I know your story all to well, and so do the others here. You are going to get great feedback from the smart people who frequent here. Again Welcome! Steve PS unless I am missing something, you do not have to talk to that salesperson again. Annuity salespeople are NOT financial advisers, they are salespeople that sell expensive products to get them a commission and ongoing high costs. Avoid them!
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