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chadposner

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  1. FYI, According to Morningstar "TIAA-CREF plans to dramatically hike its management fees, subject to shareholder approval. If the proposed plans are accepted, the firm's management fees will rise to 45 to 50 basis points for actively managed funds" "Further, TIAA-CREF wants to slap 12b-1 fees on the retail share class of its institutional funds as well". All this from a firm that prides itself on being low cost. They'll probably say they are still "cheaper" than other providers (they'll probably obmit how it will reduce the returns of their funds). Chad
  2. Dan, The New Insights Fund (managed by the same guy who has run Contrafund for years, Will Danoff) and a new Mid-Cap fund. There may be others, call Fidelity and ask. Chad
  3. Jennifer, If you want to keep it simple and cheaper, go with the Freedom Fund in the non-advisor acct. It may be worth your time to speak with the Fidelity advisor though and ask him what services he will provide for the extra fee. It may be worth it to you for the extra 1% or so. You can always stop putting money into the advisor acct. if you don't like the service you get. Also, the Fidelity Advisor product has some good (great managers) funds that you can't get in the non-advisor plan. Good Luck, Chad
  4. Gerry, There are good financial advisors and bad ones, just like every profession. Should you be on guard? DUH! Your point is common sense and doesn't really need to be discussed IMO. BTY, as a teacher I feel that I am the ultimate salesperson. If I don't get kids to "buy into" what I'm teaching on a daily basis, they don't learn. I get paid pretty well (but not enough) to get my kids perform/take action/think. This is sales, isn't everything in America? The really sad thing is in teaching, bad teachers/advisors/salepeople still get paid while making their clients/students suffer for a school year. As an aside, I feel bad when I have to "sell" my kids on the idea that standardized testing is really a good thing for them/worth their time. As for your friend's situation, give some details. I doubt that it can't have a good conclusion, especially with all "the know it all" people on this site. take care, Chad
  5. chadposner

    Pay The Same

    Joel, Interesting idea, but... 1. Why would the investment industry lower their costs? Obviously many customers are willing to pay loads, M&E, etc. It would not increase business (most people on this site would not leave TIAA, Vanguard, etc.). 2. Ford and GM are desparate and are killing their future sales (anyone owning shares of MFs that include American car companies may want to think about this). The investment industry is alive and well. Not a good comparision. Here's a better idea for the industry... Refunds of some expenses if their investments (funds, etc.) do worse than the industry average. This would keep current customers happy and attract people who are scared to invest even with Vanguard. Take Care, Chad
  6. I would do a transfer in your situation. Vanguard would be a good choice (their Wellington Fund is worth looking into if you want a "balanced" fund). I am also a fan of the American Funds American Balanced Fund (C shares if less than 7 years until you pull out the money). It is higher cost than Vanguard (probably lower than your valic expences) but is very well managed. It may also be worth your time and money to see a CFP (possibly fee-only) and have them tailor a portfolio that matches your risk tolerance and time horizon. Enjoy retirement. I only have about 25 years more to go. Chad
  7. Ira, Some good points. I agree that low cost index funds are great in that they are low cost. However, I believe many teachers are in only one or two low cost index funds in their portfolio and they think they are diversifed and have no need to ever change their portfolio. I know teachers who are in their 50's that still only have a S+P 500 index fund in their 403b. I know this does not match their current risk tolerance AND that it is not a well diversified portfolio (even for a younger teacher). They are only focused on cost. It may come back to haunt them. For people like us, who take the time to really learn about investing, diversified, low cost 403b's are generally the way to go. However, Many teachers need advise from a GOOD financial planner. That is the real problem... There are too many salespeople and bad annuity products in the 403b market. For example, Nine years ago I was sold a fixed annuity 403b. It has a low rate of return (or high fees if you see it that way). I will not move the money for at least 7 more years due to high surrender fees. However, I would have waited many years to start a 403b and probably would not have really started learning about investing except for my "experience" with that salesperson. Plus I have $40,000 in that account (which I probably would have pissed away over the years). So looking back, I wish I was in a TIAA portfolio the last nine years, but I would really wish that I was in an American funds portfolio over that same time period, but at least I was in some 403b! I don't know which portfolio will do better the next ten or twenty years, that's why I have multiple 403b's (even more diversification). The thing I really disagree with you on is your 300k example. If a person STARTS with 300k paying 1% for 30 years and has only 1% annual growth than your example is correct (90k in fees). I would think most teachers start with $0 and end with a value of less than 150k in their account. In this situation, the fees in year 30 would be $2250 (150k x1.5%), in year 10 it may only be a few hundred dollars. If in the average year the cost was $1500, the total cost would be $45,000. This would be less than 25% of the portfolio (195k without the higher fees). By the way, to get this (150k pre-tax) a teacher would only have to contribute 100/mo. pre-tax for 30 years (36K total) assuming portfolio returned 8% annualized (net of fees). Not too bad even for a "high" cost 403b. Could a lower costing portfolio do better? Maybe/Maybe not. There is no way to know. For myself, I'll take as much diversification as I can get at a reasonable cost (American Funds Growth, Amer. Funds International, Fidelity Contrafund, Vanguard Wellington)
  8. Joel, FT said 1% less in annual RETURN will negatively affect the final amount of retirement funds (which is true). I think you are interpreting that to mean 1% in higher FEES will dictate 1% lower returns than a lower cost 403b plan (which is sometimes true and sometimes not). For example, using the Oppenheimer 403b plan (C shares- almost 200 basis points) compared to a very similar (risk, % stocks, etc.) TIAA 403b portfolio. The Oppenheimer portfolio outperformed TIAA's by 4% over the last 5 yrs. annualized and by nearly 2% over the last 10 years annualized. Someone in my family has this same Oppenheimer portfolio, so this is a real situation. The rep. who sold this product also has provided pretty good service/financial advice. By using a similar American Funds 403b portfolio during the same time period, the performance (net of 140 basis points in fees) would have been even higher. Fees should be one of the factors when using a 403b, however not the only factor.
  9. Charm, Most non-profit hospitals offer at least 2 choices for their 403b plan. Does yours? Chad
  10. chadposner

    403-b

    Jerry, With that amount of money it may be worth seeing a financial planner before you do anything. Especially before you take out the $145k from your pension. Are you by chance in CalSTRS? If you are I can almost guarentee its better to leave that money in the state's retirement system, especially at your age. If you are in CalSTRS I can offer some more insights that might help. Chad
  11. David, Sounds like you haven't been getting much service from your rep. If I were you I would contact TIAA-CREF and explain your situation to one of their support people. They can suggest a few of their funds that would give you a moderate risk allocation. Their fees are low and the performance on their funds is pretty good. Good luck. Chad
  12. dp, Sounds like you want advisor support (you had Valic, now you're going to Edward Jones). What is your Edward Jones guy recommending? What state are you located in? Why Edward Jones? What is your risk tolerance? Chad
  13. Joel, If there is a fee in a fixed annuity, I don't know what it is called. I do know it is not a "mortality" fee because there is no mortality coverage as I've already explained. I would call any fee associated with a fixed annuity a "low interest rate" fee. I guess it doesn't really matter what the terminology is, the fact of the matter is fixed annuities are not good products for most people (unless you are a stockholder of an insurance co.). By the way, my first 5 years of teaching I was "scamed" into contributing to a 403b fixed annuity plan (Great American Life Ins. Co.). It has a low rate, but even worse it has a surrender period of 14 years! Needless to say, I think it is very important that we share with our fellow teachers and non-profit employees to become educated about 403b's, including but not limited to the costs involved. If you think M&E fees are bad, look into indexed annuities, two-tier annuities, and "rolling" surrender periods. In my opinion, these should all be highly regulated (if not illegal). To conclude my input on this topic, I'll say again that paying M&E on a variable product may be appropriate for some people in the right situation (see my earlier example). Nice "talking" to you.
  14. Hey Joel, I still believe there is no "M&E" in a fixed annuity. Of course there are costs in running a fixed annuity just like there are costs associated with a savings acct. or CD. I'll submit that these costs may be passed on the contract owner in the form of lower interest rates. I do know that the insurance companies are making the vast majority of their money by re-investing the funds in fixed products. There is risk in putting money into a fixed product. If the insurance company goes under, contract owners may not get their money back. That's why it is important to buy annuities (and life ins.) from highly rated ins. co.'s. Correct me if I'm wrong on this... If people have been putting money into a TIAA 403b (supplemental retirement acct) fixed annuity for the last 2 years or so they would be earning 3.25 or 3.5% interest. If they did the same in a Lincoln National Life 403b fixed annuity they would be earning the same rate. They both also have a min. guarenteed rate of 3%.
  15. Joel, FT is correct in that insurance co.s have to disclose fees, if they didn't they would never disclose the M&E fees on their variable products. They make money (alot) by paying low fixed, guarentees on fixed annuities. The way they make money is by investing the money people put into the fixed annuity (by the way, this money becomes an ASSET of the insurance co. and they can do whatever they want with it. For example, they may decide to invest it non-U.S. companies that use child labor). If they lose money on their investments, their obligations (annuity payments) could be greater than their assets. This doesn't happen too often, but when it does the ins. co. could go under and your "guarenteed" annuity payments could end! That's another reason (in addition to low yields) why FIXED annuities are not suitable (in my opinion) for the vast majority of people. Chad
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