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Guest Sierra

Herb said: "Sierra: M&E charges for VA and fixed annuity are structurally different. The fixed annuity M&E is built into the cost of the product, and cant easily be broken out. On the other hand, the M&E for VA's are a separate fee that is charged to the client's account. The proof of that is that the M&E for VA is charged against the mutual funds in the VA, but not the fixed account of the VA. Therefore, if the client wants mutual funds, and wishes to reduce fees, the client can focus on products that dont have M&E costs"

====================================================================

So you sell fixed annuities because the ME fee is built into the cost of the product (not transparent) but do not sell variable annuities because the ME fee is listed in the prospectus (transparent). The ME fee is a drain on the investment return, fixed or variable, so why do you sell the fixed product and not the variable? Do you disclose to your fixed clients that they are paying a ME fee which is built into the cost of the product? Do you tell them what they get for the ME fee?

 

 

 

 

 

 

Herb: anyone who is in the business of selling investment product must be licensed. Anyone who is in the business of dispensing investment advice for a fee must be registered with the SEC as a Registered Investment Advisor. So if a non-securities person "advises" someone on this board to buy a specific product (load or no-load) the "advisor" is not dispensing investment advice because he/she is not charging a fee for the "advice".

 

Joel L. Frank

 

 

Sierra,

Please examine the following quote from a newsletter which charges a subscription fee but is not regulated by the SEC or NASD.

 

"Since 1976, NoLoad Fund* has concentrated on one thing and one thing only—performance. And our focus has paid off.

 

The Hulbert Financial Digest ranks NoLoad Fund* the very best risk-adjusted newsletter for the past 25 years. More importantly, our single-minded attention has paid off for those who follow our strategy. Our Class 3 portfolio has turned in an impressive 18% annualized gain for the 25 years ending October 31, 2005."

http://www.fundx.com/subscribe.cfm

 

Is the newsletter providing investment advice? Is the newsletter charging a fee? If it walks like a duck and talks like a duck, it must be a duck.

 

===================================================================

According to the SEC, editors of investment newsletters are not required to register with the Commission as Investment Advisors. They are not fiduciaries to their subscribers.

 

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To the Instiller of Fear:

 

Thank you for the compliment! With your "Aloha" greeting, it sounds like you are from my favorite place on Earth, Hawaii. What I would give to be on the north shore of Oahu right now!

 

TR:

 

My remark was, indeed, meant as a compliment. You are a forceful advocate for your position, which is precisely why you drive me nuts!

 

Steve:

 

I'm trying to talk my wife into that Saturday lunch. She is starting to learn about this stuff, so it would be good for her. I'll give you a call if I make any progress.

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"Yes, Hawaii is great. Take care, and thank you very much"

 

Hope you get to make the lunch with Steve; love to hear about it if you do. Best wishes and have a nice evening.

 

 

Herb

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Aloha Herb, ......Here in CA, I just visited Hawaii in my "uke" class. We play lots of Hawaiian songs with hula dancing. Ira

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Hi,

Herb, in real life, it is the professional that must be careful of being sued. I have read plenty about various companies and others in the financial world being sued, but I have yet to read anything about individuals, magazines, websites, etc. being sued over financial advice.

 

Again, in real life, there are only two things an individual can control in trying to create wealth through investing: the amount of money being saved and the cost associated with the instrument used to invest the money. An individual cannot control the rate of return. Even fix-rate accounts can change over time.

 

So people need to save as much as reasonalble possible and control costs. The M & E just flat out cost too much and is a drag on returns. Getting life insurance through an investing instrument is an expensive way to buy life insurance. I contend that companies that sell this type of insurance should be sued because if a person really needs life insurance then the M & E does not meet their needs. A young couple with a child will need a lot more insurance than the risk of their portfolio dropping in value when they are probably only putting a few hundred dollars a month away into their account.

 

The only ones benefiting from the M & E is the salesperson and company. The impact on the investor is a reduced standard of living in retirement because of reduced returns. I doubt that you use the instruments that you sell for your own investing. If you don't eat your own cooking, why should anyone else. Best Wishes.

 

Joe

 

 

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Hi,

Herb, in real life, it is the professional that must be careful of being sued. I have read plenty about various companies and others in the financial world being sued, but I have yet to read anything about individuals, magazines, websites, etc. being sued over financial advice.

 

Again, in real life, there are only two things an individual can control in trying to create wealth through investing: the amount of money being saved and the cost associated with the instrument used to invest the money. An individual cannot control the rate of return. Even fix-rate accounts can change over time.

 

So people need to save as much as reasonalble possible and control costs. The M & E just flat out cost too much and is a drag on returns. Getting life insurance through an investing instrument is an expensive way to buy life insurance. I contend that companies that sell this type of insurance should be sued because if a person really needs life insurance then the M & E does not meet their needs. A young couple with a child will need a lot more insurance than the risk of their portfolio dropping in value when they are probably only putting a few hundred dollars a month away into their account.

 

The only ones benefiting from the M & E is the salesperson and company. The impact on the investor is a reduced standard of living in retirement because of reduced returns. I doubt that you use the instruments that you sell for your own investing. If you don't eat your own cooking, why should anyone else. Best Wishes.

 

Joe

 

 

 

Joe: Yes, professionals stand a great risk of being sued. Hence, agents must be cautious about what they say or write. My point re. non-agents was to ask about the consequence of opinions offered to people that visit this site. I worry that visitors may believe that all agents, all insurance companies, and all insurance products are frauds foisted on the public. And, Joe, you and I both know some of the comments here come close to this. Postings are not private conversations, they are public exchanges. I know the rules for agents, what are the rules for non-agents?

 

Your comments about M&E is something that I can understand. And yes, I believe that insurance needs cannot be adequately addressed with m&e fees. To be fair, I have never heard an agent or company present the idea that a person or family's life insurance needs can be met with the M&E benefit of an annuity. This is a new one to me. I agree that these costs reduce the returns for VA's. But, people buy products for different reasons, and if they feel that VA's are beneficial to them, or that fixed annuities are attractive to them, their decision should be respected. I think that's fair, wouldnt you agree?

 

Joe, we sell only fixed annuitiues and mutual funds. And, we would not sell what we do not buy. And, you have a good day.

 

Herb Hussey

 

 

 

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Joe,

 

"So people need to save as much as reasonably possible and control costs."

 

Great point. Too often people new to investing seek the magic bullet -- THE fund that will solve all of their problems -- instead of focusing on those two factors. And then that fund tanks, or the manager leaves, and the endless search begins again.

 

I also liked your point about eating one's own cooking. I've asked this of agents on this forum before. Herb stepped up to the plate and responded. I would love to see responses from other agents.

 

 

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Guest Sierra

 

Hi,

Herb, in real life, it is the professional that must be careful of being sued. I have read plenty about various companies and others in the financial world being sued, but I have yet to read anything about individuals, magazines, websites, etc. being sued over financial advice.

 

Again, in real life, there are only two things an individual can control in trying to create wealth through investing: the amount of money being saved and the cost associated with the instrument used to invest the money. An individual cannot control the rate of return. Even fix-rate accounts can change over time.

 

So people need to save as much as reasonalble possible and control costs. The M & E just flat out cost too much and is a drag on returns. Getting life insurance through an investing instrument is an expensive way to buy life insurance. I contend that companies that sell this type of insurance should be sued because if a person really needs life insurance then the M & E does not meet their needs. A young couple with a child will need a lot more insurance than the risk of their portfolio dropping in value when they are probably only putting a few hundred dollars a month away into their account.

 

The only ones benefiting from the M & E is the salesperson and company. The impact on the investor is a reduced standard of living in retirement because of reduced returns. I doubt that you use the instruments that you sell for your own investing. If you don't eat your own cooking, why should anyone else. Best Wishes.

 

Joe

 

 

 

Joe: Yes, professionals stand a great risk of being sued. Hence, agents must be cautious about what they say or write. My point re. non-agents was to ask about the consequence of opinions offered to people that visit this site. I worry that visitors may believe that all agents, all insurance companies, and all insurance products are frauds foisted on the public. And, Joe, you and I both know some of the comments here come close to this. Postings are not private conversations, they are public exchanges. I know the rules for agents, what are the rules for non-agents?

 

Your comments about M&E is something that I can understand. And yes, I believe that insurance needs cannot be adequately addressed with m&e fees. To be fair, I have never heard an agent or company present the idea that a person or family's life insurance needs can be met with the M&E benefit of an annuity. This is a new one to me. I agree that these costs reduce the returns for VA's. But, people buy products for different reasons, and if they feel that VA's are beneficial to them, or that fixed annuities are attractive to them, their decision should be respected. I think that's fair, wouldnt you agree?

 

Joe, we sell only fixed annuitiues and mutual funds. And, we would not sell what we do not buy. And, you have a good day.

 

Herb Hussey

 

====================================================================

Are you saying you purchase for your own pre-tax account a fixed annuity? If the answer is yes I would like to give you some advice---GET OUT OF IT ASAP!! If the answer is no, why did you say "we would not sell what we do not buy"?

 

The ME fee reduces the return on the fixed annuity as well. If not for the ME fee being factored into the interest rate the interest rate would be higher.

 

Joel L. Frank

Edited by Sierra

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Sierra; thanks for the suggestion, but I think I will stay with fixed and funds approach. Just so there is no mistake; We sell 'em and I own 'em. You have a good day, Sierra.

 

Herb Hussey

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Guest Sierra

Sierra; thanks for the suggestion, but I think I will stay with fixed and funds approach. Just so there is no mistake; We sell 'em and I own 'em. You have a good day, Sierra.

 

Herb Hussey

 

"You have a good day"... is that not the words you uttered to to J.MacDonald? Stop being so thin skinned and tell us why you buy for your own pre-tax account a fixed annuity but not a variable annuity. There is no guaranteed return of premium death benefit in a fixed annuity so what is its attraction to you?

 

 

Herb said: "Sierra: M&E charges for VA and fixed annuity are structurally different. The fixed annuity M&E is built into the cost of the product, and cant easily be broken out. On the other hand, the M&E for VA's are a separate fee that is charged to the client's account. The proof of that is that the M&E for VA is charged against the mutual funds in the VA, but not the fixed account of the VA. Therefore, if the client wants mutual funds, and wishes to reduce fees, the client can focus on products that dont have M&E costs"

====================================================================

So you sell fixed annuities because the ME fee is built into the cost of the product (not transparent) but do not sell variable annuities because the ME fee is listed in the prospectus (transparent). The ME fee is a drain on the investment return, fixed or variable, so why do you sell the fixed product and not the variable? Do you disclose to your fixed clients that they are paying a ME fee which is built into the cost of the product? Do you tell them what they get for the ME fee?

 

 

 

 

 

 

Herb: anyone who is in the business of selling investment product must be licensed. Anyone who is in the business of dispensing investment advice for a fee must be registered with the SEC as a Registered Investment Advisor. So if a non-securities person "advises" someone on this board to buy a specific product (load or no-load) the "advisor" is not dispensing investment advice because he/she is not charging a fee for the "advice".

 

Joel L. Frank

 

 

Sierra,

Please examine the following quote from a newsletter which charges a subscription fee but is not regulated by the SEC or NASD.

 

"Since 1976, NoLoad Fund* has concentrated on one thing and one thing only—performance. And our focus has paid off.

 

The Hulbert Financial Digest ranks NoLoad Fund* the very best risk-adjusted newsletter for the past 25 years. More importantly, our single-minded attention has paid off for those who follow our strategy. Our Class 3 portfolio has turned in an impressive 18% annualized gain for the 25 years ending October 31, 2005."

http://www.fundx.com/subscribe.cfm

 

Is the newsletter providing investment advice? Is the newsletter charging a fee? If it walks like a duck and talks like a duck, it must be a duck.

 

===================================================================

According to the SEC, editors of investment newsletters are not required to register with the Commission as Investment Advisors. They are not fiduciaries to their subscribers.

 

TR: I just read your post again and find it quite incredulous that a "pro" like you doesn't know that there is a disclaimer on investment newsletters disclosing to the reader that the editor is not rendering investment advice.

 

Joel L. Frank

 

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Joel: I am not thin skinned, I am discrete; which means that, while I am willing and able to discuss most things, my personal investments choices are not for public display or consumption. Put another way, I am not here for you to analyze or dissect. I dont do that to others, and I expect, repeat expect, the same courtesy. Lets be clear on that. If we can accommodate each other, then we continue to chat, if not, then, not. Thank you.

 

Herbert Hussey

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Guest TR1982

 

Sierra; thanks for the suggestion, but I think I will stay with fixed and funds approach. Just so there is no mistake; We sell 'em and I own 'em. You have a good day, Sierra.

 

Herb Hussey

 

"You have a good day"... is that not the words you uttered to to J.MacDonald? Stop being so thin skinned and tell us why you buy for your own pre-tax account a fixed annuity but not a variable annuity. There is no guaranteed return of premium death benefit in a fixed annuity so what is its attraction to you?

 

 

Herb said: "Sierra: M&E charges for VA and fixed annuity are structurally different. The fixed annuity M&E is built into the cost of the product, and cant easily be broken out. On the other hand, the M&E for VA's are a separate fee that is charged to the client's account. The proof of that is that the M&E for VA is charged against the mutual funds in the VA, but not the fixed account of the VA. Therefore, if the client wants mutual funds, and wishes to reduce fees, the client can focus on products that dont have M&E costs"

====================================================================

So you sell fixed annuities because the ME fee is built into the cost of the product (not transparent) but do not sell variable annuities because the ME fee is listed in the prospectus (transparent). The ME fee is a drain on the investment return, fixed or variable, so why do you sell the fixed product and not the variable? Do you disclose to your fixed clients that they are paying a ME fee which is built into the cost of the product? Do you tell them what they get for the ME fee?

 

 

 

 

 

 

Herb: anyone who is in the business of selling investment product must be licensed. Anyone who is in the business of dispensing investment advice for a fee must be registered with the SEC as a Registered Investment Advisor. So if a non-securities person "advises" someone on this board to buy a specific product (load or no-load) the "advisor" is not dispensing investment advice because he/she is not charging a fee for the "advice".

 

Joel L. Frank

 

 

Sierra,

Please examine the following quote from a newsletter which charges a subscription fee but is not regulated by the SEC or NASD.

 

"Since 1976, NoLoad Fund* has concentrated on one thing and one thing only—performance. And our focus has paid off.

 

The Hulbert Financial Digest ranks NoLoad Fund* the very best risk-adjusted newsletter for the past 25 years. More importantly, our single-minded attention has paid off for those who follow our strategy. Our Class 3 portfolio has turned in an impressive 18% annualized gain for the 25 years ending October 31, 2005."

http://www.fundx.com/subscribe.cfm

 

Is the newsletter providing investment advice? Is the newsletter charging a fee? If it walks like a duck and talks like a duck, it must be a duck.

 

===================================================================

According to the SEC, editors of investment newsletters are not required to register with the Commission as Investment Advisors. They are not fiduciaries to their subscribers.

 

TR: I just read your post again and find it quite incredulous that a "pro" like you doesn't know that there is a disclaimer on investment newsletters disclosing to the reader that the editor is not rendering investment advice.

 

Joel L. Frank

 

 

Sierra,

And I guess pigs can fly? That's my point. Just because you say it isn't advice doesn't make it so.

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