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How Does Valic Do It?

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TR1982,

 

Ouch, touchy. My question is really independent of the current post. You seem to defend VALIC at all turns, that is fine, I have no problem with that, but I think it is a legit question to ask if you are employed by them. I notice you didn't answer....what does that say?

 

I didn't challenge you too back up anything, just asked you whether you work for the company you seem so adamant to defend. I've defended and criticized TIAA, Fidelity, and Vanguard and I've always maintained in the open where my allegiances lay and who pays me (none of them). I've agreed and disagreed with you.

 

While I don't know it for a fact, my best guess is that you don't work for BAM. I've read all of Swedroe's books and your viewpoints don't match up. If you suddenly disclosed that you did work for them I would be shocked and then I would just as adamantly defend my point of view.

 

I wonder why you won't answer the simple question, a yes or no would suffice.

 

ScottyD

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Guest TR1982

TR1982,

 

Ouch, touchy. My question is really independent of the current post. You seem to defend VALIC at all turns, that is fine, I have no problem with that, but I think it is a legit question to ask if you are employed by them. I notice you didn't answer....what does that say?

 

I didn't challenge you too back up anything, just asked you whether you work for the company you seem so adamant to defend. I've defended and criticized TIAA, Fidelity, and Vanguard and I've always maintained in the open where my allegiances lay and who pays me (none of them). I've agreed and disagreed with you.

 

While I don't know it for a fact, my best guess is that you don't work for BAM. I've read all of Swedroe's books and your viewpoints don't match up. If you suddenly disclosed that you did work for them I would be shocked and then I would just as adamantly defend my point of view.

 

I wonder why you won't answer the simple question, a yes or no would suffice.

 

ScottyD

 

 

Sorry... I overreacted. Let me think about whether I want to disclose that. My concern is that it will color anything I say in the future.

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TR1982-

 

Shame on me for what? I don't profess to think for you or anyone else in this community. You and others here have the complete right to think whatever they want. I do think that by becoming better informed about fees and expenses investors can better understand the value of different courses of action. Because numerous independent thinkers have identified variable annuity costs as outweighing the benefits, I believe 403b investors are better off in a low fee 403b7 plan than in a high fee 403b1 plan. It might show you that "the emperor has no clothes" to Google "variable annuity fees" and read through the first 20 articles posted on the web. Several of those are from the SEC and NASD.

 

TR1982 if you've got better information, please let us know so we can embrace high fee variable annuity providers. We would like for such data to be validated by widely accepted actuarial techniques to compel us to change our views. If not, please be adult enough to admit the independent data and scholarship regarding variable annuity fees doesn't support your argument that maybe Valic is a better deal. There are variable annuity providers that charge mortality fees much lower than the 75 bp to 125 bp fees of Valic. Even then those lower fees are in addition to the underlying expense ratios of the investment vehicle.

 

I ready to accept the value of your wisdom. What your dismissive replies have shown me so far isn't much to compel me to change my view that 403b investors are better served in low fee 403b7 plans than high fee 403b1 plans.

 

In response to your question, I do not charge anyone for portfolio management. I manage my spouse's portfolio, my personal portfolio, and advise my parents and in-laws on their portfolios. I do not have auditable records of my portfolio's performance from the early days of my investing experience. I do know now that by using low fee (as low as 7 bp) mutual funds in tax sheltered accounts and separate term insurance policies, I am better off than if I had purchased a variable annuity product with a 200 to 300 bp total expense ratio.

 

As a courtesy to all of the members of this community perhaps you could explain what method you use to charge for portfolio management and what metrics you use to describe the performance of your clients' portfolios. If you have a better way with variable annuities please dazzle us with independently verifiable facts. My questions to you from my earlier post remain on your table for an answer.

 

I say again, state your case for Valic, et al, and please provide facts, not sniping, for all of us to consider.

 

RTS

 

 

1) My questions were not to you unless your name is febarnes or wmmcall. You seem to think that you can speak for them. Are they not able to speak for themselves? Apparently not. I am certain that if I had made those comments about Vanguard you all would be all over me for not providing any documentation. I simply ask others TO DO THE SAME.

2) Nobody has answered any of the questions I asked. My same questions are below: If you care to answer them, please do. If not, let's move on.

3)I simply asked others to support their lengthy, undocumented assertions about these firms. Here are the questions I asked before. I ask anyone here to answer them in a factual manner supported by evidence.

 

"Please show us how the fee structure is 6-8 times the average. The average of what? The average fee structure of Vanguard no load funds? The average expense ratio of the average retail mutual fund? The average expense ratio of the average VA subaccount?

You say someone will be paying 7% off the top for what? What page is that in the prospectus?

You say the salesman get no commission off the fixed account? I assume you know this because you have a copy of the employment contract with commission schedules for Valic representatives. Please show us where in their contract it says this.

Please provide the historical returns for Valic's investments that document that an investor will never meet or exceed the rate of inflation. Please provide the documentation that someone will "loose" money and then please provide the list of teachers who have not made any money in their Valic accounts."

 

Tr:

Yes, I can respond for myself. I presented to our board eight pages of data that unequivocally shows the plan as it is structured does not benefit the contributor. I provided my personal financial information as well as the Valic fee structure. I simply compared like funds to Vanguard and Fidelity. These funds trounced Valic. Furthermore, the teachers in my system are irate at the lack of full disclosure of the terms and conditions of the contract. I might add, if one thinks Valic operates in the best interest of the client, they are incredibly niave. I will be presenting this info at our association meeting on Thursday. It is open to the public.

 

 

I'm still waiting for you to answer my questions. I guess I can take this response to mean that you can't or won't.

 

Tr

I used there expense ratios and compared it to my net gains. Subtract contributions from balance compute interest.

This is a simple and easy way to reveal costs.

 

 

 

 

 

 

 

TR1982-

 

Shame on me for what? I don't profess to think for you or anyone else in this community. You and others here have the complete right to think whatever they want. I do think that by becoming better informed about fees and expenses investors can better understand the value of different courses of action. Because numerous independent thinkers have identified variable annuity costs as outweighing the benefits, I believe 403b investors are better off in a low fee 403b7 plan than in a high fee 403b1 plan. It might show you that "the emperor has no clothes" to Google "variable annuity fees" and read through the first 20 articles posted on the web. Several of those are from the SEC and NASD.

 

TR1982 if you've got better information, please let us know so we can embrace high fee variable annuity providers. We would like for such data to be validated by widely accepted actuarial techniques to compel us to change our views. If not, please be adult enough to admit the independent data and scholarship regarding variable annuity fees doesn't support your argument that maybe Valic is a better deal. There are variable annuity providers that charge mortality fees much lower than the 75 bp to 125 bp fees of Valic. Even then those lower fees are in addition to the underlying expense ratios of the investment vehicle.

 

I ready to accept the value of your wisdom. What your dismissive replies have shown me so far isn't much to compel me to change my view that 403b investors are better served in low fee 403b7 plans than high fee 403b1 plans.

 

In response to your question, I do not charge anyone for portfolio management. I manage my spouse's portfolio, my personal portfolio, and advise my parents and in-laws on their portfolios. I do not have auditable records of my portfolio's performance from the early days of my investing experience. I do know now that by using low fee (as low as 7 bp) mutual funds in tax sheltered accounts and separate term insurance policies, I am better off than if I had purchased a variable annuity product with a 200 to 300 bp total expense ratio.

 

As a courtesy to all of the members of this community perhaps you could explain what method you use to charge for portfolio management and what metrics you use to describe the performance of your clients' portfolios. If you have a better way with variable annuities please dazzle us with independently verifiable facts. My questions to you from my earlier post remain on your table for an answer.

 

I say again, state your case for Valic, et al, and please provide facts, not sniping, for all of us to consider.

 

RTS

 

 

1) My questions were not to you unless your name is febarnes or wmmcall. You seem to think that you can speak for them. Are they not able to speak for themselves? Apparently not. I am certain that if I had made those comments about Vanguard you all would be all over me for not providing any documentation. I simply ask others TO DO THE SAME.

2) Nobody has answered any of the questions I asked. My same questions are below: If you care to answer them, please do. If not, let's move on.

3)I simply asked others to support their lengthy, undocumented assertions about these firms. Here are the questions I asked before. I ask anyone here to answer them in a factual manner supported by evidence.

 

"Please show us how the fee structure is 6-8 times the average. The average of what? The average fee structure of Vanguard no load funds? The average expense ratio of the average retail mutual fund? The average expense ratio of the average VA subaccount?

You say someone will be paying 7% off the top for what? What page is that in the prospectus?

You say the salesman get no commission off the fixed account? I assume you know this because you have a copy of the employment contract with commission schedules for Valic representatives. Please show us where in their contract it says this.

Please provide the historical returns for Valic's investments that document that an investor will never meet or exceed the rate of inflation. Please provide the documentation that someone will "loose" money and then please provide the list of teachers who have not made any money in their Valic accounts."

 

Tr:

Yes, I can respond for myself. I presented to our board eight pages of data that unequivocally shows the plan as it is structured does not benefit the contributor. I provided my personal financial information as well as the Valic fee structure. I simply compared like funds to Vanguard and Fidelity. These funds trounced Valic. Furthermore, the teachers in my system are irate at the lack of full disclosure of the terms and conditions of the contract. I might add, if one thinks Valic operates in the best interest of the client, they are incredibly niave. I will be presenting this info at our association meeting on Thursday. It is open to the public.

 

 

I'm still waiting for you to answer my questions. I guess I can take this response to mean that you can't or won't.

 

Tr

I used there expense ratios and compared it to my net gains. Subtract contributions from balance compute interest.

This is a simple and easy way to reveal costs.

 

 

That is the point it is not FULLY DISCLOSED IN PROSPECTUS. see PREVIOUS ANSWER

 

 

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Guest TR1982

I think that saying it is not disclosed in the prospectus is not accurate. Prospectuses have to conform to NASD and SEC standards. I pulled up their document and it is clearly laid out in a nice table on pages 9-11. What is it about their expense ratios that is not not clear from this document?

 

Besides, the questions I presented to you had nothing to do with Fidelity's fund performance. Why don't I refresh your memory since you don't seem to remember.

 

1)Please show us how the fee structure is 6-8 times the average. The average of what? The average fee structure of Vanguard no load funds? The average expense ratio of the average retail mutual fund? The average expense ratio of the average VA subaccount?

 

2)You say someone will be paying 7% off the top for what? What page is that in the prospectus?

 

3)You say the salesman get no commission off the fixed account? I assume you know this because you have a copy of the employment contract with commission schedules for Valic representatives. Please show us where in their contract it says this.

 

4)Please provide the historical returns for Valic's investments that document that an investor will never meet or exceed the rate of inflation.

 

5)Please provide the documentation that someone will "loose" money.

 

6)Please provide the list of teachers who have not made any money in their Valic accounts.

 

I think if you are going to make these kind of assertions, please back them up with information. To date, I have seen none, which leads me to conclude they are not accurate.

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I think that saying it is not disclosed in the prospectus is not accurate. Prospectuses have to conform to NASD and SEC standards. I pulled up their document and it is clearly laid out in a nice table on pages 9-11. What is it about their expense ratios that is not not clear from this document?

 

Besides, the questions I presented to you had nothing to do with Fidelity's fund performance. Why don't I refresh your memory since you don't seem to remember.

 

1)Please show us how the fee structure is 6-8 times the average. The average of what? The average fee structure of Vanguard no load funds? The average expense ratio of the average retail mutual fund? The average expense ratio of the average VA subaccount?

 

2)You say someone will be paying 7% off the top for what? What page is that in the prospectus?

 

3)You say the salesman get no commission off the fixed account? I assume you know this because you have a copy of the employment contract with commission schedules for Valic representatives. Please show us where in their contract it says this.

 

4)Please provide the historical returns for Valic's investments that document that an investor will never meet or exceed the rate of inflation.

 

5)Please provide the documentation that someone will "loose" money.

 

6)Please provide the list of teachers who have not made any money in their Valic accounts.

 

I think if you are going to make these kind of assertions, please back them up with information. To date, I have seen none, which leads me to conclude they are not accurate.

 

Tr:

Your opinion or belief about my figures or presentation to our school board is IRRELEVANT. The teachers in my system know from their statements this program is in the words of Forbes magazine "a dog." However, to humor myself and those reading this post, consider the following:

 

1. My personal account info provided to our board reveals a cost that exceeds the 1.25 average by 6 to 8 percent. Valic reps harp on the fact these investments are in mututal funds. This is partially true. They fail to tell you they are enclosed in an insurance wrapper. There is a lack of transparency and full disclosure. My agreement is from 99 and has changed ,but not in my best interest. In 99 this plan was called a cafeteria plan. Strange invesment vehicle. I have never heard of a cafeteria earning interest!!! If one is in the new program, the Portfolio Misdirected, his costs are much greater. Go to the website and read it for yourself.

 

2. The seven percent figure is revealed when one subtracts the amount contributed as principal and the balance of the contribution goes down when it is contributed. My personal account info from Valic proves this. Just because it is not in the prospectus does not mean it does not take place.

 

3. Unless the sales rep is not telling the truth this is the case. You make a good point about the truth. It is possible they are not telling it like it is.

 

4. The seven year history of Valic in my school system is all that is germain to my presentation. If you want to do a historical analysis, knock yourself out.

 

5. My personal records taken from the Valic website under personal performance prove it. The board has a copy as do other teachers.

 

6. The right to privacy act will not allow me to provide personal info of others. I am shocked you would make such an unlawful request. However, the range of financial loss of the teachers who have discussed this with me is from 6 to 16 percent.

 

Finally, my presentation has not been rebutted by anyone. If anything , It is worse than the known figures I provided. My response adequately answers your questions within the law. I am assuming, of course, you understand the words personal and privacy.

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If it's irrelevant, then why waste your time replying?

 

It is called common courtesy in my part of the United States. You may have good intentions, but, from my perspective, which may be irrelevant to you, your people skills could use some work.

 

I have most likely placed my job in jeoardy by speaking out in a public way. However, in order to help my colleagues and me, this was the only way. If you were an educator, you would understand the risk. So, I have no reason to attempt to deceive or make up my info. The only way my formal requests would even be considered is if I had my facts in order. Since I have been asked to be on the committee to study change, I must have some credibility with our school system based on the facts presented. Regardless of the outcome or recommendations, I will have exposed a GREAT DECEPTION that teachers will refuse to be a part of in the future. So, I have already achieved some good for myself and others like me, whose only wish was to benefit from investing their money for retirement. How dare we expect those responsible to DISCLOSE and operate in OUR BEST INTEREST! Shame on teachers for such high expectations.

 

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I am working with a TPA with a full array of mutual fund options and a comprehensive service offering. I'm involved in the 403(b)/457 part of the effort. I'd like to get some input on how what we do (a translated 401(k) offering) sounds to people, and what concerns we are not addressing or highlighting properly. Half the time people's eyes glaze over when we try to show them that their concerns are illusory and they can simplify their lives, get good results and worry less. Anybody interested in looking at the stuff? All comments, good and bad, are welcome.

 

Tom Geer

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Guest Sierra

I am working with a TPA with a full array of mutual fund options and a comprehensive service offering. I'm involved in the 403(b)/457 part of the effort. I'd like to get some input on how what we do (a translated 401(k) offering) sounds to people, and what concerns we are not addressing or highlighting properly. Half the time people's eyes glaze over when we try to show them that their concerns are illusory and they can simplify their lives, get good results and worry less. Anybody interested in looking at the stuff? All comments, good and bad, are welcome.

 

Tom Geer

 

Yes Tom, I'm interested at "looking at the stuff".

 

Joel

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I am working with a TPA with a full array of mutual fund options and a comprehensive service offering. I'm involved in the 403(b)/457 part of the effort. I'd like to get some input on how what we do (a translated 401(k) offering) sounds to people, and what concerns we are not addressing or highlighting properly. Half the time people's eyes glaze over when we try to show them that their concerns are illusory and they can simplify their lives, get good results and worry less. Anybody interested in looking at the stuff? All comments, good and bad, are welcome.

 

Tom Geer

 

 

Tom:

I am willing to study available options that benefit the contributor.

FB

 

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