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Nea Valuebuilder: Another Perspective

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In the past few months, I've begun learning about retirement options and have found this site to be an invaluable resource. I am also an active member of the National Education Association (NEA) and was very concerned when I read some of the negative articles and posts about the NEA ValueBuilder program run by Security Benefit. Even though the program is not an option in my school system, I felt it was important as an advocate for teachers that I should find out what I could about this issue.

 

I recently attended the NEA Representative Assembly in Philadelphia as a delegate. After hearing the year's financial reports, I saw little mention of Member Benefits and if any money was received from vendors such as Security Benefits. I wrote a note with some of the questions I had about how Member Benefits products are selected, how much is received from vendors and how it is spent to the secretary-treasurer of NEA. She promptly wrote me back and I went up to meet her and we spent about 20 minutes discussing some of the issues around Member Benefits and the NEA Valuebuilder program. I didn't take word for word notes, so the quotes are pulled from the web site www.neamb.com

 

“The NEA Member Benefits Corporation is a subsidiary of the NEA, established to develop, implement and administer NEA Member Benefits programs and services. Its governing body includes a Board of Directors which oversees the corporation to ensure the quality and consistency of the programs.”

 

“The NEA does not profit from NEA Member Benefits programs. The goal of NEA Member Benefits programs is to break even--no program is supported by dues dollars.”

 

The key point here is that NEA isn't receiving kickbacks from Security Benefits. There is no money in the main NEA budget from vendors. Now Member Benefits does receive money and they sure do give out a lot of canvas bags, and luggage tags, and key chains and water bottles and anything else you can put a logo on. (Side note: On the one hand it seems over the top the amount of stuff they had for the 8,000 delegates on the other hand these delegates represent 3.2 million members and will presumably use info for their state and local programs from Member Benefits to use as a recruiting/retention tool.)

 

The NEA Member Benefits trustees report to the NEA Board of Directors. Interested members should be able to contact their state NEA Director for more info. I will be trying to get info from my state directors to find out how much is received from vendors and how it is spent.

 

The next issue was how are Member Benefits programs selected.

“NEA Member Benefits also demands strict criteria from prospective corporate providers. All providers must have the ability to serve NEA members on a nationwide basis, be financially stable, demonstrate a commitment to quality and a proven track record of success, comply with all federal regulations, be willing to collaborate closely with NEA Member Benefits in marketing efforts, and provide a competitively priced product backed by excellent service, exclusively for NEA members and their families.”

 

An RFP process is used to select vendors meeting the criteria for a particular program. This sounds good in most cases but the 'nationwide basis' causes big problems for the NEA Valuebuilder program. The program has to be available in all 50 states AND to our overseas members teaching in the Department of Defense schools. Now, TIAA-CREF was mentioned specifically as a vendor that would have been a great fit. It makes sense, they deal with colleges, why not K-12? TIAA-CREF didn't want anything to do with NEA because they don't want to deal with one teacher in a school system in a small system in Delaware, and then another two or three bus drivers in Nevada and maybe a teacher in Okinawa. TIAA-CREF can keep costs low by dealing with the staff of an entire university, they can't do that by offering services to every member of the NEA. In my mind, the very high costs associated with the NEA Valuebuilder product are paying for Security Benefits to deal with thousands of local school districts and advertise to those 3.2 million members. My school system doesn't offer NEA Valuebuilder but I have no doubt that if I called up Security Benefit then they would have someone do the paperwork to be registered as a vendor on my local list. SO, out of those companies that responded to the RFP and could meet the selection criteria especially 'nationwide basis' and 'proven track record', Security Benefits was the best of the lot.

 

There was a note of optimism though, apparently enough 'financially stable' companies with 'a proven track record' are finally making use of the internet that NEA members may eventually have choices with much lower expenses. i.e. Self-directed option rather than a full service option.

 

I think it's clear that the Security Benefits choices are a bad deal for anyone that has access to lower cost choices. The full service model doesn't add much if any value to the individual investor. However, I'm not sure that they are much worse than the Primerica 403(b) I signed up for when I had just started out teaching. I will continue to believe that NEA and NEA Member Benefits is doing the best they can for NEA members under the limitations they have. Hopefully the future will bring better choices.

 

Now, my experiences are with the national and my individual state organization. It is certainly possible that leadership in locals or other states may have engaged in behavior that was not in the best interest of the members.

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Ultra,

 

1) You said that:

 

"The key point here is that NEA isn't receiving kickbacks from Security Benefits."

 

However, here is a quotation directly from the NEA MB web site:

 

"Security Benefit pays an annual fee to MBC based in part on the average assets invested in the NEA Valuebuilder products under the agreement."

 

I have e-mails directly from NEA MB stating that Security Benefits pays $2 million to NEA MB.

 

I suppose that we could quibble over what constitutes "kickbacks," but it is a FACT that Security Benefits pays an annual fee to NEA MB.

 

It is another fact that low cost companies such as Vanguard are unwilling to pay money to NEA MB. Yet another fact is that NEA MB has not endorsed low cost companies such as Vanguard.

 

2) You said that:

 

"I'm not sure that they are much worse than the Primerica 403(b) I signed up for when I had just started out teaching. "

 

Response: Is this not yielding to the least common denominator?

 

3) You said that:

 

"I will continue to believe that NEA and NEA Member Benefits is doing the best they can for NEA members under the limitations they have."

 

Response: If Valuebuilder is the best that NEA can do, that is a pretty sad commentary.

 

 

 

 

 

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It's good to be skeptical but the details are important.

 

1. NEA Member Benefits is not the same as NEA. NEA Member Benefits is a self-contained little sub-unit. It doesn't use any dues dollars and it doesn't give any money to NEA. It's like the school store at my high school. Instructional funds aren't used to run the school store and profits from the school store aren't used to buy textbooks.

 

I am attempting to obtain the NEA MB financial report. If you are a member you may be able to get info from your state NEA director.

 

Now, I did mention all the advertising stuff including the 10,000 or so NEA Valuebuilder bags, keychain, luggage tags, water bottles, etc. I did see dollar signs as all that stuff was passed out and felt bad that each item given away represented a higher expense ratio for participants. I'm also assuming that part of that money is going to the many direct mailings that members receive from NEA MB on a regular basis. There are also regional directors that travel around distributing information about NEA MB programs.

 

Assuming that there are still 750 million under assets as is claimed on the site, then 2 million would represent around a 0.26% expense which is something we would prefer not to see but is probably consistent with 12b-1 expenses.

 

So, to me a kickback would be money that goes directly back to NEA to support other stuff. The $2 million you are talking about seems to be going to advertise and distribute program information.

 

1-a. I was told that there is a Request For Proposal (RFP) process for NEA MB programs. I have not seen the RFP for the NEA Valuebuilder program. (Somehow I don't think Vanguard submitted a proposal.) The TIAA-CREF discussion indicates to me that a low cost company was desired. Hopefully, we will see some changes if some of these lower cost self-directed internet options become available. However, there is no getting around the fact that NEA MB will need money to advertise the program to members so even if Vanguard or other low cost companies were an option there would still be a layer of expenses added to let members know that the programs exist.

 

I think the argument isn't whether Security Benefits should give money to NEA MB, but what should the expense ratio limits be in relationship to assets under management.

 

2&3. We can absolutely say that educators have to compare their local options and in all likelihood will find something better than NEA Valuebuilder. (Will also probably find things worse.) The true conflict of interest here is that NEA MB can't say on the website, "Hey, you can probably do better! Be sure to check out your other options."

 

The current situation is that the only companies interested in dealing with NEA are full service shops with high expenses. Most of us here on the board (and bogleheads) know that full-service doesn't give more value but rather less. The other option would have been to offer nothing at all.

 

We do need to keep advocating for NEA MB to offer better products but I can't find any evidence of unethical behavior on the national level.

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Ultra,

 

1) Great idea on getting the NEA MB financial report. I will look into that.

 

2) Again, we could quibble over the definition of kickback. I stand by what I said: SB pays an annual fee of $2 million to NEA MB. NEA then endorses SB. Let the folks decide what kind of arrangement this is.

 

The reason Vanguard is not interested in an NEA program is that it is not willing to pay a fee to NEA MB, as does Security Benefit.

 

3) "We can absolutely say that educators have to compare their local options and in all likelihood will find something better than NEA Valuebuilder."

 

The problem with this line of reasoning is that the NEA label carries a great deal of weight with its members. Folks believe that if NEA endorses a program, it must be good because, after all, NEA is looking out for their interests. NEA wouldn't steer its members wrong, would it?

 

4) "The current situation is that the only companies interested in dealing with NEA are full service shops with high expenses."

 

And why is this the case? Is it because low cost companies will not pay $2 million to receive NEA's endorsement?

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I would not join the NEA. In my opinion they are a corrupt organization that is bringing little value to its members while taking in huge amounts of money. Most of the benefits they claim to offer can be gotten other places for free.

 

When I was fighting to get Vanguard into the system and was getting the cold shoulder it was suggested to me that I approach our local leg of the NEA. They would not support me in my efforts to get Vanguard or any other low fee retirement entity. Instead they referred me to some -you guessed it- some Nationally sponsored retirement NEA plan. What Crap. All I wanted them to say was, "yes we endorse the idea of bringing lower fee

options into our school system" and They wouldn't do it.

 

WE now have Vanguard but no thanks to NEA Nationally or locally. It no longer serves any useful purpose and as a union it has no clout anymore. Not in my school system anyway. Its a self serving body.

 

 

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Hi Everyone,

 

NEA Member Benefits plans to add a low-cost, internet-based product to the ValueBuilder program. I believe the details were supposed to have been announced in June, but perhaps they are waiting for the final IRS regulations to be published.

 

Once the regulations are published, I imagine districts will issue RFPs for 403(b) vendors, as mine is planning to do. I am interested in finding out more about the new NEA MB program and what a bid from them would include. I am particularly interested in finding out if they will offer low-cost index funds.

 

Jeff

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Guest Sierra

Whether it is soap suds or 403b products you can bet it is priced at such a level that the company can afford to pay the endorsement fee to the union AND still wind up with MORE in profit than if it never entered into the endorsement fee arrangement in the first place. There must be a large enough plate for the broker to eat from, the broker's rep to eat from and the union to eat from...enter the 2-3 percent product.

 

The index fee provider will never pay a fee for an endorsment because the fees are much too low to start with. Additionally, index funds sell themselves, they do not need a union endorsement. When you see a union endorsement you most probably are being sold something that you do not need and or is harmful to your financial condition.

 

Joel

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There are a number of reasons to be critical of the NEA Valuebuilder products, but if you are going to be critical you should be critical of the right things.

 

The argument that I'm hearing seems to be that Security Benefits showed up at the door of the NEA. They dropped off a sack with 2 million dollars and so the corrupt union endorsed Security Benefits which then went off to pillage and loot the retirement accounts of members.

 

From my interview with the Secretary-Treasurer of the NEA (who is on the board of trustees for NEA MB), NEA Member Benefits (a subsidiary of NEA with the goal of breaking even) put out a Request for Proposal (RFP) for a 403(b) and 457 plan. An RFP is a competitive bid process. There were a number of factors in the selection process including the ability to provide service nationwide and to Department of Defense schools, be financially stable and have a proven track record. Security Benefits was chosen.

 

Now the big problem people have is that Security Benefits gave money to NEA Member Benefits. This money is used to advertise the NEA Valuebuilder program to members. I will again mention all the advertising stuff that is given to promote the NEA Valuebuilder program.

 

Let's pretend that we are on the NEA Member Benefits Board of Trustees and we select Vanguard as a provider through the RFP process. One of the options is Vanguard Total Stock Market Index (VTSMX) with an expense ratio of 0.19%. Great!!! Now, we have a very low cost option that beats the industry average of 1.09%. But wait, we have to let the members know that the product is available. Let's go cheap and just post something up on a website. We hire someone to design and post a page about our new offering for $5,000. We can't use dues dollars to promote Vanguard because that would be unethical and we aren't making any profits from offering Vanguard. We need to recover the cost, otherwise members won't know that we have this great low cost retirement program. The answer is obvious, we ask Vanguard to help pay for the cost of promoting their product. Vanguard comes back and says sure here is a check for $5,000.

 

I think everyone would probably be very happy with that scenario. No problem with Vanguard paying NEA Member Benefits $5K to announce the availability of the product.

 

Now let's imagine that after a few months Vanguard tells NEA Member Benefits that they are getting calls from NEA members that want to know more info about the plan. Vanguard tells Member Benefits they can't keep a low expense ratio for their other customers if they have to spend time working with teachers that don't know anything about investment. NEA Member Benefits says okay and opens an 800 number for questions. Suddenly the costs of offering the Vanguard programs are much higher because NEA Member Benefits now has to have someone staffing the 800 line during the day. (Not to mention the long distance to help those teachers in Okinawa and Germany.) So, NEA Member Benefits goes back to Vanguard and says that they have to break even and are currently losing money by offering the products. Vanguard realizes this will be a recurring expense and says, okay but lets come up with a fair advertising and support percentage to add to the cost of the underlying fund expense. (0.19% + some percentage to NEA Member Benefits to advertise)

 

Back to reality: NEA Member Benefits takes money from Security Benefits to advertise the NEA Valuebuilder that Security Benefits profits from. In this case though, it's not just a single webpage and an 800 number (in English and Spanish) but there is also direct mailings to 3.2 million members, a team of member benefits directors for each region that goes to state and local meetings then there are pamphlets, refrigerator magnets, tote bags, water bottles, etc, etc. All of which can't come from dues. The provider that is making the profit is the only appropriate place for NEA Member Benefits to obtain funds for advertising the product. So if you want to be critical of money given to NEA Member Benefits from Security Builder then it should be over the amount. So, is $2 million too much? Given that there is at least $750 million assets under management that represents less than 0.25% for advertising. It seems equivalent to 12b-1 expenses for funds that advertise. If you want it to be less then give your cost saving measures for informing and supporting the rank and file members.

 

The real problems are:

-Low cost index funds do not "sell themselves" as a 403(b) option otherwise we wouldn't all be here complaining about how hard it to get our school systems to offer them.

-funds offered through NEA Valuebuilder are more expensive than the industry average

-NEA Valuebuilder does not offer low cost core index funds

-Broker service costs from Security Benefits adds another layer of costs to the already expensive funds

-Security Benefits charges administration fees for accounts under $25K

-Security Benefits charges contingent deferred sales charges and variable account fees that range from 0.35% - 1%

-NEA Member Benefits advertising and member support adds a layer of cost to the already expensive funds.

-The vast majority of the 403(b) industry is geared to drain the retirement savings of educators. It is almost impossible to work within the current broker based system and receive a good value.

-Direct channel investing for 403(b) is the exception and not the rule. (Wait, I'm repeating myself so I'll end here.)

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Guest Sierra

There are a number of reasons to be critical of the NEA Valuebuilder products, but if you are going to be critical you should be critical of the right things.

 

The argument that I'm hearing seems to be that Security Benefits showed up at the door of the NEA. They dropped off a sack with 2 million dollars and so the corrupt union endorsed Security Benefits which then went off to pillage and loot the retirement accounts of members.

 

From my interview with the Secretary-Treasurer of the NEA (who is on the board of trustees for NEA MB), NEA Member Benefits (a subsidiary of NEA with the goal of breaking even) put out a Request for Proposal (RFP) for a 403(b) and 457 plan. An RFP is a competitive bid process. There were a number of factors in the selection process including the ability to provide service nationwide and to Department of Defense schools, be financially stable and have a proven track record. Security Benefits was chosen.

 

Now the big problem people have is that Security Benefits gave money to NEA Member Benefits. This money is used to advertise the NEA Valuebuilder program to members. I will again mention all the advertising stuff that is given to promote the NEA Valuebuilder program.

 

Let's pretend that we are on the NEA Member Benefits Board of Trustees and we select Vanguard as a provider through the RFP process. One of the options is Vanguard Total Stock Market Index (VTSMX) with an expense ratio of 0.19%. Great!!! Now, we have a very low cost option that beats the industry average of 1.09%. But wait, we have to let the members know that the product is available. Let's go cheap and just post something up on a website. We hire someone to design and post a page about our new offering for $5,000. We can't use dues dollars to promote Vanguard because that would be unethical and we aren't making any profits from offering Vanguard. We need to recover the cost, otherwise members won't know that we have this great low cost retirement program. The answer is obvious, we ask Vanguard to help pay for the cost of promoting their product. Vanguard comes back and says sure here is a check for $5,000.

 

I think everyone would probably be very happy with that scenario. No problem with Vanguard paying NEA Member Benefits $5K to announce the availability of the product.

 

Now let's imagine that after a few months Vanguard tells NEA Member Benefits that they are getting calls from NEA members that want to know more info about the plan. Vanguard tells Member Benefits they can't keep a low expense ratio for their other customers if they have to spend time working with teachers that don't know anything about investment. NEA Member Benefits says okay and opens an 800 number for questions. Suddenly the costs of offering the Vanguard programs are much higher because NEA Member Benefits now has to have someone staffing the 800 line during the day. (Not to mention the long distance to help those teachers in Okinawa and Germany.) So, NEA Member Benefits goes back to Vanguard and says that they have to break even and are currently losing money by offering the products. Vanguard realizes this will be a recurring expense and says, okay but lets come up with a fair advertising and support percentage to add to the cost of the underlying fund expense. (0.19% + some percentage to NEA Member Benefits to advertise)

 

Back to reality: NEA Member Benefits takes money from Security Benefits to advertise the NEA Valuebuilder that Security Benefits profits from. In this case though, it's not just a single webpage and an 800 number (in English and Spanish) but there is also direct mailings to 3.2 million members, a team of member benefits directors for each region that goes to state and local meetings then there are pamphlets, refrigerator magnets, tote bags, water bottles, etc, etc. All of which can't come from dues. The provider that is making the profit is the only appropriate place for NEA Member Benefits to obtain funds for advertising the product. So if you want to be critical of money given to NEA Member Benefits from Security Builder then it should be over the amount. So, is $2 million too much? Given that there is at least $750 million assets under management that represents less than 0.25% for advertising. It seems equivalent to 12b-1 expenses for funds that advertise. If you want it to be less then give your cost saving measures for informing and supporting the rank and file members.

 

The real problems are:

-Low cost index funds do not "sell themselves" as a 403(b) option otherwise we wouldn't all be here complaining about how hard it to get our school systems to offer them.

-funds offered through NEA Valuebuilder are more expensive than the industry average

-NEA Valuebuilder does not offer low cost core index funds

-Broker service costs from Security Benefits adds another layer of costs to the already expensive funds

-Security Benefits charges administration fees for accounts under $25K

-Security Benefits charges contingent deferred sales charges and variable account fees that range from 0.35% - 1%

-NEA Member Benefits advertising and member support adds a layer of cost to the already expensive funds.

-The vast majority of the 403(b) industry is geared to drain the retirement savings of educators. It is almost impossible to work within the current broker based system and receive a good value.

-Direct channel investing for 403(b) is the exception and not the rule. (Wait, I'm repeating myself so I'll end here.)

 

 

A union negotiates the wages and working conditions of its members. If the union feels the 403b is an issue for collective bargainging then bring the issue up at the bargaining table but do not enter the 403b business by the "endorsement" process. The endorsement fee is simply a back door way of raising revenue. Ultra, what would be your opinion of a school district that, for a fee, endorsed a specific 403b product provider? The fee would be used to balance the school district's budget. The taxpayer would like it...but would it be the right thing to do? NY Governor Spitzer ruled while attorney general that it is illegal for the NY teachers union to do so.

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Ultra,

 

I do not believe you are looking at the NEA Valuebuilder from an unbiased prospective, you are trying to protect your friends from a very poor decision.

 

Did it ever occur to you that an organization that is supposed to be protecting its members might use its dues to lobby districts for BETTER options with lower costs, rather than maintain and attempt to benefit from the status quo?

 

If you were sold this product, how would you feel? Are you willing to live with subpar performance for your entire life because of the NEA's decision?

 

You cannot separate the NEA and the NEAMB, they are one and the same regardless of separation by legal status. The fact of the matter is that the unions can be a great force for change in retirement plans for educators and in many states are doing the right thing (try WEATrust in Wisconsin).

 

My wife is an NEA Member - we expect more from them than the horrible product they push. Why push a product at all - why not push for change. If the NEA Valuebuilder is the right and moral thing to do, than why doesn't the NEAMB start offering Health Insurance and pushing that on the districts?

 

The NEA and local unions work hard to ensure that their members have excellent health benefits, why not do the same for the 403(b)?

 

I'm not anti-union, but the NEA needs to realize its members expect more from them and we believe the unions have the ability to work for better retirement benefit programs.

 

ScottyD

 

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Hi,

I have been an NEA member through UTLA for 30 years. The NEA Valuebuilder is a terrible deal for teachers. If NEA can't offer anything better than that, then they should get out of the business. Quite frankly, teachers are getting a raw deal from their own union. Best Wishes.

 

Joe

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Ultra,

 

You said that,

 

"The next issue was how are Member Benefits programs selected.

“NEA Member Benefits also demands strict criteria from prospective corporate providers. All providers must have the ability to serve NEA members on a nationwide basis, be financially stable, demonstrate a commitment to quality and a proven track record of success, comply with all federal regulations, be willing to collaborate closely with NEA Member Benefits in marketing efforts, and provide a competitively priced product backed by excellent service, exclusively for NEA members and their families.”

 

Comment: On the surface, these criteria are fine. However, the portion that I bold printed virtually ensures a mediocre (at best) product. It ensures the usual list of high cost/mediocre performance suspects. It excludes low cost/high quality performers such as Vanguard and Fidelity.

 

I think that your intentions are good, but I think that you have been overly-accepting of the usual NEA excuses for this pathetic Valuebuilder product. Valuebuilder? Hardly. More like Valuekiller.

 

As you can tell, I have little but contempt for NEA/NEA MB when it comes to financial products. Based upon the Valuebuilder experience, I will have nothing whatsoever to do with any financial product that NEA endorses. If Valuebuilder is the best that NEA/NEA MB can do with 403b offerings, why on earth should anyone trust what they recommend for loans, credit cards, insurance, etc.?

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Wow! I listed a ton of reasons why NEA Valuebuilder is bad but because I give justification on how the money from Security Benefits might be legitimately used to market the product, I am labeled as being biased. Well if so, then I think it balances out the strong bias in the other direction.

 

There are two different rules.

1. Don't be evil.

2. Do no harm.

 

My fundamental argument is that NEA and NEA MB didn't violate rule #1. People are painting with a very broad brush in saying that NEA and NEA MB are corrupt which to me equals evil. I am presenting the perspective that NEA isn't evil but rather offered a bad product in a market filled with bad products. My school system offers 17 403(b) vendors with loaded funds and high expense ratios. They only offer 1 vendor with low fees. Employee benefits won't just say to employees, hey check out the state 457 plan it's a better deal or look carefully and compare everything to the TIAA-CREF option. I am frustrated with my school system but I don't think they are evil or corrupt.

 

I agree that NEA MB violated rule #2. They are doing harm by offering a product with expenses so far above industry average and should either get out of the market OR offer something better. I believe that they intend to offer a better option soon and look forward to reporting back when that happens.

 

As advocates for teachers, I think the NEA members on this board should be sending a message that says, "NEA MB shouldn't offer a retirement product unless the expense ratio is below ######. NEA MB shouldn't have marketing expenses above Y. NEA Valuebuilder should have low cost index funds as a major part of their offerings." As an advocate, I am working within my organization to make changes. I have talked with NEA officers about the concerns of the 403(b) wise community and I have also reported back here my findings.

 

Does NEA Member Benefits offer anything good? I recently opened a money market account through a link from the NEA Member Benefits website. It offers 5.08% interest with a 1% bonus for the first two months from Bank of America. The interest rate is not the absolute highest but it is competitive and beats the pants off what I was receiving from my savings account or what I could get at Bank of America on my own or even get from a CD. I chose this option because the Bank of America branch is literally a block from my house and is more convenient than an internet bank. I'm also enjoying my free subscription to Kiplinger's from the magazine service.

 

 

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Guest Sierra

Wow! I listed a ton of reasons why NEA Valuebuilder is bad but because I give justification on how the money from Security Benefits might be legitimately used to market the product, I am labeled as being biased. Well if so, then I think it balances out the strong bias in the other direction.

 

There are two different rules.

1. Don't be evil.

2. Do no harm.

 

My fundamental argument is that NEA and NEA MB didn't violate rule #1. People are painting with a very broad brush in saying that NEA and NEA MB are corrupt which to me equals evil. I am presenting the perspective that NEA isn't evil but rather offered a bad product in a market filled with bad products. My school system offers 17 403(b) vendors with loaded funds and high expense ratios. They only offer 1 vendor with low fees. Employee benefits won't just say to employees, hey check out the state 457 plan it's a better deal or look carefully and compare everything to the TIAA-CREF option. I am frustrated with my school system but I don't think they are evil or corrupt.

 

I agree that NEA MB violated rule #2. They are doing harm by offering a product with expenses so far above industry average and should either get out of the market OR offer something better. I believe that they intend to offer a better option soon and look forward to reporting back when that happens.

 

As advocates for teachers, I think the NEA members on this board should be sending a message that says, "NEA MB shouldn't offer a retirement product unless the expense ratio is below ######. NEA MB shouldn't have marketing expenses above Y. NEA Valuebuilder should have low cost index funds as a major part of their offerings." As an advocate, I am working within my organization to make changes. I have talked with NEA officers about the concerns of the 403(b) wise community and I have also reported back here my findings.

 

Does NEA Member Benefits offer anything good? I recently opened a money market account through a link from the NEA Member Benefits website. It offers 5.08% interest with a 1% bonus for the first two months from Bank of America. The interest rate is not the absolute highest but it is competitive and beats the pants off what I was receiving from my savings account or what I could get at Bank of America on my own or even get from a CD. I chose this option because the Bank of America branch is literally a block from my house and is more convenient than an internet bank. I'm also enjoying my free subscription to Kiplinger's from the magazine service.

 

 

Ultra: look at the fine print and you will learn that the endorsement fee is not only used to reimburse MB for its costs in marketing the endorsed product but is used at its dicretion for other member benefits. I feel the analysis is quite easy. If the organization needs an increase in revenue do it in a much more transparent way like increasing advertising rates or dues. But do not enter the 403b business without a securities license. Have they learned from the Spitzer decision or must the feds break up this arrogant mob?

 

Joel

 

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