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Single Vendor 403(b) In School Districts

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Guest TR1982

TR1982,

 

Hi! What's your business model for this 3000 person enrollment, as a registered rep or insurance agent? I'm curious because you made the statement: "Vanguard isn't in the 403b business and doesn't want to be. They provide investments, not investment advice."

 

Did you conduct this enrollment as an Investment Advisor Representative? With all courtesy, if you did so as a RR or Agent then of course you are selling products and NOT advice (which, if any, is incidental to that sale). Maybe you were 'enrolling' folks in a managed account program through the vendor. Please clarify? Regards,

 

Jim

 

 

How does my licensing or business model have any bearing on what VG does or doesn't do? I think you're just fishin.

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Guest Skeptical

TR1982,

 

Hi! What's your business model for this 3000 person enrollment, as a registered rep or insurance agent? I'm curious because you made the statement: "Vanguard isn't in the 403b business and doesn't want to be. They provide investments, not investment advice."

 

Did you conduct this enrollment as an Investment Advisor Representative? With all courtesy, if you did so as a RR or Agent then of course you are selling products and NOT advice (which, if any, is incidental to that sale). Maybe you were 'enrolling' folks in a managed account program through the vendor. Please clarify? Regards,

Jim

 

 

How does my licensing or business model have any bearing on what VG does or doesn't do? I think you're just fishin.

 

TR1982,

 

Your reply to Tony implies that someone (perhaps not you) is selling investment advice. Who is this? You also mentioned a 3000 person enrollment in a previous post. Did you not wish your statement to lead us to think that you and your team were providing investment advice? If so, your legal capacity is critical to know; RR, IA, or IAR. Of course EVERYONE is an advisor,and no one SELLS products. I'm just curious if your enrollment provided actual investment advice and if so did you do so as an IAR.

 

Jim

 

FYI: I think your likely correct about on-site reps from the no-load firms. Distribution via people is very, very expensive indeed.

 

 

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Thanks for everyone's informative thoughts; this dialogue has been very helpful in educating me about the advantages and challenges of a single vendor SD plan, and I appreciate everyone taking the time to respond.

 

To clarify, I was not stating that onsite representation from no-load mutual fund companies was common in a mutliple vendor SD environment. What I stated was that it was common in a single vendor 403(b) plan of some size (generally 500 employees and up, though I have seen smaller organizations obtain such representation as well depending upon the circumstances). And for larger nonprofits, often the mutual fund companies will offer as many onsite visits as the insurance and other financial services companies. And, even among the insurance companies, the investment offerings consist of low-cost mutual funds; I have not seen a vendor propose variable annuities or mutual funds with added charges in the exclusive provider marketplace for several years now.

 

Admittedly, this is mostly an ERISA environment with employer contributions, but I have also worked with religious organizations with elective-deferral-only plans (churches are non-ERISA unless they affirmatively elect ERISA), and the results are largely the same if a single vendor is used. All of the vendors put their best foot forward in an RFP process if they know that they will be the exclusive provider going forward. And indeed, if many SD'd choose to go with one vendor (I am getting the sense from these posts, however, that this is far from a trend, especially in the short term), it will present a tremendous opportunity for some vendors who are used to pricing in an exlcusive environment and can pick up significant amounts of 403(b) business.

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Guest Skeptical

TR1982,

 

What happened? Did I strike a nerve by asking questions you'd NEVER get from a participant you're enrolling? Would you ignore the same question(s) from a school teacher sitting across from you, filling out salary deferral forms?

 

Step up and answer a reasonable, respectful, and informed question.

 

Cheers,

Jim

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TR1982,

 

What happened? Did I strike a nerve by asking questions you'd NEVER get from a participant you're enrolling? Would you ignore the same question(s) from a school teacher sitting across from you, filling out salary deferral forms?

 

Step up and answer a reasonable, respectful, and informed question.

 

Cheers,

Jim

 

 

S:

 

What's your business model?

 

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Guest TR1982

TR1982,

 

What happened? Did I strike a nerve by asking questions you'd NEVER get from a participant you're enrolling? Would you ignore the same question(s) from a school teacher sitting across from you, filling out salary deferral forms?

 

Step up and answer a reasonable, respectful, and informed question.

 

Cheers,

Jim

 

 

You're just fishin so you can start a personal attack. It's so typical of some of you. You can't argue on the substance so you go personal. I asked questions as well in my response and got no answer from Tony or Steve. I wonder why....

I really don't care what you think of me. The debate is about ideas. I don't have an agenda here, I know what I do and do it very well. Nothing you say changes that. Why don't you respond to my questions? Or maybe you're afraid to...

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Guest Skeptical

S:

 

What's your business model?

 

 

Intruder,

Easy, I don't have one. I do not have any financial relationships, or earn any form of compensation, directly or indirectly from any entity that has anything to do with the DC/DB business; be it MF, TPA, Consultants, Insurance companies, or SDs. Period.

 

I have ZERO affiliation with the industry except as a DC plan participant. Now that I answered your query how about you doing the same? I'll be holding my breath.

 

Jim

 

You're just fishin so you can start a personal attack. It's so typical of some of you. You can't argue on the substance so you go personal. I asked questions as well in my response and got no answer from Tony or Steve. I wonder why....

I really don't care what you think of me. The debate is about ideas. I don't have an agenda here, I know what I do and do it very well. Nothing you say changes that. Why don't you respond to my questions? Or maybe you're afraid to...

TR,

No personal attacks from me and I sincerely I thought I answered your question. You asked why my question was relevant and I provided a response.

 

You made the statement that participants were buying investment ADVICE and you stated the VG sells products not advice. I just wanted to know from whom, your firm or another entity? It's a fair question. No harm, no foul. Maybe there is something new on the enrollment side I didn't know about.

 

Jim

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Guest TR1982

 

S:

 

What's your business model?

 

 

Intruder,

 

Easy, I don't have one. I do not have any financial relationships, or earn any form of compensation, directly or indirectly from any entity that has anything to do with the DC/DB business; be it MF, TPA, Consultants, Insurance companies, or SDs. Period.

 

I have ZERO affiliation with the industry except as a DC plan participant. Now that I answered your query how about you doing the same? I'll be holding my breath.

 

Jim

 

 

 

 

You're just fishin so you can start a personal attack. It's so typical of some of you. You can't argue on the substance so you go personal. I asked questions as well in my response and got no answer from Tony or Steve. I wonder why....

I really don't care what you think of me. The debate is about ideas. I don't have an agenda here, I know what I do and do it very well. Nothing you say changes that. Why don't you respond to my questions? Or maybe you're afraid to...

 

TR,

 

No personal attacks from me and I sincerely I thought I answered your question. You asked why my question was relevant and I provided a response.

 

 

 

You made the statement that participants were buying investment ADVICE and you stated the VG sells products not advice. I just wanted to know from whom, your firm or another entity? It's a fair question. No harm, no foul. Maybe there is something new on the enrollment side I didn't know about.

 

Jim

 

I stated long ago here that I would not reveal who I work for and where I work. I think it is not relevant to the discussion and is just used by some people to discredit their comments. There is no requirement that I know of on this board that a poster must meet some requirement to post here or participate in the discussion. I think that is the definition of free board.

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Jim,

TR can dish it out in our faces about how rich he is and he loves the status quo of the insurance industry and load mutual fund companies and when we point out that the status quo is bad for our colleagues regarding the issues of the day, high fees, commissions, annuity products, with little diversification or thinking long term with the all of the risk taken by the clients only, he takes it personally! Strange but true. Chuck is the same way. These folks still cannot believe that we don't need their advice and that their advice is misleading and good sound investment advice is omitted. not because its from any one person, because it goes against all of the authors we respect: Bogle, Ricci, Swedroe, Bernstein, Fama, etc. Also, where are the pros when somebody comes along asking a question. All they do is attack what we are saying to the original poster. The difference here is that I can take it, but not my dog. Thats going too far! (paraphasing FDR reelection speech when the opposing side attacked his pet dog, its a funny story).

 

Nothing personal around here. They just can't handle the truth with facts. Futhermore they can't handle the fact that we know what they are up to 100%, its pretty simple.

 

Happy holidays,

Steve

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Guest TR1982

Jim,

TR can dish it out in our faces about how rich he is and he loves the status quo of the insurance industry and load mutual fund companies and when we point out that the status quo is bad for our colleagues regarding the issues of the day, high fees, commissions, annuity products, with little diversification or thinking long term with the all of the risk taken by the clients only, he takes it personally! Strange but true. Chuck is the same way. Thise folks still cannot believe that we don't need their advice and that their advices is HORRIBLE not because its from any one person, because it goes against all of the authors we respect: Bogle, Ricci, Swedroe, Bernstein, Fama, etc.

Nothing person ever around here. They just can't handle the truth with facts.

Happy holidays,

Steve

 

 

Impressive response. What a waste of time.

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Guest Skeptical

I stated long ago here that I would not reveal who I work for and where I work. I think it is not relevant to the discussion and is just used by some people to discredit their comments. There is no requirement that I know of on this board that a poster must meet some requirement to post here or participate in the discussion. I think that is the definition of free board.

 

I don't care who you work for or where you work. I asked who was selling ADVICE? How can that be personal?

 

Jim

 

 

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TR

 

I didn't realize you asked me a question in your last post. I agree with you that many investors are not willing to learn on their own. Thats why I believe a single low cost provider in a school district might be beneficial. With a plan document to be required in 2009, school systems can then take ownership of their 403Bplan and start offering non biased financial education to their employees based on the vendor they have selected. It would simplify the process and make it easier for employees to learn. I also think mandatory enrollment of all employees would be a good idea. With too many choices its confusing.

 

Again, I think their is a definite need for some financial counsel but I think its being done disingenuously by many commissioned based advisors. Its a big business, and when it comes to the investors, its not mutually beneficial.

 

I think your beef with us is that Jim, Steve and others pretty much have your number. WE can see through it all and that bothers you. You wish we would be like the folks who don't know a thing.

 

I've been put through it all by unscrupulous advisors and I know first hand the damage the industry can do and is doing to honest hard working teachers . I've been screwed once to many times to not stand up and let others know about it.

 

Of course this is the same old same old. WE both have been through this before but for newbies it does bear

repeating.

 

I applaud Jim, Steve and others for taking the skeptical view. I also admire you for stating your case too.

 

Tony

 

 

 

P.S. We're not the only ones who don't reply to questions around here.

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"I think your beef with us is that Jim, Steve and others pretty much have your number. WE can see through it all and that bothers you. You wish we would be like the folks who don't know a thing."

 

You are so right on Tony. The pros have trouble when folks like us when we advise newbies to go with index funds, control costs, diversify and learn to do this yourself. The pros have never ever heard of this before especially from educators. Since this website was launched, we had pros coming in here and were very unprofessional (n a s t y is more accurate). TR comes close, but not like the early days. I think the pros are learning a great deal here, not some much about how to handle questions that may come up from their own clients, but they are more serious about looking at the issues we repeat over and over, controlling costs and diversification across asset classes and using VG, Fidelity and TR Price. I would not be surprised that more pros learned from us than our colleagues. Its so rare that an LAUSD educator comes here asking questions and its usually about early withdrawals, unfortunately. The webmaster says that this site gets about 1000 hits a day. I am willing to bet that 950 hits are by pros lurking around for more information. It’s their best interests and it’s their business to keep up with the market. We are the trend setters here.

 

In my conversations with the pros down at my union hall, he made sure to tell me that they are now using Vanguard as a choice. Sure they have the fees and commissions and I will not use them but our message is getting through. I asked one of the Valic reps who is on my 457 oversight committee, a young guy, in joking, what is the number one important variable in retirement planning? And we both said FEES and laughed. It may be in jest but it’s an important message. Imagine that.

 

Life has important messages that are truisms, but there are consequences and other events, good things, that are not predicted. This website was created to help educators, but an important and unpredicted event occurred: who would have predicted that this website actually taught the pros that they start offering better choices and learn about fees. I bet many of them changed their own portfolio as a result of a few visits to this website. One thing I am sure of, we will never know because the pros here are very secretive and never admit that we know more than they do, except for Scotty. And he is the only pro that will give advice to posters. The others just attack us. It’s funny. Over at the VG Diehard forum, the pros are giving of their time and energy for free, Ricci, Swedroe, and many others willing to give sound advice, no sales. Only Scotty and Michael have done it here and we thank them.

 

Just some Happy Holiday musings,

Steve

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Guest TR1982

TR

 

I didn't realize you asked me a question in your last post. I agree with you that many investors are not willing to learn on their own. Thats why I believe a single low cost provider in a school district might be beneficial. With a plan document to be required in 2009, school systems can then take ownership of their 403Bplan and start offering non biased financial education to their employees based on the vendor they have selected. It would simplify the process and make it easier for employees to learn. I also think mandatory enrollment of all employees would be a good idea. With too many choices its confusing.

 

Again, I think their is a definite need for some financial counsel but I think its being done disingenuously by many commissioned based advisors. Its a big business, and when it comes to the investors, its not mutually beneficial.

 

I think your beef with us is that Jim, Steve and others pretty much have your number. WE can see through it all and that bothers you. You wish we would be like the folks who don't know a thing.

 

I've been put through it all by unscrupulous advisors and I know first hand the damage the industry can do and is doing to honest hard working teachers . I've been screwed once to many times to not stand up and let others know about it.

 

Of course this is the same old same old. WE both have been through this before but for newbies it does bear

repeating.

 

I applaud Jim, Steve and others for taking the skeptical view. I also admire you for stating your case too.

 

Tony

 

 

 

P.S. We're not the only ones who don't reply to questions around here.

 

 

Tony,

I appreciate your response. As I have said before here a number of times, many of the things you noted above are true. There are unscrupulous advisors (plenty of them) out there. I was simply trying to share my experience as someone who works in the business and does it honestly and ethically. People can disagree, but I am a just trying to add perspective. I think it is sad that a few people who post here can only think an advisor who AGREES WITH THEM IS has anything to say or is honest and ethical. That is such a self righteous point of view. It is also chills any since of real discussion. I hope you have a great Christmas holiday.

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