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Guest J Simmons

Excerpt From Bloomberg Article

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I guess that was directed at me. I saw that but I was expecting more on teacher 403b issues than the article presented.

 

12.7% fees? Is that possible or did I read that wrong? Thats just robbery.

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Still planning to write separate story on 403(b) sector. If you have any anecdotes to contribute, send them my way. darrell Preston, Bloomberg, dpreston@bloomberg.net

 

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J Simmons, Tony and others --

 

Re: The Bloomberg article, I'm pretty sure it was "aimed at" anyone who cares to become involved and DEMAND that we have better alternatives in our retirement vehicles. And by "better alternatives", I mean options that have FULL DISCLOSURE of all fees, charges, costs, and whatever else they want to call the money that WE lose and that go to someone ELSE'S pockets, unbeknown to us. In that sense, the article was "aimed at" people just like us who hang out on this board. Darrell may be able to clarify that a bit, tho.

 

JudyS

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I just want to put something to rest - unless someone can prove otherwise. I've examined the NEA Valuebuilder plan and I don't like it - no surprise. I was the first to write a full expose on the offering about 5 or 6 years ago. I haven't reviewed it recently - but I never found any combination of funds that would equal the 12% figure that is bandied about. I know it is derived from the lawsuit that was filed - but that portion of the lawsuit in my opinion was inaccurate.

 

The plan is bad enough, believe me, we don't need to exaggerate how bad it is though - its poorness will speak for itself.

 

So - here is my challenge - I offer nothing but perhaps a mention on my blog and maybe an article on this site - Find me a combination of fees in the NEA Valuebuilder product that equal 12%+ annually that the participant has a high probability of paying.

 

Darrell at Bloomberg - Glad to hear you are writing an article, I think you might want to focus a portion of it on the rise of the TPA's in school districts and how this will affect school employees - it will directly affect the fees they pay.

 

ScottyD

 

 

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Scotty D --

 

A couple of years ago I wrote a short piece for www.403bwise.com comparing using Valuebuilder to invest in a certain American Century Fund vs. investing directly in that fund. In preparation, I asked for and received the prospectus for Valuebuilder. Despite hours and hours searching through that paperwork, I could never come CLOSE to understanding what the fees/ costs/ expenses were. Additionally, there are multiple additional costs that the participant can elect, pushing the overall costs skyward. I'm no numbers person and not the sharpest knife in the drawer, but decided that if I couldn't understand it, most people probably couldn't. And maybe, just maybe, there was little intention to have a participant really and truely fully understand. Maybe.

 

Recently I saw the new low fee (no salesperson) offering from Valuebuilder and intended to order the prospectus to look it over. However, they charge $30 for a paper copy, which I wasn't willing to spend merely to satisfy my curiosity.

 

Perhaps if I had in hand a terrific new book I just read, Loeper's "Stop the 401(k) Ripoff", I would have been better prepared to seek out the hidden costs.

 

I continue to believe that NEA's time and effort would be well spent helping teachers learn how to effectively and efficiently invest in a 403(b).

 

JudyS

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Judy,

NEA is charging $30 for the prospectus! I guess they have not learned a thing. I would think that charging a participant that much money (or any amount) for a prospectus that is required by the SEC to send to investors is all perfectly legal.

Steve

 

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Judy,

NEA is charging $30 for the prospectus! I guess they have not learned a thing. I would think that charging a participant that much money (or any amount) for a prospectus that is required by the SEC to send to investors is all perfectly legal.

Steve

 

 

Judy:

 

Where did you get the idea there is a $30 charge for a valuebuilder prospectus? If you goolge NEA member benefits plan and access valuebuilder account access you will find that a free paper copy of the prospectus is available by calling 800-632-8258.

 

According to a NY times article on July 17,2007, the lawsuit discussed in this article claimed that the total fees of Valuebuilder annuity could be as high at 10.62%. Obviously this includes the 7% deferred sales charge. According to the NEA webside, Valuebuilder is also available as a non annuity custodial account for 403b plans with a different fee structure.

 

Why doesn't dpreston enlighten us as to how fees total 12.17% since he is writing the article about it?

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Intruder --

If you go to this site you will find info on the Direct Invest option. Go to the 2nd page, 4th line, column 2 and you will see the $30 charge for the paper prospectus. Some of the other expenses are outlined here, too.

 

http://nea.securitybenefit.com/neavaluebui...SAFactSheet.pdf

 

By the way, in reference to Scotty D's concerns about overstatement of fees in the Valuebuilder product with the advisor, I THINK you can figure on a 7% redemtion fee on contributions held less than a year, and many funds have a 5 % (or thereabouts) front end load. We aren't even talking about a 12-b1 fee, yet, but I do believe there is the ubiquitous "wrap fee", which is 1% I think. So if you were so unlucky or silly as to get in and out in a year, you would have approximately 13% right there. Those are the obvious costs. AND there are other fees, expenses, costs, and charges in there somewhere, I suspect. Now not everyone will pay all of those, of course.

 

JudyS

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Hi,

The average cost for all of my Vanguards funds is .21%. I think anyone who is having to pay over 1% for any financial products is getting taken to the cleaners. Best Wishes.

 

Joe

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I just want to put something to rest - unless someone can prove otherwise. I've examined the NEA Valuebuilder plan and I don't like it - no surprise. I was the first to write a full expose on the offering about 5 or 6 years ago. I haven't reviewed it recently - but I never found any combination of funds that would equal the 12% figure that is bandied about. I know it is derived from the lawsuit that was filed - but that portion of the lawsuit in my opinion was inaccurate.

 

The plan is bad enough, believe me, we don't need to exaggerate how bad it is though - its poorness will speak for itself.

 

So - here is my challenge - I offer nothing but perhaps a mention on my blog and maybe an article on this site - Find me a combination of fees in the NEA Valuebuilder product that equal 12%+ annually that the participant has a high probability of paying.

 

Darrell at Bloomberg - Glad to hear you are writing an article, I think you might want to focus a portion of it on the rise of the TPA's in school districts and how this will affect school employees - it will directly affect the fees they pay.

 

ScottyD

 

 

Judy/ScottyD:

 

What Valuebuilder are we talking about? Valuebuilder Direct is a custodial account funded by mutual funds not annuity contracts and does not have the fees associated with annuities, such as M & E. The direct program seems to function as a self directed program where the participant selects the funds without an agent. Is this correct? Of the 19 mutual funds, which ones have the 12% fees which have been reported in the Bloomberg article? There is a separate Valuebuilder product line that uses annuities.

 

Darrell whats you take on this issue?

 

Judy: why does it matter there is a $30 fee for a paper document if you can read it or down load it for free? The information is there. Also have you tried to get a free prospectus from the 800 no?

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Intruder --

 

The new Valuebuilder Direct is, as far as I know, a brand new program. As an NEA member, I received the first notice of it last week. Apparently it is not an annuity and as such would have no M&E fees, correct. The class action lawsuit has been filed on behalf of participants who have the only other Valuebuilder program that has been available lo! these many years. And I would presume that none of the individual mutual funds would have any 12% fees in and of themselves, of course, in either program.

 

But the question has always been what are the TOTAL fees, costs, expenses (and whatever else you call $$ that goes to someone other than the participant), not just the fees WITHIN any mutual fund. Come on, Intruder. You knew that.

 

In this area of inquiry, there are only two questions that matter. 1. What is the TOTAL amount of $$ that is being paid? 2. Has every last bit of it been disclosed to the participant so that he/she can make a reasoned, knowledgeable choice? (Full disclosure on my part: # 1 and #2 are not original thoughts!!)

 

And here is another interesting question: Would Valuebuilder Direct ever have happened without the class action suit?

 

JudyS

 

 

 

 

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So what are the total fees for VB? Are they 10.62, 12.17%, or as Scotty has maintained a lot less. You are the one claiming that there is a 7% redemption fee and a 5% load as well as wrap and 12b-1 fees when Scotty has stated that he has never been able to find any combination of funds that equal the 12% number that has been bandied about. Scotty has stated he believes the 12% is inaccurate.

 

So I am asking you again: which VB fund or annuity has 12% in fees and what are the sources for such fees?

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