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Fund Question

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At my district's RFP meeting, we had a potential "consultant" give his presentation and he was showing what another district had done. He was telling about how they (the other district) went with Met Life and and he was showing all the "funds" that were available. He was pointing out all the choices we would have. They were from all different mutual fund companies- a onesy, twoesy thing-classic annuity thing. He was trying to wow us with returns etc. My BS meter was now on high. So, I asked him if these were annuities and he said "no." I am fairly well read on this topic (from this site) but if they weren't annuities what were they? Was he lying? For gosh sakes they are being sold from an insurance company.

 

He kept saying they had low expense because you would now be in a group rather individual. My take - low expenses compared to individual annuities not to no-load mutual funds. Any insight would be helpful.

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At my district's RFP meeting, we had a potential "consultant" give his presentation and he was showing what another district had done. He was telling about how they (the other district) went with Met Life and and he was showing all the "funds" that were available. He was pointing out all the choices we would have. They were from all different mutual fund companies- a onesy, twoesy thing-classic annuity thing. He was trying to wow us with returns etc. My BS meter was now on high. So, I asked him if these were annuities and he said "no." I am fairly well read on this topic (from this site) but if they weren't annuities what were they? Was he lying? For gosh sakes they are being sold from an insurance company.

 

He kept saying they had low expense because you would now be in a group rather individual. My take - low expenses compared to individual annuities not to no-load mutual funds. Any insight would be helpful.

Um, this was from Metropolitan Life Insurance Company. Wow, my BS detector is going crazy right now.

 

Here is a question to ask this bozo: does the plan charge a mortality and expense (M&E) fee? That should expose the product for what it probably is: an annuity - an insurance product.

 

Also: ask him how Met Life's fees compare to Vanguard index fund fees.

 

Then get back to us and amuse us with his responses.

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Guest Skeptical

2366967,

 

Met offers a group variable annuity that looks like, smells like, but most certainly is NOT a mutual fund platform. The sub-accounts of the annuity are invested in shares of a retail fund, but participants own units of the insurance contract. A clever bait & switch that works all the time. Take a look at any materials provided for footnote language like "available through a group annuity issued by MetLife Insurance Company".

 

If your further examination reveals that the product pitch was for mutual funds and it turns out to be an annuity I would encourage you to immediately file a complaint with FINRA and your state insurance department. Also, a friendly call to the "other" district might reveal more than you know. I'm very doubtful indeed that the pitch you heard was for direct investing in funds. Please keep us informed.

 

Jim

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^

The good news is that he didn't become our consultant, so I won't be able to ask him those questions. During his presentation I couldn't stop squirming, it was a classic sales pitch. I wish I could have asked him about the M & E fee. He added how great of thing revenue sharing would be, classic. And this is the guy who was supposed to be our unbiased consultant.

 

But I still don't understand the "they are not annuities" thing. Like AP said, they are from an insurance company. What other kind of product would they be? He couldn't have been bold (dumb) enough to lie in front of 16 people, could he have?

 

Addendum - Thanks Skeptical, I had just posted the above before I read your post.

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He may be stupid or bold or even both. Who knows. What I have learned is these guys are put in a position by their employers to do anything and say anthing to get a sale.

 

They survive just knowing a little bit more than what the general public knows. Once they come across anyone

with a little more knowledge than they have they fall apart and run.

 

In some ways I feel sorry for them because they are trying to make a living. THe insurance companies have a sink or swim platform which puts them in the position to have to lie to make a living.

 

Personally, I couldn't live like that.

 

 

 

Unfortunately, not enough folks know about this site or care about the issue to initiate real change so Insurance salesman can always find someone to sell to, Its a numbers game and they usually win.

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It's possible that he was offering funds from The Metropolitan Series Fund, Inc. (“MSF”) through MetLife Advisers, LLC “MetLife Advisers” but... who knows, and fortunately we'll never need to!

 

 

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Guest Skeptical
It's possible that he was offering funds from The Metropolitan Series Fund, Inc. ("MSF") through MetLife Advisers, LLC "MetLife Advisers" but... who knows, and fortunately we'll never need to!

 

 

 

Vince,

 

"MSF". That would be the cleverly designed product only available inside insurance contracts correct? The client never owns "MSF"since it's purchased with the premiums of a life contract (VUL, VA, or Group VA). Nice story for the rep to pitch though. Glad they didn't buy it!

 

Cheers,

 

Jim

 

 

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A Standard & Mandatory question/part of a carefull RFP Process:

 

Please provide a SPECIMEN of the SERVICE AGREEMENT or CONTRACT that we will need to execute.

 

To all purchasers & investors - READ BEFORE YOU SIGN.

 

Do not be fooled by what is said. My experience is that once you sign, you will be held to the terms of your contract. Caveat Emptor!!

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At my district's RFP meeting, we had a potential "consultant" give his presentation and he was showing what another district had done. He was telling about how they (the other district) went with Met Life and and he was showing all the "funds" that were available. He was pointing out all the choices we would have. They were from all different mutual fund companies- a onesy, twoesy thing-classic annuity thing. He was trying to wow us with returns etc. My BS meter was now on high. So, I asked him if these were annuities and he said "no." I am fairly well read on this topic (from this site) but if they weren't annuities what were they? Was he lying? For gosh sakes they are being sold from an insurance company.

 

He kept saying they had low expense because you would now be in a group rather individual. My take - low expenses compared to individual annuities not to no-load mutual funds. Any insight would be helpful.

 

 

The following will give you insight to what the MetLife person was proposing from start to finish ????

 

MetLife was chosen as the single provider in this county.

 

http://dbs.ccps.org/Accounting%20&%20Finance/TSA.html

 

http://dbs.ccps.org/Accounting%20&%20F...vider%20(2).htm

 

http://dbs.ccps.org/Accounting%20&%20F...ch%204-2-07.pdf

 

I hope to hear what the usual suspects have to say about this plan and why the consultant picked it.

 

 

 

 

 

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At my district's RFP meeting, we had a potential "consultant" give his presentation and he was showing what another district had done. He was telling about how they (the other district) went with Met Life and and he was showing all the "funds" that were available. He was pointing out all the choices we would have. They were from all different mutual fund companies- a onesy, twoesy thing-classic annuity thing. He was trying to wow us with returns etc. My BS meter was now on high. So, I asked him if these were annuities and he said "no." I am fairly well read on this topic (from this site) but if they weren't annuities what were they? Was he lying? For gosh sakes they are being sold from an insurance company.

 

He kept saying they had low expense because you would now be in a group rather individual. My take - low expenses compared to individual annuities not to no-load mutual funds. Any insight would be helpful.

 

 

The following will give you insight to what the MetLife person was proposing from start to finish ????

 

MetLife was chosen as the single provider in this county.

 

http://dbs.ccps.org/Accounting%20&%20Finance/TSA.html

 

http://dbs.ccps.org/Accounting%20&%20F...vider%20(2).htm

 

http://dbs.ccps.org/Accounting%20&%20F...ch%204-2-07.pdf

 

I hope to hear what the usual suspects have to say about this plan and why the consultant picked it.

 

Low fees? Oh, sure:

 

- 10/15 funds had expense ratios greater than 1.0%

- 2/15 funds had expense ratios between .90-1.0-%

- 2/15 funds had expense ratios between .80-.89%.

 

Also:

 

- Only one index fund (S&P 500), though it had a low ER of .18%

- Target retirement funds had ER's of .89-1.01%

 

I also liked this excerpt:

 

"Q: How do I know that the representative will not recommend that I move my money to increase their commission?

 

A: A major benefit in having a single provider arrangement is that representatives from the provider will be salaried employees. Their income will not be dependent upon your investment choices, thus maximizing the value of the services they provide."

 

Uh-huh.

 

This plan is nothing to write home about.

 

 

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Guest Skeptical

Ricky.Bobby,

 

Nice job posting those links. Well done and good info. I noticed a few issues when giving the docs a quick view.

 

--In the Bolton presentation it states that Met Life reps will be commissioned, but elsewhere is says they are salaried? Under commission structure it says "DNR". Hmm? How could a finalist be recommended with a DNR? Is it commish or salary? Sloppy work by Bolton?

 

--Also Bolton says they are "not affiliated with any brokers or investment managers", but their Form ADV says they are actively engaged in business as registered representatives (of a broker dealer).

 

--The presentations says the admin cost will be 25 bps for the program. It does not mention that in any of the participant materials.

 

--No mention of sub-transfer agent payments. Whether they are solicited, accepted, and/or credited to the plan.

 

--I particularly like this disclosure in the participant guide:

 

 

"ARE THERE COSTS TO PARTICIPATE INTHE PROGRAM?

Mutual fund companies may assess certain annual fees and expenses. For more information regarding fees, please read each mutual fund prospectus carefully."

 

--That's it? Read the prospectus? Not gonna find the admin costs in that silly prospectus.

 

--R3 shares (RERCX) with 50 bps 12b-1s, along side Baron (BSCFX) that pays Met only 25 bps. Rep persuades participant to choose the R3 fund and Met earns a 100% larger distribution payment.

 

There's more but I'm tired.

 

Nite all,

 

Jim

 

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Insurance companies can and do offer mutual fund platforms,I don't know about MetLife but I know at a minimum the following do:

 

Valic

Nationwide

TIAA

ING

 

Probably many others.

 

The guy still sounds like he was an idiot..

 

Scottyd

 

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I find it quite disturbing that you call someone an idiot, liar, moron, etc. without actually knowing what you're talking about. Many that post on this board are obviously very intelligent and ethical, which makes it all the more shocking when personal attacks are made without any factual information.

 

The fact is that Met does offer a mutual fund only platform that is also cost effective.....IT IS NOT AN ANNUITY. I have no relationship with the consultant or the district of which you speak, nor do I have any idea as to the name, location or even state of this district. I can understand how one would jump to the same conclusions as yourselves, but find the personal attacks upsetting and beneath the integrity of the members of this board.

 

ScottyD...you have published some great information and are a great advocate. It's really shocking to see you post that this man may have been telling the truth, albeit not explained very well, and then call him an idiot for no reason. I expected more.

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wow, you have completely distorted my post. I actually defended metlife by proving thatinsurance companies do offer mutual fund platforms. The guy did and does sound like an idiot, maybe he isn't, but if the comments are true, they were idiotic- that is a statement of fact.

 

My integrity is just fine and still intact.

 

Scottyd

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Skeptical.. you're correct. If you read the fine print on their website about MSF:

 

 

 

1MSF shares are offered only to separate accounts established by Metropolitan Life Insurance Company, New England Life Insurance Company, MetLife Investors USA Insurance Company, General American Life Insurance Company or other insurance companies affiliated with any of these insurance companies. MSF serves as an investment vehicle for variable life insurance, variable annuity and group annuity products of these insurance companies. The general public may not directly purchase MSF shares.

 

 

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