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457 & Life Insurance

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Jim,

 

Why do you place so much importance on the cost of a 15 year level term life insurance policy when you could care less about the 200 basis points you're paying for your 403b? Why don't you buy the life insurance from the Security Benefit Group---the same company that handles your 403(b) investments?

 

Peace,

Joel Redwoods Frank

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Jim,

 

Why do you place so much importance on the cost of a 15 year level term life insurance policy when you could care less about the 200 basis points you're paying for your 403b? Why don't you buy the life insurance from the Security Benefit Group---the same company that handles your 403(b) investments?

 

Peace,

Joel Redwoods Frank

I don't even know if Security Benefit offers term insurance. It never crossed my mind. But since I doubt that I am getting any extra added value by buying more expensive term, since it is just a death benefit, I don't think I would choose to pay more for it. It is a question of choice, something that you don't seem to believe in. You only want one company that offers few choices.

 

My next door neighbor works for Fox Searchlight and has a 401K. It is sponsored by American Funds, that is his only choice. If he doesn't like it he can't participate elsewhere. TIAA came to our school district and said if the District wanted them in their 457 they would have to be the sole provider. Personally, I find it dismaying that they would choose to curtail my choices. Are they afraid to compete Joel?

 

BTW, when are you going to answer my questions? If you missed them here they are again.

 

1. What is your background to give out so much investment advice?

2. Who do you work for?

3. How much do you have in TIAA? How much do contribute per month? Which funds do you put it in?

4. What were YOUR actual returns like during the bear market?

5. Why do you sometimes post as Redwoods & sometimes as Joel_guest?

 

Here's a new one. What are you hiding Joel that keeps you from answering these simple questions? Do you work for TIAA-CREF?

 

Jim

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jphillips,

 

Instead of sniping with Joel which is becoming very stale and boring I encourage you to consider the below information especially in light of your comment: "Personally I find it dismaying that they would choose to curtail my choices. Are they afraid to compete?"

 

A strong case can be made that a sole provider best serves the interests of employees. How can this be you might ask? The caveat is that the correct sole provider must be chosen. And before you jump up and down with another TIAA conspiracy rant, this doesn't mean that only one company out there has the capabililty to be the correct sole provider. Let me explain... If a district or employer does its due dillegence during the Request for Proposal (RFP) process (that is the vendor search process), the district has the power to request and get all of the following: low-cost options and hands-on-reps and information seminars (and yes TIAA can and does provide such services). Such an RFP process shifts the sales process away from the classrooms, staff lounges and union halls where I have witnessed it first hand to where it belongs: supervised by the employer and ideally an unbiased consultant during the RFP process. All vendors have an equal chance. An RFP is a lot like getting work done on your house or car. You request a bid and arrive at a decision based on some combination of price and service. You don't always choose the lowest-cost contractor/mechanic and you don't always choose the most full-service contractor/mechanic. The point is that during the bid process you have the most power to get what you want.

 

It sounds like you really enjoy working with your commission-based rep and that you do not mind paying more in fees. That's great. However, for every investor like you who doesn't mind paying more for the undercoating my guess would be that there are thousands who do mind. I think many would be best served with low-fee options and then when in need of advice they could turn to a fee-only financial planner.

 

I encourage you to read the following:

http://www.403bwise.com/features/rfp.html'>http://www.403bwise.com/features/rfp.html'>http://www.403bwise.com/features/rfp.html'>http://www.403bwise.com/features/rfp.html

http://www.shrm.org/hrmagazine/articles/1203/1203taylor.asp

http://www.403bwise.com/features/rfp.html

 

Dan Otter

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