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tomkoz

Annuities In A 403b

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Thanks for the reply. Yes you are more forthright than most. You at least post yourv fees on your website. I have gone through 50 of the list of 335 RIA's I've found on Google and none of them actually list their fees. Very disappointing.

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ARE YOU GOING TO ASSERT THAT YOUR REP DISCLOSED THE 1.25 PERCENT M & E FEE PRIOR, I REPEAT PRIOR, TO YOUR SIGNING UP FOR THE ANNUITY? PLEASE TELL US HOW MANY MONTHS OR YEARS EXPIRED AFTER YOU SIGNED UP FOR THIS ANNUITY THAT YOU FIRST LEARNED THAT YOU WERE PAYING A 1.25 PERCENT M & E CHARGE? Were there any websites that put you "wise" to the ME fee? It is ok to admit that if not for the existence of certain websites you never would know what the ME fee is for or how much your issuer is charging you for assuming the Mortality and Expense risk.

 

Joel

 

 

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ARE YOU GOING TO ASSERT THAT YOUR REP DISCLOSED THE 1.25 PERCENT M & E FEE PRIOR, I REPEAT PRIOR, TO YOUR SIGNING UP FOR THE ANNUITY? PLEASE TELL US HOW MANY MONTHS OR YEARS EXPIRED AFTER YOU SIGNED UP FOR THIS ANNUITY THAT YOU FIRST LEARNED THAT YOU WERE PAYING A 1.25 PERCENT M & E CHARGE? Were there any websites that put you "wise" to the ME fee? It is ok to admit that if not for the existence of certain websites you never would know what the ME fee is for or how much your issuer is charging you for assuming the Mortality and Expense risk.

 

Joel

 

So far, jphillips has substantiated (to someone else via PM) that he has invested in an annuity that has earned him an annualized 8%+ return over the last five years, which by most standards would qualify as an investment success (certainly compared to what the markets have done over that time). He seems very aware of what he is paying, and content to do so.

 

So why is the tone of this post so condescending? It assumes that the rep who sold him the annuity failed to disclose charges; that vast amounts of time went by while he was unknowingly paying these charges; and best of all, that it was THIS website (and by extension, of course, you!) that showed him the way, the truth and the light. None of the facts supports this unique vision.

 

It's possible that jphillips just has a good advisor/rep with whom he's had an excellent experience. I know that doesn't fit into the "Everyone's Really A Shark" school of thought, but I just thought I'd throw that out there.

 

 

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Hey FrenchTeacher,

 

We applaud jphillips for earning a solid return. Good for him. We are so happy that he had a good experience with a rep that we want to publicize it in a story on 403(b)wise. Its seems far too many are willing to talk the talk on the board but aren't so inclined to walk the walk via a story. Too bad. I guess we can add another form of investing to the mix. We have agressive, passive and then we have what happens far too frequently on this board: the passive aggressive poster/investor. I wish more would take a cue from Ellie Lowder and have the courage to really stand up for their convictions.

 

Dan Otter

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FT: Welcome back. Long time no see.

 

Jim was fast to say he was disappointed by RIA websites not divulging their fees.

 

So is it not reasonable for me to assert that prior to signing an annuity contract the rep should disclose to the prospective client all charges and especially a charge of 1.25 percent that is clearly, by itself, much more than HALF of all expenses the investor will be obligated to pay. My point is the fact that most 403b annuity reps never divulge this cost because it is very difficult to defend its worthiness and thus, may jeopardize the sale.

 

But when it comes to an RIA agreement the client definitely knows what the fees are prior to signing the advisory contract. So not posting the fees up on a public website is no big deal and should not be disappointing to anyone.

 

Is is a studied fact that owners of these annuity contracts both inside and outside pre-tax accounts do not know that they are paying an ME fee....even after decades of participantion...this is a national scandal.

 

Proposal: Ask just ten of your colleagues that are invested in Opportunity Plus to come to his board cold and define the ME fee. And also assert that this fee was expressed in percentage and dollar terms at the point of sale.

 

Peace and Hope,

Joel L. Frank

Pension Columnist

The Chief-Civil Service Leader

NYC

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Jim,

 

I think it is worth stating that the performance of your fund has little to do with the M&E fees associated with it. That being said, it is probably only available through the annuity platform.

 

Many of the people on this website subscribe to an investment theory known as Modern Portfolio Theory (MPT) and its associated theories (EMT, CAPM, etc.). Without going into the details, it basically says that the returns you account earned were pure luck, and your return should revert to the mean, ie your account should underperform in the future.

 

I personally do not believe in MPT. so I would recommend that you stick with you fund, until performance warrants a change. Markets tend to go in cycles. Money managers' strategies tend to work better in certain parts of the cycle than others. Thus, the manager who performed well over the past 5 years, do not neccessary perform well over the next 5 years. However, there are managers who perform well cycle after cycle.

 

I would ask what factors drove your decision to pick the fund you did?

 

Mark

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Money managers' strategies tend to work better in certain parts of the cycle than others. Thus, the manager who performed well over the past 5 years, do not neccessary perform well over the next 5 years. However, there are managers who perform well cycle after cycle.

 

I

Mark

 

 

I would be very interested in learning who those financial managers are who have performed well 'cycle after cycle.'

 

Hal

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Thanks for the reply. Yes you are more forthright than most. You at least post yourv fees on your website. I have gone through 50 of the list of 335 RIA's I've found on Google and none of them actually list their fees. Very disappointing.

-----------------------------------------------------------------------------------

ARE YOU GOING TO ASSERT THAT YOUR REP DISCLOSED THE 1.25 PERCENT M & E FEE PRIOR, I REPEAT PRIOR, TO YOUR SIGNING UP FOR THE ANNUITY? PLEASE TELL US HOW MANY MONTHS OR YEARS EXPIRED AFTER YOU SIGNED UP FOR THIS ANNUITY THAT YOU FIRST LEARNED THAT YOU WERE PAYING A 1.25 PERCENT M & E CHARGE? Were there any websites that put you "wise" to the ME fee? It is ok to admit that if not for the existence of certain websites you never would know what the ME fee is for or how much your issuer is charging you for assuming the Mortality and Expense risk.

 

Joel

Joel,

 

Yes he did. As I previously stated he gave me 4 different options. He told me that if I chose to take the VA I should only do it to partipate in the professionally managed sub account and that there was a fee for doing this of 1.25%. He told me that this fee would act as a death benefit to guarantee the account value going to my wife if I should die during a downswing in the market but that I was not investing in this product for the death benefit. This was the cost of participating in this VA and that I should ONLY do it if I wanted to take advantage of the sub account that was professionally managed. If I was going to "manage" the accounts myself I would be better off in "straight" mutual funds and save myself that cost.

 

He did point out to me that he saw many teachers who had opened up mutual fund accounts 5, 6, 7, or 10 years ago and are still contributing to the same funds that they started with. Sometimes this is good & sometimes this is bad. I freely admit that I do not have the time to learn or the expertise to manage my accounts myself and know where and how I should be diversified. Perhaps if I knew someone like Scottyd at the time I would have taken advantage of his services. But seeing as how the first time I ever heard of an RIA was when I joined this Board it is a moot point.

 

Joel, I will readily admit that if I could do it myself I would spend less and therefore logic dictates I would have an overall higher return. OTOH, if I was as smart as the people who did it for a living I would be a fund manager making $1,000,000 a year and not a school teacher making $80,000 a year.

 

All things being equal a no load or low load or low expense investment should outperform an investment with fees attached. Unfortunately we do not live in a perfect world and all things are rarely equal.

 

Jim

 

Jim

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Jim was fast to say he was disappointed by RIA websites not divulging their fees.

 

Is is a studied fact that owners of these annuity contracts both inside and outside pre-tax accounts do not know that they are paying an ME fee....even after decades of participantion...this is a national scandal.

 

 

Joel,

 

As usual you misconsture my comments. Scottyd wrote that I didn't look very hard to find RIAs. I agreed with him and went looking. I was hoping to be able to find websites, like Scottyd's, where the fees are disclosed so that I could post them to this Board for purposes of comparison. I was unable to, so short of taking a day off of work and making 50-100 toll calls there is no way for me to get an idea of what the average RIA charges. Yes I'm sure that if I hired an RIA he would disclose all the fees, but for the purposes of this discussion that is not helpful.

 

"Is is a studied fact that owners of these annuity contracts both inside and outside pre-tax accounts do not know that they are paying an ME fee....even after decades of participantion...this is a national scandal."

 

What study is this fact published in? Can you provide any proof to back up this claim? It's a natiopnal scandal? No Joel, US soldiers torturing Iraqui prisoners is a national scandal. Salesman not disclosing fees they are probably supposed to is irresponsible and unethical, not a national scandal.

 

Jim

 

 

 

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Hey FrenchTeacher,

 

We applaud jphillips for earning a solid return. Good for him. We are so happy that he had a good experience with a rep that we want to publicize it in a story on 403(b)wise. Its seems far too many are willing to talk the talk on the board but aren't so inclined to walk the walk via a story. Too bad. I guess we can add another form of investing to the mix. We have agressive, passive and then we have what happens far too frequently on this board: the passive aggressive poster/investor. I wish more would take a cue from Ellie Lowder and have the courage to really stand up for their convictions.

 

Dan Otter

Dan,

 

I am sorry but I am not going to expose someone I have had a 20 year relationship with to people like Joel. I have no need for them to be labeled sharks or accused of doing things that members on this board disagree with. I don't know Ellie Lowder and I am sure that as a professional spokesperson she may be used to being criticized in public. My financial rep isn't and I would not want him to be.

 

Quite frankly I would not put it past Joel to devise some method of harrassment. ie complaints to the CA Dept. of Ins., NASD, school districts, etc. if he knew the name of the person or companies I do business with. I am sure Joel would take great glee in attempting to put someone he considers a shark out of business.

 

Jim

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Hey FrenchTeacher,

 

We applaud jphillips for earning a solid return. Good for him. We are so happy that he had a good experience with a rep that we want to publicize it in a story on 403(b)wise. Its seems far too many are willing to talk the talk on the board but aren't so inclined to walk the walk via a story. Too bad. I guess we can add another form of investing to the mix. We have agressive, passive and then we have what happens far too frequently on this board: the passive aggressive poster/investor. I wish more would take a cue from Ellie Lowder and have the courage to really stand up for their convictions.

 

Dan Otter

 

Dan, you said the magic word: "convictions." I have no cut-in-stone convictions on using an agent, which is the primary reason why I declined (politely, I think) your offer to contribute to your story. I'd be happy to endorse the agent who has proven so helpful to me, but I would stop short of a story espousing the use of agents in general. Ellie Lowder may have these convictions, owing to her affiliation with NTSAA. Certainly any agent would be likely to have these convictions.

 

I began contributing (if that's the right word) to this discussion because someone on this board was posting things about NYSUT, my union, that were either outright lies, or unsubstantiated theories. I wanted to make it clear that that was the case. I DIDN'T come on here because I think insurance companies or agents in general are God's gift to teachers. If that makes me "passive/aggressive," well, so be it.

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Jim was fast to say he was disappointed by RIA websites not divulging their fees.

 

So is it not reasonable for me to assert that prior to signing an annuity contract the rep should disclose to the prospective client all charges and especially a charge of 1.25 percent that is clearly, by itself, much more than HALF of all expenses the investor will be obligated to pay. My point is the fact that most 403b annuity reps never divulge this cost because it is very difficult to defend its worthiness and thus, may jeopardize the sale.

 

But when it comes to an RIA agreement the client definitely knows what the fees are prior to signing the advisory contract. So not posting the fees up on a public website is no big deal and should not be disappointing to anyone.

 

Is is a studied fact that owners of these annuity contracts both inside and outside pre-tax accounts do not know that they are paying an ME fee....even after decades of participantion...this is a national scandal.

 

 

Joel, it's absolutely reasonable to assert that all those charges should be disclosed. It is NOT reasonable to assume (apparently falsely, as you've done here) that his particular agent failed to do so, especially when he had already outlined what his agent HAD disclosed in previous posts.

 

You assert that it is a "studied fact" that owners of annuity contracts live in ignorance of their fees, due to their agents' negligence. Can you provide a link to some of these studies? I'd be interested in reading them.

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Contact Melvyn Weiss a class action attorney who has litigated against the likes of Prudential.

 

Surely there must be some online references available for such a "studied fact"? I shouldn't have to contact the attorney who stands to make a buck by proving this obvious malfeasance, should I?

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