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Indexed Annuities, The Power Of Suggestion....

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Here is the link to Moore's response.

 

It is less a 52 point response as an unbalanced marketing promotion of Equity Indexed Annuities. Moore show's herself as nothing more than a shill for the industry.

 

I think her defense is easily picked apart and if I had an hour I would do it. I'll take just the first one to show how easy it is:

 

You have the value proposition of indexed annuities all wrong. They do not “promise you’ll share in the upside of stocks with no downside.” Indexed annuities are promoted as ‘allowing the purchaser to have LIMITED participation in the market’s upside, while avoiding the downside risks associated with the market.’

 

Nope, regardless of how these are designed and what the insurance company might tell a reporter, the agent sells the EIA as the ups without the downs and ALWAYS compares the product to the stock market. This product is not tied to the stock market and should not EVER be compared to stocks as it is not and never will be invested in stocks. They are savings vehicles with a different crediting method, so of course there is no way to lose money - its a gimmick (forget the point that everyone who has every bought an EIA immediately loses anywhere from 5 - 15% of principal due to the Surrender). Compare the product to a bond, a fixed annuity or even to that same insurance company's bonds - but not to the return of stocks.

 

Why would you put your entire ability to earn interest in the hands of an insurance company that can manipulate what they payout with ease via an incredibly difficult to understand formula.

 

I could go on, but whats the point.

 

ScottyD

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"Indexed Annuities, The Power Of Suggestion.... About 7000 LAUSD employees have been sold these turkeys"

 

I am curious.. how are you privy to the investment options by educators in a school district? This should be looked into as this is privileged information between the investor and the company. I think the employees of LAUSD may have a concern that you have access and are disclosing it openly on public boards.

 

As for money loses.. the billions upon billions lost to people while their brokers were under the watchful eyes of FINRA and the SEC.. well.. lets just say when you have an issue.. yell "Squirrel" maybe no one will notice.

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They are savings vehicles with a different crediting method, so of course there is no way to lose money - its a gimmick (forget the point that everyone who has every bought an EIA immediately loses anywhere from 5 - 15% of principal due to the Surrender). Compare the product to a bond, a fixed annuity or even to that same insurance company's bonds - but not to the return of stocks.

 

ScottyD

 

 

Odd thing I have not been able to figure out. I have a balanced portfolio.. and at my age I have started shifting a little more to annuities and a little less out of the "market" When I talk an advisor.. I always get the patented response.. this is a long term investment and you shouldn't panic due to market conditions, etc. Whats the difference between a surrender period on a product and a "long term" investment scenario? I didn't realize that my retirement savings was to be viewed as a Christmas savings account.

 

The index product I am in has outperformed my Fidelity funds.. (poor selection on my part I will admit) and now that I am out of the surrender period on my annuity which I have had for over 10 years, I fail to understand the logic.

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"Indexed Annuities, The Power Of Suggestion.... About 7000 LAUSD employees have been sold these turkeys"

 

I am curious.. how are you privy to the investment options by educators in a school district? This should be looked into as this is privileged information between the investor and the company. I think the employees of LAUSD may have a concern that you have access and are disclosing it openly on public boards.

 

As for money loses.. the billions upon billions lost to people while their brokers were under the watchful eyes of FINRA and the SEC.. well.. lets just say when you have an issue.. yell "Squirrel" maybe no one will notice.

 

 

I don't recall any names being posted, do you Beau? You might find it interesting to know that any person is entitled to such information via the California Public Records Act. Anyone can request information regarding a public pension plan, of course they cannot receive any personal information. Not that this is how Steve received in the information, but your veiled threat and outright call for an investigation is rather ludicrous.

 

ScottyD

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No veiled threat. Just find it odd.. sure you can find out what companies work with a district and in some cases where they send money to.. but as to an employees investment choices? Maybe it was just pure speculation on his part?

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No veiled threat. Just find it odd.. sure you can find out what companies work with a district and in some cases where they send money to.. but as to an employees investment choices? Maybe it was just pure speculation on his part?

 

 

I don't see why it isn't public information to know how many people contribute to a specific vendor in a public pension plan? For goodness sake, I can jump on Brightscope and see basically the same data for any private 401(k) in the world. Enough with the accusations.

 

ScottyD

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You can request that.. however.. reading what was posted.. it was a particular product.. not a vendor. Thats a little different. I apologize if anyone thinks I am accusing anyone. I was just going by the facts as they were presented by the original post. I guess I should just guess at what was really meant?

 

Using that logic.. I see that 300 people are participating with Lincoln. I would have no idea what they were investing in, just that they are with Lincoln.

 

Anyway.. I read your blog Scotty and I do have to give you kudos for that.

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"Indexed Annuities, The Power Of Suggestion.... About 7000 LAUSD employees have been sold these turkeys"

 

I am curious.. how are you privy to the investment options by educators in a school district? This should be looked into as this is privileged information between the investor and the company. I think the employees of LAUSD may have a concern that you have access and are disclosing it openly on public boards.

 

As for money loses.. the billions upon billions lost to people while their brokers were under the watchful eyes of FINRA and the SEC.. well.. lets just say when you have an issue.. yell "Squirrel" maybe no one will notice.

 

Hi Beauxdru,

If you are really curious and live in the Los Angeles area, come to a meeting at LAUSD of the defined contributions oversight committee. I have been announcing these meetings for a few years now and you can get the same report that I get and about 12 committee members including the public. Its all public information. The old days of hiding and secrecy are over of these plans. It’s called transparency and districts need to take more responsibility for retirement plans.

 

The information lists all of the companies and the number of people per month who are enrolled and the amount in the aggregate in both the 403b and the 457b side. The district has about 1500 participants in the 457b with about 25 million in assets, none are in an annuity, they are fixed accounts, bonds, a Schwab window and mutual funds including 2 Vanguard funds.

On the 403b side it has about 30,000 participants contributing about 150 million a year. You are right we don't know what is specifically sold, but when was the last time you heard of a no load, non commissioned laden fund from Vanguard or TIAA cREF sold by the usual insurance company. We know its indexed annuities because our TPA has reps all over the district and they run into insurance company reps. I have personally talked with my former colleagues and each time it was an indexed annuity that they described. My professional friends tell us that indexed annuities are the most popular product sold these days.

Our next meeting is Feb. 17, from 3-5pm at LAUSD headquarters.

BTW, the members of the committee are from staff and unions, I am a member at large, a retired teacher who represents everybody. We make the decisions based on consulting from our professional consultant and the TPA. The district is not in charge, the TPA is not in charge, no individual committee member is in charge, its the committee who make recommendations to the CFO who is the legal authority and fiduciary. CFO accepts or rejects our recommendations for changes or additional transparency.

Come on down and take a look. I think you will be impressed because this "privileged information" as you describe has never been an advantage for teachers. It’s been a windfall for the insurance industry for years. There is a way to provide objective information without violating anybody’s privileged information as per ERISA guidelines. 401k plans have been doing this for years

 

Have a good day,

Steve

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You can request that.. however.. reading what was posted.. it was a particular product.. not a vendor. Thats a little different. I apologize if anyone thinks I am accusing anyone. I was just going by the facts as they were presented by the original post. I guess I should just guess at what was really meant?

 

Using that logic.. I see that 300 people are participating with Lincoln. I would have no idea what they were investing in, just that they are with Lincoln.

 

Anyway.. I read your blog Scotty and I do have to give you kudos for that.

 

 

Beau,

 

Given that each product is registered with the state, if the TPA could track, then I think it should be made available - again, this is not private information.

 

Appreciate that you read my blog and apologize if I seem defense of Steve, he's a friend of mine!

 

ScottyD

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Thank You.. I sent you a pm making sure I had the correct address. Was not sure if I should post that on the board on not.

 

Beau,

Here is the specific address and last weeks agenda. The minutes are online but they are six months old.

Everybody is welcome. Come a few minutes early to get a pass for security purposes.

 

Los Angeles Unified School District

403(b) and 457(b) PLAN OVERSIGHT COMMITTEE MEETING

333 South Beaudry Avenue, Conference Room 28-196

3:00 5:00 p.m., Thursday, February 17, 2011

 

Last week's AGENDA as an example of what we talk about.

 

1. Roll Call………………………………………………………..…George Tischler

2. Approval of Minutes:

December 9, 2010………….………………………….………………………….

 

3. By-Law Recommendations …………………………………..…….…John Walsh

 

4. SST Update (30 minutes)……..……....…………………………………………….

 

5. 403(b) Update (15 minutes)………….….………….………………………………

 

6. 457(b) Plan Update (15 minutes).....……….……….………...……………VALIC

 

7. Administration Funds ……………………………………………………………...

 

8. School Site Access ………………….………………………………………….…..

 

9. Set next agenda and next meeting date (quarterly or monthly)…………………….…...

 

10. Public Comments ………………………..……………….………………..….…....

 

11. Adjournment………………………………………………………………….…….

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