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EdLaFave

Website To Navigate And Reform Ocps (Fl) 403B/457B Plans.

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That is interesting.

 

Like you hear all the time in politics, the people need to get involved and take matters into their own hands. Educate each other about the best options. Call retirement services every single day and complain about the crappy options. Overwhelm the school board meetings. Change would happen overnight.

 

I have been so underwhelmed by OCPS. I don't like to guess at motives but their actions demonstrate that helping the employee isn't a top priority. The woman in charge of Retirement Services told me she likes having the agents because they educate employees about the 403(b)/457(b) plans. Meanwhile she claims it would somehow be illegal for Retirement Services to help employees understand the plans...how ridiculous is it that Retirement Services won't tell you about the retirement plans!?

 

In the best case scenario these folks simply don't care, want their job to be easy, and/or are afraid of vague legal threats the TPAs bring up. In the worst case scenario the whole thing is corrupt and the decision makers are in the pockets of these financial companies.

 

Either way if we would just organize then we could fix the problem!!!

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That is interesting.

 

Like you hear all the time in politics, the people need to get involved and take matters into their own hands. Educate each other about the best options. Call retirement services every single day and complain about the crappy options. Overwhelm the school board meetings. Change would happen overnight.

 

I have been so underwhelmed by OCPS. I don't like to guess at motives but their actions demonstrate that helping the employee isn't a top priority. The woman in charge of Retirement Services told me she likes having the agents because they educate employees about the 403(b)/457(b) plans. Meanwhile she claims it would somehow be illegal for Retirement Services to help employees understand the plans...how ridiculous is it that Retirement Services won't tell you about the retirement plans!?

 

In the best case scenario these folks simply don't care, want their job to be easy, and/or are afraid of vague legal threats the TPAs bring up. In the worst case scenario the whole thing is corrupt and the decision makers are in the pockets of these financial companies.

 

Either way if we would just organize then we could fix the problem!!!

 

Hi Ed,

Did you open up a hornet's nest. You said it perfectly, and what I have been thinking too. News reports and these forums (here, M* and Bogleheads) have not moved the needle much. I thought last years NYTimes 5 series articles might be a game changer. But that died within a few weeks. There just isn't enough of us to take these opportunities and use social media to get these articles in front of teachers. Our colleagues don't go online. They literally want face to face, and then they get it. I asked about 50 teachers at a workshop how many knew Mr. Money mustache. ONLY ONE! ONE person! Just about everybody in the online world knows MMM.

 

School districts have been told by the industry never to give out information because they listen and believe the scare tactics about setting themselves up for liability. That's precisely why our award winning 457(b) plan is growing sooooooooooooo slowly, after 11 years, it only has 115 million, when it should have a billion. There is no PR and benefits stops every opportunity, because they are afraid of liability. This scare tactic has worked for 50 years, ever since the TSA was released to teachers, as a replacement for social security.

 

We are fighting a very powerful and entrenched and secluded professional culture. When we talk about anything remotely related to 403b or 457b 99% of our colleagues have NO IDEA what we are talking about, and the first impression is that we are out for ourselves, that we have some economic motivation that goes against the culture. I have been blocked from a very popular twitter account because I merely wanted to insert a link to the NY Times articles. No question, no dialog, just blocked out by absolutely naive people who are our teacher leaders in this secluded culture. It's not just the district benefits, it's the union leaders as well.

 

We have to think about alternatives. We need to brainstorm new ways to reach our teachers, and to put the unions on the spot. Its a challenge but after 20 years, I am not stopping. I hope others are up for the challenge too. I don't blame people for quitting, because it is soooooooooo DISCOURAGING!!!!! Instead, on this forum, we love to talk about bogle, and what new investment ideas are online, but our colleagues could care less because it is online, and it doesn't work. This site has been around since 2000! Sure we helped some teachers, but reform is years away, unfortunately. Our biggest challenge is that our colleagues have a pension, and so they believe that they never have to worry about money, that the institution will take care of them, and in many situations, that's what happens.

 

Great discussion starter Ed. You are a great addition here, and a fresh voice into this horrible and yes totally corrupted 403b world with public K-12 districts.

 

Steve

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This quality isn't limited to educators. There is nothing more powerful than a personal, human connection. People need to be able to look you in the eyes, shake your hand, feel your pasion, and see your authenticity. You need to connect with their fundamental humanity and show that you care about their well being. I keep tying this back to politics and whatever you think about Trump or Bernie, they have the most loyal followers because they held massive rally after massive rally and reached out to people in the flesh. The internet is great for sharing information and cultivating a following but it has to start with a spark from grassroots, on the ground work.


Maybe I'm a fool but I deeply believe that here in Orange County we're not limited by the number of people advocating. I genuinely believe we're limited by my (or others') ability to get in front of people and speak from the heart. If I were a school employee or if I could find a way to speak to these folks, I just know we'd build momentum. The message is a gift from god, greedy wall street types have rigged the system to steal from your retirement. They don't care that you're already underpaid or that you're doing some of the most noble work our society requires. They've stolen from me, they tried desperately to steal from my wife, they're targeting you, and we're going to put a stop to it once and for all! Enough is enough. It writes itself!


...sure we'll have to talk about expense ratios, sales loads, diversification, etc but we have to lead with a fundamental message of fairness. You've worked your butt off, played by the rules, and these greedy greedy people have crafted a plan to specifically take advantage of you. It isn't fair and we have the power to stop them!


I'm fired up and if I can start getting in front of teachers then I won't stop until it is fixed.


The biggest and most bitter disappointment for me were the unions. I wholeheartedly support the concept of organized labor because it is needed to balance the power. They have a sacred responsibility to help the people and to discover the role they've played in the 403b/457b issues has disgusted me.

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I read through the long 2008 403bwise thread on the FL 403b “Model Plan” today. http://board.403bwise.com/index.php?showtopic=2988 The poster fredalan provided considerable of information about the plan, but nothing definite about the fees. Dan Otter and ScottyD and others provided skepticism and reserved judgement.

The IBC is a coalition of the FL teacher’s union FEA, the FL administrator’s association, the FL superintendent’s association, the FL school boards association. IBC hired a consultant (Gallagher Benefit Services) to design a better 403b/457 plan for all FL county-based school districts. The consultant worked with the “risk-managers” of the 4 associations to set the goals of the new plan. Can we assume that all these associations should have the goal of significantly lowering the costs of the 403b plans of FL K-12 employees?

They don’t make the current costs available, nor do they show how they’ve been lowered. What went wrong? How did they end up with the same old high-cost venders? Is there a simple answer?

This article by Scott about conflict of interest and lack of a fiduciary relationship between the employees and the TPA and others is worth a read. http://teachersadvocate.blogspot.com/2013/09/wild-west-in-government-403b-continues.html

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The biggest and most bitter disappointment for me were the unions. I wholeheartedly support the concept of organized labor because it is needed to balance the power. They have a sacred responsibility to help the people and to discover the role they've played in the 403b/457b issues has disgusted me.

 

 

For 17 years people here have despised the NEA Security Benefits 403(b) and not much has changed. I have to believe that the 403b problems are not political enough to draw the union leadership in. They talk about it behind closed doors, but never publically. They are just as afraid as the district's benefits administration because of LIABILITY. I tried to get elected to my local retirement committee as just a plain and ordinary Chair of this tiny committee. Tried twice and lost both times, and a fellow member who knew me well said that he did not vote for me because I was "too radical." High-level union leaders are tough with a lot of issues but fall flat on their face with the corrupted 403(b). When I talked about 403(b) they politely listened giving the impression that they knew what I was talking about, but nothing happened. Now I assume when I talk to any of my colleagues, I assume they know NOTHING. The 403b has always a low priority. Some still think they can make money off their members. I think that is a losing cause.

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I actually don't know much about NEA. I understand there is a fair amount of resentment towards them for associating with Security Benefit and perhaps for other less than stellar actions in the past. However, in my personal experience I view NEA as a godsend because they're the only reason my wife and I are able to invest a 403(b) with a total cost of roughly 0.08%...hard to be mad about that.

 

 

 

 

For 17 years people here have despised the NEA Security Benefits 403(b) and not much has changed.

 

I want to start by saying that I usually do not post to discussion boards. I like to read other people's thoughts and ideas and learn from their experience but I don't fell like my experiences really add to the discussion. In this case, I do feel compelled to speak up. In fact, the only reason I created an account here instead of continuing to lurk, is because I have been so impressed with the things Ed and Steve (and others) have been sharing, and the passion with which they fight for the benefit of other teachers. Count me as a fan.

 

I have been angry about my bad 403b options for a long time. In fact, I was happy to be able to move my money to Lincoln Investments and only pay 0.9 on top of the expense ratios to get access to Vanguard Admiral funds. That was such an improvement over the Valic account that I started in that I had to be happy to only be overpaying by around 1%. And then I came across some posts on the Bogglehead and 403bwise boards about the Security Benefit NEA Direct Invest accounts. I hope you will all be happy to know that as of Friday I have officially been successful in opening and contributing to my new Direct Invest account. I can finally retire my anger over my retirement account (now I just have my anger about other teachers' retirement accounts). I can not tell you how helpful the things you have written about your experiences were for me when I decided to pursue this process. First, I would not have known about the Direct Invest account. Second, there were several points in the process where it did not look like it was going to go through and I think I might have given up without the inspiration from reading about your experiences. Instead, I kept pushing the process along, knowing that others had blazed the trail and eventually reached success. Ed, reading what you have been saying on this site and BH was great, but when I took a look at your website, and read your whole story, and saw what you are doing for other teachers I am so amazed-impressed-inspired-awed by your selflessness. You are doing incredible things. I owe everyone who has contributed to these conversations a great debt. Your actions will end up making a difference of tens of thousands of dollars to my retirement. And that is just one person. I can only imagine the overall impact as you continue to spread the good word and push for more changes. I am truly, truly grateful.

 

What does surprise me, however, is to hear how much people malign Security Benefit and NEA. I get that they do have expensive options, but the fact that they offer the option to go the direct route is such a huge step up from all other high cost providers that I would think people would celebrate that these organizations were giving people the choice we would all like to have. I listened to Dan and Scott on the podcast talk about meeting one of the guys from NEA Member Benefits. If I understood correctly, they talked to him about the bad options from NEA/Security Benefit and described what a good option would look like - low cost, availability of index funds, no salesmen. And now we have this option. It sounds to me like they were provided with reasonable advice and they did something with it to try to provide a better option for those of us comfortable making our investment choices without an "advisor" (salesman). Shouldn't we be praising them for the steps they have taken? They have provided us with almost exactly what we say we want but people continue to complain about them and run them down. If I tried to listen to constructive criticism, acted on it to make the improvements requested, and then was repeatedly criticized I can tell you that would be the last time I tried to provide improvements. We seem to be shooting ourselves in the foot.

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chaka_han, welcome to the forum! Thanks for participating and sharing you experience. You do a great job of expressing your thoughts.

I certainly agree that the Security Benefit NEA Direct Invest 403b is an excellent low-cost option. The fact that SB pays the NEA several million every year for the privilege of using the NEA name on SB 403b offerings should be kept in mind. This is possible because SB sells teachers high-cost annuity based 403b plans and those high fees (often 2 to over 3%) are paying the costs of Direct Invest.

Users of Direct Invest should thank their colleagues for making the low-cost plan possible. You could consider it a transfer of funds between teachers! And while they are at it, educate their colleagues about low-cost investing! If every teacher who becomes informed about investing and moves from high-cost annuity 403b to low-cost mutual fund 403b plans then educates at least 2 other teachers to do the same, real progress could be made. EdLaFave and BashDash doing this!

I think our goal should be to have a low-cost MF based 403b plan that doesn’t rely on uninformed colleagues subsidizing it. The large state-wide 457 plans are examples of low-cost internet-based plans. The 403b plans of Vanguard, Fidelity and Aspire are evidence that teachers don’t need to be ripped off in order to have a low-cost plan.

SB and NEA hope that by offering Direct Invest, they will reduce the calls for K-12 403b reform. By all means use the SB NEA Direct Invest if it’s available while (1) helping colleagues move to low-cost plans, and (2) working to get Vanguard, Fidelity and/or Aspire added to the district’s provider list.

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chaka_han,

 

I too welcome you to the forum. Now our task is to inform and help others find, enrolled successfully and invest consistently to Security Benefit Direct Invest 403b plan.

 

Thanks for sharing your story. I wonder how much of the negativity to what the unions are usually doing wrong is "shooting ourselves in the foot"? You are probably right because the unions will never change, NEA will never publicize and hire reps to help people enroll in the low-cost plan. I wonder how much of the negativity prevents some of our colleagues from discovering the Security benefit low-cost Direct Invest?

 

My concern has always been for years: we have to be careful about being too happy with NEA low-cost Direct invest because its only for those few teachers who are savvy enough to enroll themselves can benefit. I am very happy for those few teachers.

 

But direct invest is not ever going to be a revolutionary change where all teachers will have a low-cost plan. The vast majority of our colleagues are stuck with high-cost 403bs and this will most likely go on for another generation of teachers.

 

Recall, that NEA low-cost direct invest was only created to protect NEA from another lawsuit. It has NEVER been for the best interests of their members. So if its starts getting around the NEA has a good plan, the high-cost salespeople will point to us here and Bogleheads as proof that even we are recommending NEA plans. Its vague enough that a naive teacher will be vulnerable to NEA's sales sharks, and enroll in the high cost 403bs instead. We have to assume that our colleagues know very little about any of this.

 

When you say good things I would only say security benefits direct invest and KEEP "NEA" out of the conversation.

 

have a great day, and I hope I was not too negative. There is a long history of how the NEA has ripped off their members since the 90s.

 

Steve

PS I have been a long-standing union member since 1984 and struck with my union in 1989. Unions have done great things with benefits, working conditions, pay raises, class size reductions, etc. But NOT the 403b. Only in Wisconsin has the union done a decent job, and I would also count NY. But California unions have been terrible for 403bs.

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I hope you will all be happy to know that as of Friday I have officially been successful in opening and contributing to my new Direct Invest account. I can finally retire my anger over my retirement account (now I just have my anger about other teachers' retirement accounts). I can not tell you how helpful the things you have written about your experiences were for me when I decided to pursue this process. First, I would not have known about the Direct Invest account. Second, there were several points in the process where it did not look like it was going to go through and I think I might have given up without the inspiration from reading about your experiences. Instead, I kept pushing the process along, knowing that others had blazed the trail and eventually reached success. Ed, reading what you have been saying on this site and BH was great, but when I took a look at your website, and read your whole story, and saw what you are doing for other teachers I am so amazed-impressed-inspired-awed by your selflessness. You are doing incredible things. I owe everyone who has contributed to these conversations a great debt. Your actions will end up making a difference of tens of thousands of dollars to my retirement. And that is just one person. I can only imagine the overall impact as you continue to spread the good word and push for more changes. I am truly, truly grateful.

 

I am so happy to have played a role in you enrolling in Direct Invest. Congratulations! This effort has been a bit taxing and the mostly online/anonymous nature of it can be a bit isolating. So I am thrilled when people let me know that I've helped. It keeps me motivated, thank you!

 

I hope you can spread the word to all of your co-workers! When I spoke to the head of our Retirement Services department she said something to express doubt that these plans are as bad as I've described them to be because supposedly I'm the only one who has complained. So it may make some small difference to let Retirement Services, Director of Risk Management, School Board, Chief Financial Officer, etc know how dissatisfied you are/were. If you ever feel the urge to push for systemic change then I'd be happy to help in any way possible.

 

Just out of curiosity, do you want to share the state/district you're in?

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I apologize for the length of my posts. Maybe this is why I usually don't post on discussion boards. Once I start I can not find a way to say what I need to say succinctly.

 

 

Krow and Steve,

 

Thank you for explaining where the negative attitudes about NEA and Security Benefit come from. I certainly never looked at it from the perspective that this plan is being subsidized by teachers in high-cost plans, but that actually makes perfect sense. I wondered how this plan could be offered since it does not seem to generate money for Security Benefit.

 

 

My concern has always been for years: we have to be careful about being too happy with NEA low-cost Direct invest because its only for those few teachers who are savvy enough to enroll themselves can benefit. I am very happy for those few teachers.

 

When you say good things I would only say security benefits direct invest and KEEP "NEA" out of the conversation.

 

 

Steve

PS I have been a long-standing union member since 1984 and struck with my union in 1989. Unions have done great things with benefits, working conditions, pay raises, class size reductions, etc. But NOT the 403b.

 

So what is the right kind of plan for those of our colleagues who are not knowledgeable and savvy about investments? I think that those of us who are, to some degree, knowledgeable are often stunned that other teachers are not more concerned/upset about the state of the 403b program. At first, we think it is ignorance because that is what it was for us when we got stuck in a high-cost plan. So we try to get the word out. And people don't care. And then we get frustrated with the apathy. I kind of get the impression that that is what Ed is going through with his efforts in Florida. There is a large percentage of people who simply have no interest in learning about investments, paying attention to numbers, or doing any sort of math. They just want someone to tell them what to do. Add to that the fact that only about 30% (if what I have heard is correct) of teachers nationwide even participate in a 403b program, and it is very hard to get anyone interested in this problem. So, ideally, all 403b programs should have a direct invest type plan option with very low-cost index funds available for those who are interested in and comfortable with controlling their own investments. What are we looking for for those others why really can't/don't want to control their own investments? Now we are back to needing an advisor. And lacking a true advisor, in step the insurance agents and other salespeople. And they do offer advice and information about saving for retirement that those teachers need. It certainly isn't being provided by the school district. The problem is that they are providing that information at an excessive cost. Now, which is better, to get no information about saving for retirement or getting expensive information about saving for retirement? I think I mentioned that my first 403b was with Valic. And when I finally woke up more than 12 years later and realized the high expense ratios, management fees, M&E fees, and the 15-year surrender charges I was stuck with I was angry angry angry. Angry at myself. Angry at the company. Angry at the salesperson. But here is the thing that I really can't overlook: I now had 12 years of savings built up in a retirement account that I would never have had if that salesman hadn't come into the lunchroom and signed me up for that god-awful plan. Granted, it was not as much as it would have been in a good plan, but it was more than I would have had if I had no plan. Best case scenario, I would have held on to that money in a savings account making slight interest every year. Worst case, I would have spent that money on any number of things that I did not really need. So I agree, that this system sucks, but unless we can replace it with something better, those expensive salespeople are probably still doing a lot of good (even if it is an inadvertent byproduct of making money for themselves) for teachers who otherwise would never have started to save for retirement. In your minds, does the replacement system have a financial advisor who is not pushing a product come into the school and perform the same functions that the salespeople are currently doing? What do they get paid? What is a reasonable cost for a 403b plan that includes sound financial advice and planning without salesmanship? When I moved to Lincoln Investments there were no products they tried to sell me, there were no M&E fees, and no surrender charges. They did, however, charge 90 basis points to participate in their plan. I certainly think of that as very expensive because by then I was a little more knowledgeable and did not want to utilize the advice a financial planning that they offered. But is that a reasonable cost for someone who needs the advice and planning? Everyone always mentions Vanguard, Fidelity, and Aspire as low-cost providers, but aren't they just like the Security Benefit direct invest plan in that there is not an advisor or planning included in the plan? How is that going to help those who do not have the knowledge?

 

Steve - Just so you know, when I do tell people about the plan I just say Security Benefit direct invest and my initial post is in no way meant to be supporting NEA because I am pro-union. I am, in fact, union indifferent. There are good things about unions and bad things about unions. My statements about NEA and Security Benefit are just about me being a long-standing believer that we should be just as loud with praise and celebration when we see something good as we are with our complaints about things that are bad. I had seen a lot of complaints (that I now understand a little bit better) without hearing any praise and was confused as to why.

 

Ed - I am sure that what you are doing can be frustrating, but those that are a little bit knowledgeable recognize what an amazing thing it is that you are trying to do for people. My fear is that the vast majority of the people you are looking to impact are not in a position to understand and therefore will not respond to your efforts. I only hope that you make some connections with some like minded Florida teachers that will feed your motivation. Until then, know that your efforts have impacted me and inspire me to try to help my fellow teachers here in Maryland.

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So I agree, that this system sucks, but unless we can replace it with something better,

 

 

It's been replaced! The 403b offered by districts is corrupted forever by state insurance commissioners.

The 457b and some low-cost mutual fund platform 403b plans are now available offered by many states and a handful of districts nationwide.

 

Here is one example of a district offering: Los Angeles Unified Award Winning 457(b) plan: all mutual fund and index including Vanguard, no insurance products, average cost .42% https://lausd457b.voya.com/einfo/fundinfo.aspx?page=investment_informationfundinformation&cl=lausdi&pl=711011PU&domain=lausd457b.voya.com

the primary reason why this plan is so good is that it has an advisory committee of union reps, and I am the member at large voting member. We have been screaming for low-cost vanguard funds for 11 years and we have gotten them. I wrote a book about my story with a few of my friends on how we went from not knowing much to having our plan earn an award: http://latebloomerwealth.com/publications/fighting-powerful-interests/ free PDF download also forever.

 

California state Pension2, one of the best 403b plans in the country offered by the teacher's pension plan: http://www.calstrs.com/pension2

 

The teachers' unions and the districts still don't get it for the vast majority of districts and unions nationwide (Wis and NY unions are exceptions).

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Just Imagine we are standing in front of the NEA and CTA headquarters protesting their continued secrecy and high-cost 403bs, instead of Louis Vuitton. These protesters are against killing alligators for Vuitton's handbags. We could do a similar protest. I have done this and wow did I get attention real fast. Annuity people called el security and tried to get us thrown out. We can talk all we want about Vanguard, and low cost investing, and how awful that people are not saving for retirement, but it's not going to change a thing. Another generation of our colleagues is going to continue to get the shaft with the current system.

 

http://www.kesq.com/news/painted-peta-protesters-expected-in-palm-desert/514880549

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Steve

 

Can a school system be sued for offering high fee only offerings? I know some universities have been taken to court.. I am confounded that there is no vetting on a school system's part to who they allow on their list. I know ignorance rules and decisions are made without knowledge but still, maybe a hard lesson would get their attention.

 

Tony

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I'm 100% behind both anìmal rights and the right to not have your retirement accounts raided by financial 'professionals'. I'll be at the Florida 403b/457b protest if one ever pops up and if I ever have the ability to ensure one pops up then it will.

 

After the last few months, I don't think ignorance is the problem here in Orange County (FL).

  • I've met in person and exchanged emails with somebody in the union
  • I've been ignored by both union presidents (instructional and non-instructional)
  • I've emailed the school board members, chairman, and superintendent once or twice.
  • I've spoken at a school board meeting.
  • I've exchanged many emails and phone calls with the OCPS Director of Risk Management, OCPS Senior Manager of Retirement Services, OCPS Chief Financial Officer, and others.

Lots of these people have flat out ignored me. Everybody else has listened, seemingly understood, and failed to make any commitment to action. Here at OCPS they can't claim ignorance, they're doing this knowingly and intentionally.

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I know some universities have been taken to court..

 

I think that has only been private universities that have ERISA 403b plans. They can be sued for not following the law protecting employees. Unfortunately, there is no legal protection for non-ERISA plans, and public schools are non-ERISA.

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