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westerndad

Ing Issue

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French Teacher,

 

I enjoy reading your posts, and find you to be pretty fair (not to mention witty!). I don't undertand your objections to Joel's ING issue, though. I know that he raises the issue a lot, but I'm sure that new folks are constantly coming to this forum, so there might be quite a few who are unaware of this.

 

To take some of the flak away from Joel, I think that I will hammer on some things myself. A few threads ago I acknowledged that lots of folks need or want professional advice, and that it made all the sense in the world for them to consult with a fee-only planner. That type of fee is "good" for investors. I then challenged Murph to explain how loads, surrender fees, and 12b-1 fees were also "good" for investors.

 

No response yet.

 

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Truth be told, westerndad, I disagree with you about "good" fees, insofar as fees always represent money OUT of your own pocket, and INTO someone else's, which is inherently NOT a good thing. At their best, fees represent the cost of doing business with the entity to whom you pay it. Taken in that context, the fees paid to a fee-only planner are only "good" if the advice is good.

 

Are the loads associated with certain mutual funds "good"? Depends. If I pay 2-3% annually in fees for a mutual fund that outperforms the market by several percentage points, do I feel like my fee has gone towards a good cause (i.e., mine)? Sure. And yes, past performance is no guarantee of future performance, etc., etc. I would still rather pay the premium for a manager whose track record justifies it.

 

With the ING issue as Joel frames it, I object to the blanket statements that are misleading or outright wrong. Given the proper time and motivation, I could search the archives of this site and come up with many misleading or outright false things he has said, and I frankly object to it because ING in general (and my rep in particular) have done great things for my financial life. There is also an omnipresent suggestion that the union to which I belong is somehow whoring itself with their agreement with ING, even though I have never once heard an objection to it in my years as a teacher in New York.

 

ING may not be the greatest company in the world to deal with everywhere in the country, and God knows after reading this site that there are areas of the country (the state of California leaps to mind) where advocacy such as Steve Schullo's is not only welcomed, but necessary. But we shouldn't throw the baby out with the bath water. My union has seen to it that all kinds of investment options are open to teachers who want them. ING is endorsed, sure, but not mandated...there are no-load options available to anyone who wants them. And that's why I respond so vocally whenever Joel in particular tries to demonize ING to the extent that he does. Where I come from, it simply isn't warranted. And as often as he logs onto this site to spread his nonsense to new folks who are reading him for the first time, I intend to be right behind him with the counterpoint, reminding everyone that there is virtually no objection to the way things are in NY State right now. Indeed, with all options available to anyone who wants them, why would there be?

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Guest Sierra

There is also an omnipresent suggestion that the union to which I belong is somehow whoring itself with their agreement with ING, even though I have never once heard an objection to it in my years as a teacher in New York.

================================================

I never thought of using the word "whoring". It surely fits and I will definitely use it in the future. Thanks for the unintended suggestion. Now to your illogical statement. How many teachers in NY State are eligible to buy your ING variable annuity with its 1.00 percent Mortality and Expense fee? The entire k-12 staff in every school district in the state EXCLUDING the City of NY. Let's say about 100,000. Now the French Teacher would have us believe that they all (all 100.0 percent of them) support the union's collection of a $4,000,000 fee ("whoring itself") from ING because little old FrenchTeacher "never once heard an objection to it in my years as a teacher in New York".

 

Apparently you do not know that the City of NY is part of the state of NY. Half of the state's teachers work in the City. Their local union and employer are in full agreement as far as making sure that ING is never sold to a school teacher employed by the City of New York. Could it be possible that the City and its teachers union believe your New York State United Teachers (NYSUT) is whoring around with ING? French Teacher: DO YOU "HEAR THE OBJECTIONS" NOW OR SHOULD WE TURN UP THE VOLUME?

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Sounds like the teachers in the city of NY believe that less choice is better. The entire rest of the state obviously disagrees.

 

You believe, Joel (and you always have), that one size fits all, and that YOUR definition of the best investment program is categorically the best investment program for all. I'm thankful that that brand of narrow-mindedness, and that patrician attitude, appear to be limited to NYC.

 

By the way, your numbers are way, way off. The rest of NY State (which is used to being marginalized by the above-it-all attitudes of those in NYC who believe that they actually ARE the entire state of NY) far outnumbers the membership of NYC. There are 500,000 NYSUT members, and you claim below that 100,000 of them are in NY State excluding NY City? So by your contorted math, NYC has 400,000 teachers? Better drag out that abacus and try again.

 

Lastly, I never claimed that 100% of the union membership is in favor of this arrangement between NYSUT and ING...merely that it is a NON-ISSUE to most of us. If the majority of members found it objectionable, you can be quite certain that there would be a vast turnover in our union's leadership. This is just one more example of you trying, trying desperately, to make a mountain out of a molehill.

 

[Edit: from NYSUT's website: "We range in size from tiny locals of fewer than 10 members to the United Federation of Teachers, which represents 130,000 teachers and other school employees in New York City." Elsewhere in the site, NYSUT claims a total of 500,000 members. So NYC represents 25% of NYSUT members, not half.]

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Guest Sierra

Pasted up from the NYSUT website

================================================

 

 

About NYSUT

 

New York State United Teachers is 500,000 people who work in, or are retired from, New York's schools, colleges, and healthcare facilities. We are classroom teachers, college and university faculty and professional staff, school bus drivers, custodians, secretaries, cafeteria workers, teacher assistants and aides, nurses and healthcare technicians.

 

NYSUT is a federation of more than 900 local unions, each representing its own members. We are part of the American Federation of Teachers, the fastest growing union in the United States. We are also part of organized labor - the AFL-CIO - and of Education International, with more than 20 million members world wide.

 

We range in size from tiny locals of fewer than 10 members to the United Federation of Teachers, which represents 130,000 teachers and other school employees in New York City.

++++++++++++++++++++++++++++++++++++++++++++++

FT: As you can see the 403b eligibles is not 500,000 statewide because we have to subtract the retirees. I would guesstimate that about 400,000 are 403b eligible with 130,000 members working in NYC. To this 130,000 we need to add 10,000 supervisors. So 260,000 union members are eligible for your ING while 140,000 are not. How could you possibly be proud of a union when a large segment of its leadership has taken the position that the ING relationship is so hurtful to the members that the local (NYC) will do everything in its power to keep ING out of the City. Please note that the 10,000 supervisors have a separate union and it too is steadfast in making sure it is not part of endorsing a corrupt NYSUT/ING partnership.

 

 

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Westerndad,

 

Wait a minute...I know how this goes. You ask me a question, I answer it honestly and even though I do so in good faith you attack me like a pit bull.

 

The fee's are 'good' if the client needs the help, the fees are reasonable and fully disclosed, and the planner is worth it. (did someone just yell sik 'em?)

 

You don't need my help so I wouldn't be worth it to you. I know that most of the people on this site feel that they don't need help and that nobody is worth it. I am perfectly okay with that.

 

My business is based mostly on referrals. I get referrals from clients who are paying me fees. Many of the prospective clients already know how I work because the person who has referred them told them about my business model. Believe it or not, I don't charge or make anywhere near the majority of reps I compete with. I have a high volume - low profit business model. I don't know what to tell you Westerndad. I am charging fees and I'm more booked than ever.

 

I'm sorry, you have been showing such an interest in my investments and the fees I charge and I have not asked you anything about you. Please tell me what you are currently investing in? What fee's your paying and what your performance has been over the last10, 15 & 20 years? I know that you probably were not investing for all 20 years but the fund families have printed histories you can refer to. (I realize that past performance is not an indication of future gain)

 

Tell me about your Asset Allocation - why you've picked the funds you picked and how they are correlated with each other. Also, if you happen to know the beta and standard deviation for your current porfolio that would be great as well.

 

 

 

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Murph,

 

Actually, you never did respond to my questions, which is why I posed them again. I did not attack you like a pit bull. I acknowledged the appropriateness of fees from fee-only planners, but questioned the appropriateness of loads, surrender fees, and 12b-1 fees. You have now responded in only the most general manner. I, however, will respond specifically to your questions about my investments:

 

1) Asset allocation: 50-50

 

2) Funds SD Fees 1 yr. 3 yr. 5 yr. 10 yr.

 

VTTVX .22 6.95

FSTMX 14.90 .10 7.64 6.18 -1.3

FSIIX 15.43 .10 17.41 14.08 -0.35

FBIDX 4.41 .32 2.46 5.87 7.57 7.25

 

Those are the returns that are available. VTTVX is a new fund, so there is not much available. The returns, of course, would correlate to the underlying funds (total stock market, euro index, pacific index, total bond).

 

The betas, of course, would be 1.0 relative to the indexes to which the funds are pegged.

 

3) Why did I choose these funds?

 

a. They enable me to capture virtually the entire return of the given markets. I don't need to worry that they will underperform the markets, unlike the vast majority of actively-managed funds.

 

b. The expenses are far, far lower than actively-managed funds.

 

c. They provide ample diversification.

 

4) How are the funds correlated with each other?

 

They are not, of course, which is why I chose them. This provides the diversification.

 

OK, Murph. There you have it. I did leave out one other investment. That was the two-tiered monstrosity that a salesman pawned off on me in my younger years when I did not know any better. I hope that others will avoid that mistake that I made. I am ultimately responsible for making it, but that salesman was sure responsible for not explaining things to me.

 

And now, since I have been so specific, let's get back to those fees.

 

1) 12b-1 fees: Would it be fair to say that these purport to benefit investors, but in fact benefit advisors?

 

2) Loads: Would it be fair to say that these impose a significant drag on investments?

 

3) Surrender fees: How can these possibly be justified?

 

Really, Murph, I'm not attacking you or advisors. As I have repeatedly stated, there is a most definite need for advisors, and these folks should most definitely be compensated. Good advisors should be paid a substantial fee. I guess that I'm simply questioning whether the above types of fees are a reasonable FORM of compensation.

 

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Oops, the performance data are poorly formatted. I tried to use columns, but they did not appear as I hoped. Let's try that again:

 

VTTVX:

 

SD: not available

Expenses: .22

1 yr. : 6.95

(This is a newer fund, so that is all that is available)

 

FSTMX:

 

SD: 14.90

Expenses: .10

1 yr.: 7.64

3 yr.: 6.18

5 yr.: -1.3

 

FSIIX:

 

SD: 15.43

Expenses: .10

1 yr.: 17.41

3 yr.: 14.08

5 yr. -0.35

 

FBIDX:

 

SD: 4.41

Expenses: .32

1 yr.: 2.46

3 yr.: 5.87

5 yr. 7.57

10 yr.: 7.25

 

 

 

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Pasted up from the NYSUT website

================================================

 

 

About NYSUT

 

New York State United Teachers is 500,000 people who work in, or are retired from, New York's schools, colleges, and healthcare facilities. We are classroom teachers, college and university faculty and professional staff, school bus drivers, custodians, secretaries, cafeteria workers, teacher assistants and aides, nurses and healthcare technicians.

 

NYSUT is a federation of more than 900 local unions, each representing its own members. We are part of the American Federation of Teachers, the fastest growing union in the United States. We are also part of organized labor - the AFL-CIO - and of Education International, with more than 20 million members world wide.

 

We range in size from tiny locals of fewer than 10 members to the United Federation of Teachers, which represents 130,000 teachers and other school employees in New York City.

++++++++++++++++++++++++++++++++++++++++++++++

FT: As you can see the 403b eligibles is not 500,000 statewide because we have to subtract the retirees. I would guesstimate that about 400,000 are 403b eligible with 130,000 members working in NYC. To this 130,000 we need to add 10,000 supervisors. So 260,000 union members are eligible for your ING while 140,000 are not. How could you possibly be proud of a union when a large segment of its leadership has taken the position that the ING relationship is so hurtful to the members that the local (NYC) will do everything in its power to keep ING out of the City. Please note that the 10,000 supervisors have a separate union and it too is steadfast in making sure it is not part of endorsing a corrupt NYSUT/ING partnership.

 

Joel, your math is officially as screwed up as the rest of your "thinking."

 

The website claims 500,000 NYSUT members and 130,000 UFT members. But you claim we have to subtract out retirees...so you want to axe 100,000 from the general membership rolls, while retaining all 130,000 UFT members??? Oh no, wait...you've actually ADDED 10,000 UFT members to get to 140,000!!! (Because the UFT gets BIGGER as their membership retires, whereas NYSUT in general shrinks???) No WONDER you think half the state doesn't have ING available to them.

 

I'm not even addressing the other major falsehood...that retirees are somehow not 403b "eligible." What do you think, Joel...they all close down their 403B's on July 1st, immediately after their retirement?

 

It's worthless having a discussion with you if you can't get the simple stuff right. I don't expect you to grasp the more complicated issues.

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Guest Sierra

FT:

 

I admit that my data may be lacking the accuracy it deserves but you do not have to insult me. Please try to be more civil and help out with the collection of the needed data so that we can both agree on a ratio.

 

Having said that I would like to change the analysis somewhat with the goal at arriving at an accurate ratio. It is a given that all public education employees of the City of NY, K thru the City University of NY are not allowed to contribute to the New York State United Teachers endorsed 403(b) carrier, ING. This includes the instructional and non-instructional staff.

 

I have elicited the help of the State Legislative Library. I have asked for the number of employees that are employed in public education statewide and also just in the City of NY. I feel that these figures will give an accurate ratio of how many 403(b) eligibles working in the State are excluded from ING. As soon as I receive their data I will share it with you.

 

Joel, Peace and Hope, Frank

 

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I admit that my data may be lacking the accuracy it deserves but you do not have to insult me. Please try to be more civil and help out with the collection of the needed data so that we can both agree on a ratio.

 

 

Mea culpa, Joel. Sometimes it's almost like you have sort of an agenda against ING...I dunno where I get that impression, but it carries over to when you make honest mistakes as well.

 

Back to the ratio...what's wrong with the numbers you cite (and I cite) on the NYSUT website? 500,000 members, 130,000 UFT members, ~25% therefore NYC (and hence ineligible for ING)?

 

Whether we accept 25% or you come up with a third number that's 30% or 32%, is it really likely to change your point that much?

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Guest Sierra

You're right, it will have nothing to do with my position. I just want to come up with a ratio that meets your approval. I'm also sure you will continue to contribute your hard earned dollars to ING.

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You're right, it will have nothing to do with my position. I just want to come up with a ratio that meets your approval. I'm also sure you will continue to contribute your hard earned dollars to ING.

 

Nope...I'll be contributing them to my own account, thanks. ING is simply the caretaker.

 

At any rate, I'm still uncertain why the numbers listed on the NYSUT website don't meet your approval, but I'm sure you'll clarify that at some point.

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