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Guest Sierra

"Full service" is in the eyes of the beholder. The 2 percent vendors like Travellers use these code words to convey their message that they provide service that is superior to the no-loads. To this I say "baloney". The 2 percent rep gets paid to sell not service. Service is down time. Once you're in the fold he/she will tell you to call the 800# and talk to one of the reps. The same service is provided by the no-loads.

 

Your wife needs to get active and ask her employer why no-loads are not available. She needs to ask the higher paid officials like the ones making 2 and 3 times what a teacher makes why they like paying tens of thousands of dollars in unnecessary fees over a course of a working liketime when those fees should be used to grow the investment.

 

"I nor my wife have the time to watch the market." This sounds like a vendor's sales pitch. Do not buy into it! There is no need for a no-load investor to "watch the market" if they diversify their investment among different asset classes. Ask the Traveler's rep to document how he/she positioned his or her clients in the late 1990s so that they did not take the scalding that they otherwise would have taken during the severe downturn of 2000, 2001, 2002. In otherwords ask for references just as if he/she was attempting to get your business to finish your basement!

 

Peace and hope,

Joel L. Frank

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There may well be some good agents who provide service to their clients. My experience was different. Let's see ... I was sold a "TSA" about twenty years ago. The last time I spoke with my "service provider" was ... hmmm ... about 15 years ago. What a guy.

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Guest Joes

westerndad,

 

when looking at the annuity ask the representative to give you a performance report it will highlight the returns that you would have recieved net of all those fees. To sierra's suprise youll find that many of them even after fees did better than the fidelity fund he mention. Hmm how is that possible well first of all annuity fund managers need not be concerened w/ tax selling issues and hold much less of there accounts in cash because redeptions are lower.

 

It ole' fee argument looks great on paper but many no load investors and university professors who use tiaa/cref were devestated when the market fell apart after 911. I know first hand. Im still working long after i should have been thanks to the ole no loads and tiaa/cref. while my buddies who met w/ there reps annually paid more for superior service and value retired on time. Well at least I saved on fees now I get to work another 10 years.

 

I asked them why they used a financial advisor because it cost them more and they asked me why i went to the dentist (we laughed), but i got the point.

 

 

Also like many others when the markets down or you get older ( and you will get older) your annuity will provide you w/ a guaranteed Fixed account. Last i looked fidelity provided some bond funds which have losing as of late.

 

good luck

 

and btw dont make any financial decisions based on anything u read on a blog like this they are dime a dozen, get a professional to help you.

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Hi Joes,

 

Thanks for your post. A couple of questions... Could you tell us how you were allocated during 9/11? What led you to this allocation? What university do you work for? How did you calculate that you will need to work at least 10 more years? Also, please pass along data that supports your statement that "many of them (variable annuity investors) even after fees did better than the Fidelity fund he (Joel) mention."

 

I don't think anyone who truly understands investing is against professional advice. In fact we have the following information on the 403(b) FAQ section:

 

Do I have to use an agent to set up a 403(b)?

No. This site believes that with financial education, patience and realistic expectations, individuals are perfectly capable of managing their own 403(b). It is important to point out, however, that many agents provide valuable services to their clients. These services can include: retirement planning, information about state retirement plans, and analysis of other financial needs. Such agents rightly deserve to be compensated for their services. The key is to figure out exactly what services you are receiving, and exactly what fees you are paying for these services. Only then can you determine the true value of using an agent. Other options include hiring a financial planner who can be paid on an hourly basis to aid you with your 403(b).

 

What is your opinion of an investor using low cost investments upon the advice of a fee-only financial planner?

 

You make a good point about annuitization. It can make a lot of sense to annuitize a portion of retirement savings. But why lock into such a scenario during the accumulation phase? Any investor can always choose this option upon retirement when they have a better idea of their retirement lifestyle and financial needs.

 

I would be interested to hear your opinion on the following books: The Four Pillars of Investing by William Bernstein, Common Sense on Mutual Funds by John C. Bogle, and A Random Walk Down Wallstreet by Burton G. Malkiel. These well-respected books make a very strong case for the low-cost index approach to investing. If you have data to refute this books we would be very interested in seeing it.

 

Dan Otter

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Guest Sierra
westerndad,

 

when looking at the annuity ask the representative to give you a performance report it will highlight the returns that you would have recieved net of all those fees. To sierra's suprise youll find that many of them even after fees did better than the fidelity fund he mention. Hmm how is that possible well first of all annuity fund managers need not be concerened w/ tax selling issues and hold much less of there accounts in cash because redeptions are lower.

 

It ole' fee argument looks great on paper but many no load investors and university professors who use tiaa/cref were devestated when the market fell apart after 911. I know first hand. Im still working long after i should have been thanks to the ole no loads and tiaa/cref. while my buddies who met w/ there reps annually paid more for superior service and value retired on time. Well at least I saved on fees now I get to work another 10 years.

 

I asked them why they used a financial advisor because it cost them more and they asked me why i went to the dentist (we laughed), but i got the point.

 

 

Also like many others when the markets down or you get older ( and you will get older) your annuity will provide you w/ a guaranteed Fixed account. Last i looked fidelity provided some bond funds which have losing as of late.

 

good luck

 

and btw dont make any financial decisions based on anything u read on a blog like this they are dime a dozen, get a professional to help you.

Joes, my buddy!

 

The loss you took in 2000, 2001, 2002 has nothing to do with your use of a no-load fund outfit like the TIAA-CREF system but everything to do with investing in one asset class---equities! You can hardly blame TC for this, unless you were advised by TIAA-CREF to invest the way you did. The fact of the matter is you ignored all the education that is provided in TC literature as well as their website. Every so often the firm discloses the asset allocation decisions of its annuity holders. You joined the very, very small minority that place all or most of their eggs in the stock market.

 

Prior to the adoption of CREF on July 1, 1952 the TIAA organization performed a 12 month study on how a hypothetical person would have done if he/she invested money in the stock market. They went back to the 1880s and carried it through to 1951. They performed all kinds of hypotheticals---the name of the study is "A New Approach to Retirement Income" published in 1951 with the recommendation that TIAA establish a "variable" annuity underwritten by a companion organization to be created by the name of "College Retirement Equities Fund". I suggest you read that pioneer study. CREF was the nation's first variable annuity and in my opinion has remained the best since its creation on July 1, 1952.

 

BTW, the highest paying fixed annuity rate should be TIAA with its 0.03 percent mortality and expense charge. In a pre-tax account tax selling and redeptions are non-issues so this is not a reason, as you erroneously assert, why some loaded choices out performed their no-load counterparts.

 

While there are no investment management fees (expense ratios) with a fixed annuity account---there is a Mortality and Expense charge which runs about 100 basis points or 1.00 percent? The guranteed return of premium death benefit does not apply to a fixed interest annuity so please tell us what benefit is derived by the payment of this fee?

 

Peace and Hope,

Joel L. Frank

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Well, a lot has happened since I first asked the question about Travelers. The school district went out to bid for a new vendor. The school district will be putting in a matching plan and is eliminating it's retirement pension plan. There will be 1, possibly 2 vendors. The match will be 20 cents on the dollar up to 3% of compensation. The vendor they have chosen is AIG-VALIC. Anyone know anything about AIG-VALIC?

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Guest Sierra

<!--QuoteBegin--DrDaddy+Apr 30 2005, 11:32 AM-->

QUOTE (DrDaddy @ Apr 30 2005, 11:32 AM)
<!--QuoteEBegin--> Well, a lot has happened since I first asked the question about Travelers. The school district went out to bid for a new vendor. The school district will be putting in a matching plan and is eliminating it's retirement pension plan. There will be 1, possibly 2 vendors. The match will be 20 cents on the dollar up to 3% of compensation. The vendor they have chosen is AIG-VALIC. Anyone know anything about AIG-VALIC? <!--QuoteEnd-->
<!--QuoteEEnd-->

AIG-Valic is a commissioned based variable annuity company. VARIABLE ANNUITY LIFE INSURANCE COMPANY = VALIC. Compared to Travelers you may be going from the frying pan into the fire. It doesn't seem like this thread had any impact on the final decision made by your school district.

 

Is this a public or private school district?

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Guest TR1982

Hey western,

 

Suppose the funds this individual picks outperform Fidelity's fund and he ends up with more money net of fees than Fidelity's? Which choice is better then?

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Guest TR1982

Sierra,

I know this situation that DRDaddy is talking about and you know nothing about what any of the vendors bid. I know what one firm bid and you should not talk about something you no nothing about. This is typical of the the idle chatter on this board. Act like an expert when you know nothing.

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Guest TR1982

Sierra,

Hate to break it to you, you're wrong again! There is no such thing as M&E on a fixed account. Why don't you go out and sit for your Series 6 or 7 exam as well as the life and health exam in your state? Then maybe you might be able to speak with some amount of authority on these subjects.

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