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"Fixed annuities (non-variable)do not have M&E's or mortality expenses applied against the contracts. They are simply the premium accumulated with interest and adjusted for withdrawals."

 

 

TR, this kinda contradicts the whole "you were right, Sierra, and I was wrong" thing, doesn't it? Heh.

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Guest Sierra

Steve, this is just plain ridiculous. How can anyone on this board cite the work of John Bogle, who founded Vanguard, as an unbiased source, while out of the OTHER side of their mouths castigating an article written by a pair of PhD's for the Journal of Financial Planning?

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

JB was an unbiased researcher before he started Vanguard.

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Guest TR1982

FT,

This is why you are wasting your time having this conversation. People like Sierra aren't interested in other points of view or the free exchange of ideas.

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I have no freakin' idea one way or the other. But I'll concede that Bogle was an independent researcher that reached different conclusions from TR's two PhD's, if you'll concede the possibility that TR's two PhD's were independent researchers who simply reached different conclusions from Bogle.

 

Also, if you produce EVIDENCE that TR's cited researchers were simply preordained to reach the conclusions that they did, and that therefore the article they wrote was nothing more than a bag job, then I'm all ears. But the simple fact that it was published in the Journal of Financial Planning is hardly "evidence." Indeed, given their screening procedures, it's very much evidence to the contrary.

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Guest Sierra

The point I was making is that once a researcher finishes his research and goes commercial with his findings he is no longer unbiased. Since 1976 JB is in fact biased and his convictions have served millions very very well.

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Guest Sierra

There are also investment management and administrative fees paid by the fixed annuity holder. But they too, like the ME fee, are implicit rather than being explicit. A fixed annuity is not a security and as such the insurer is not required to disclose the fees that are factor into the declared interest rate. A VA on the other hand is a security and is thus required to fully disclose (explicitly) the fees associated with the sub accounts.

 

This is why a no-load outfit like TC will always have a higher fixed interest rate annuity than its competition.

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This is why a no-load outfit like TC will always have a higher fixed interest rate annuity than its competition.

 

Really? My fixed account has a contractually guaranteed 4% (meaning that no matter what rates do, ING cannot lower my rate to a figure less than 4%). What is TIAA-CREF paying these days?

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The point I was making is that once a researcher finishes his research and goes commercial with his findings he is no longer unbiased. Since 1976 JB is in fact biased and his convictions have served millions very very well.

 

But if his research was done in a scientific way, then his conclusions are sound, no?

 

Which is the point I was making about everyone trying to belittle the studies cited by TR. Read them first, and if you don't like the methodology, tell me what you don't like about it. Explain how it's flawed; I assure you that I'll listen with an open mind. But don't scoff at it because it appears in the Journal of Financial Planning, especially while praising other news items to the skies simply because they appear in publications like the Wall Street Journal, Forbes, etc., whose agenda is quite obvious as well.

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Guest TR1982
There are also investment management and administrative fees paid by the fixed annuity holder. But they too, like the ME fee, are implicit rather than being explicit. A fixed annuity is not a security and as such the insurer is not required to disclose the fees that are factor into the declared interest rate. A VA on the other hand is a security and is thus required to fully disclose (explicitly) the fees associated with the sub accounts.

 

This is why a no-load outfit like TC will always have a higher fixed interest rate annuity than its competition.

 

 

Banks have investment management costs, too. Those costs are factored into their investment spread as well. The wonderful thing, though, is if you don't like it, you don't have to buy it. That's the great thing about living in a free country where you have choice.

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Guest Sierra
There are also investment management and administrative fees paid by the fixed annuity holder.  But they too, like the ME fee, are implicit rather than being explicit.  A fixed annuity is not a security and as such the insurer is not required to disclose the fees that are factor into the declared interest rate.  A VA on the other hand is a security and is thus required to fully disclose (explicitly) the fees associated with the sub accounts.

 

This is why a no-load outfit like TC will always have a higher fixed interest rate annuity than its competition.

 

 

Banks have investment management costs, too. Those costs are factored into their investment spread as well. The wonderful thing, though, is if you don't like it, you don't have to buy it. That's the great thing about living in a free country where you have choice.

TR: We are now in 100 percent agreement. Why could you not respond in this fashion back on May 1 rather than saying the following:?

 

QUOTE (TR1982 @ May 1 2005, 04:49 PM)

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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Guest TR1982

Sierra,

 

You are truly amazing! You twist the truth in the most interesting ways.

 

What you said:

 

"Fixed account holders just like sub-account holders pay a Mortality and Expenes fee."

 

My actuary said this:

 

"Fixed annuities (non-variable)do not have M&E's or mortality expenses applied against the contracts. They are simply the premium accumulated with interest and adjusted for withdrawals."

 

Now, it is beyond me how you can now say that we are in agreement. What I find interesting is your inablilty to admit your mistake and just move on.

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Guest Sierra

TR:

 

Pardon me, I was under the impression that you agreed with Scott and me when we labeled the ME fee, as applied to fixed accounts, as being "implicit" and thus factored into the declared interest rate.

 

So we have come full circle. You admit that the fixed account holder pays for administration and investment management expenses (just like the sub-account holders) but unlike the sub account holders who are guaranteed future annuity income rates via payment of the ME fee, the fixed account holders are guaranteed future annuity income rates for free.

 

Is my understanding of your position correct?

 

Joel L. Frank

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Guest TR1982

I will agree with you that when you go to McDonalds and buy a Big Mac that the costs of the food, employees, facilities cost, etc. are included in the cost of the Big Mac.

 

What I will not agree with you on is this:

 

What you said:

 

"Fixed account holders just like sub-account holders pay a Mortality and Expenes fee."

 

My actuary said this:

 

"Fixed annuities (non-variable)do not have M&E's or mortality expenses applied against the contracts. They are simply the premium accumulated with interest and adjusted for withdrawals."

 

Fixed account holders do not pay a fee that is called a Mortality and Expense fee. That's all I have ever said and you absolutely refuse to acknowledge that you are wrong even though I have provided the very evidence you wanted me to supply in addition to the fact I suggested you read the contract or prospectus of a fixed annuity (or VA) and you obviously did not do that. It seems obvious to me that you enjoy this kind of gamesmanship and that's fine but I have to go cut the grass.

 

Later.

 

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