Monday, October 29, 2007

Teacher retirement plans more limited, confusing

Article by Pamela Yip on the new 403(b) regulations and how they'll affect normal, everyday teachers - it isn't looking good.

Scott Dauenhauer, CFP, MSFP, AIF
www.meridianwealth.com
949-916-6238

Thursday, October 25, 2007

Motley Fool Skewers AIG VALIC on Fees

Is Your Retirement Plan Robbing You Blind?

The Motley Fool's Tim Hanson skewers AIG VALIC in article about his wife's high fee account. Tim's wife is a school teacher who is forced to use AIG VALIC and her account experiences excessively high fees, you'll enjoy this read - its not just educational, its kind of funny to read and imagine Tim getting all worked up!

ScottyD
949-916-6238
www.meridianwealth.com

Wednesday, October 24, 2007

A LESSON IN STEALING PENSIONS

A LESSON IN STEALING PENSIONS

The New York Post joins the Los Angeles Times in ripping the NEA for continuing to sell the ridiculously expensive NEA Valuebuilder product to teachers (we like to refer to it as the ValueKiller).

My wife is an NEA member as are most of my clients - they want their union to stand up for them, not use them.

When will the NEA begin treating the 403(b) and 457(b) like they do healthcare and advocate for a better system instead of profiting from the current one.

Luckily many state affiliates do not follow the NEA lead and working to better the 403(b), cheers to those affiliates.

ScottyD
www.meridianwealth.com
949-916-6238

Wednesday, October 17, 2007

AIG VALIC Launches New Low-Cost, No-Load Mutual Fund Platform in 403(b) Market

AIGVALIC, the largest purveyor of 403(b) products to k-12 school districts has launched a "no-load" product called the "Profile Retirement Program". Interestingly enough the program is not to be easily found, or found at all on their website and the press release that appears above on BusinessWire is not found on their Press Room section of their website......wierd. Is it possible that this program is simply a ploy to answer the critics that their products are too expensive? They can now say, "but we have a no-load product". This isn't a serious attempt to help employees lower costs, it appears to just be PR - otherwise why an announcement, but no details.

The product is available through 403(b) Compare, but the disclosure is not exactly eye-opening either as they give a range of fees, not the exact fee. The underyling investment options appear to be priced around .70%, with the S & P fund priced at .36%. However, AIGVALIC can charge a wrap fee of up to 1.00% and up to an additional .65% if the "Guided Portfolio" is chosen. Doesn't sound low-cost, but at least it's no-load!

I'll give you more information if and when AIGVALIC decides to distribute it.

In a parallel story, the NEA has come out with their own no-load product (about five years after saying they would do so). The name of the product is DirectInvest Online and is also a difficult product to find out information on. It is not registered on 403bCompare.com and thus not available in California. I had to type in "directinvest" in the search box at www.neamb.com and then click on a press release, which then had a link to the special website. If you are looking for this product to be marketed on the "Investments" section you will not find it. The website is located here. Amazingly there is little info on this site unless you really dig - for example, the fact sheets for each investment option do not list the expense ratio of the fund.....how difficult would that be to add to a sheet that is supposed to give THE FACTS?

There are four index funds and the Target Date's are done by T. Rowe Price, a good company.

The main question an investor must ask themselves is why they would choose AIGVALIC or NEA Valuebuilder for their 403(b)? Neither product is that low in cost, though they are no-load and there are much better choices out there for individuals if they want to go direct. These two products might be alluring for those individuals in school districts that have a limited provider list and offer the high cost VALIC and Valuebuilder products - through those payroll slots you should be able to access these lower cost, no-load products and thus have at least a decent option.....that is of course if you can find out any information on them.


Scott Dauenhauer, CFP, MSFP, AIF

The Free Fallacy - Why Free 403(b) TPA's Are A Bad Idea

This is a piece I wrote that I believe is one of the most important papers I've written since "Does The NEA Practice What It Preaches" back in 2001. This paper, like the last is an expose on the industry that is attempting to serve school districts across the United States in relation to their compliance for 403(b) retirement plans. A bevy of Third Party Administrators of 403(b) Compliance have popped up to offer "Free" compliance services, or low-priced compliance service - but they are all driven by product sales.

The compliance piece is simply a way to get to school employees to sell them product, not a comprehensive plan to keep them in compliance.

My paper examines the true costs of these "Free" TPA's and concludes that they are a bad idea and probably a lawsuit waiting to happen.

Scott Dauenhauer, CFP, MSFP, AIF
www.meridianwealth.com
949-916-6238