Tuesday, March 25, 2014

North Carolina Launches Statewide 403(b) Program

I was the consultant for the Request for Proposal on this plan (with SST Benefits Consultants) and think it's going to be great.

From the Triangle Business Journal, Jason deBruyn:

"State Treasurer Janet Cowell and TIAA-CREF have launched the N.C. Public School Teachers’ and Professional Educators’ Investment Plan, a statewide, supplemental 403(b) retirement program for the state’s public K-12 educators.
The program offers 27 well-diversified, low-cost investment choices and a variety of services designed to help teachers prepare for retirement, according to Cowell’s office. Research shows that educators who participate in low-fee plans can accumulate significantly more retirement savings versus those in plans with higher fees.
“I’m excited that we’re launching a high-quality, low-cost supplemental retirement plan for teachers and educators across the state,” Cowell said in a statement. “This statewide plan will help teachers and education employees boost their retirement savings.”
All of North Carolina’s 115 school districts will have the option to participate in the new program. In most cases, districts will also be able to take advantage of lower fees, as the new program is designed so that fees decline as more school districts enroll and asset levels increase. 
The 403(b) program was authorized by the General Assembly in 2012 and approved by the Supplemental Retirement Plans Board of Trustees last week. The N.C. Department of State Treasurer is the program administrator, and TIAA-CREF will be the program provider."
 Scott Dauenhauer, CFP, MPAS, AIF

Monday, March 24, 2014

CalSTRS Staff Recommends Record Keeping Contract to be Awarded to Voya Financial

The California State Teachers' Retirement System posted an intent to award an eight year record keeping contract to Voya Financial, an ING company to serve the 403(b) and 457(b) run by the state. The staff has made the recommendation and it is subject to board approval on April 3rd.

Scott Dauenhauer

Thursday, March 20, 2014

Top 403(b) Providers In Major School District Still Have 18% Surrender Charge

The following is my professional opinion as an Independent Fiduciary:

403bCompare screenshot Midland  Surrender Charge

Would you believe me if I told you that two of the top providers of 403(b) products in a major school district offered products that had surrender charges as high as 18% and surrender periods as long as 14 years? I'm still in shock myself (and that takes a lot to do).

Midland National Life offers a product called the Capstone in California and it has a surrender period of up to 14 years with a surrender charges of up to 18%.

Life Insurance of the Southwest, part of the National Life Group offers a product called the SecurePlus Platinum (how's that for a name) that has a 15 year surrender period and surrender charges of 14%.

These two companies are not small providers, they are the top two by assets.

This is what educators get when school employers are not allowed to control their 403(b) programs. These products would never fly in an ERISA plan and would never be sold by a fiduciary, yet everyday school teachers are sold products with excessive surrender periods and excessive surrender charges.

These are the products that ASPPA's sub-association, the NTSA fight to keep available to our nation's school employees. This is wrong.

You can check the products out on 403bCompare by clicking on the company name above.

Scott Dauenhauer CFP, MSFP, AIF

Monday, March 17, 2014

What's Behind That Fixed Indexed Annuity Sale? Great American Edition

Teachers and School Employees, are you wondering what's behind that Equity Indexed Annuity recommendation and wondering why you are feeling so much pressure to start contributing to that 403(b) with a Great American agent, perhaps the following will enlighten you:

Through May 2, 2014 Great American reps get an extra $50 per application submitted and if they submit 25 applications they get another $500. This is on top of their commissions and if that wasn't enough incentive, they'll earn points that they can use to purchase perks that range from "luxury vacations to today's hottest electronics."

Are Great American products in your best interest? It doesn't matter, they only need to be "suitable" for the rep to sell them, they do not owe you any Fiduciary responsibility.

Next time you are approached about buying a 403(b) from a Great American rep you should ask them what perk they are qualifying for by you signing up.

Scott Dauenhauer, CFP, MPAS, AIF

For the folks at Great American who are upset with me posting the screenshot, it was unprotected and available on the web with just a simple search. Here's the