Wednesday, April 16, 2014

NTSA Attack on Ohio Bill Follow Up

In my previous post I pointed out an absurd e-mail distributed by ASPPA's NTSA organization head Chris DeGrassi, attacking a bill in Ohio that would allow higher education institutions some limited rights to control their 403(b) programs. I thought I'd follow it up with some specifics from the bill so you can make your own decision. 

First, here is a highlight from the NTSA e-mail, sent from Chris DeGrassi (the full version can be seen here):

Amendment Summary
  • This bill is a terrible piece of legislation that exempts public entities from any purchasing requirements for 403(b) plans
  • 403(b) providers will be picked at the sole and absolute discretion of public institutions, rife with conflicts and inherent abuse
  • This legislation will take away your business with absolutely no process or recourse
Here is the actual language from HB 483 (from HC0325X1):

Sec. 9.911. (A) An annuity contract or custodial account procured for an employee of a public institution of higher education pursuant to section 9.90 of the Revised Code shall comply with both of the following: 
(1) The annuity contract or custodial account must meet the
requirements of Internal Revenue Code section 403(b).
(2) The institution, in its sole and absolute discretion,
shall arrange for the procurement of the annuity contract or
custodial account by doing one of the following:
(a) Selecting a minimum of four providers of annuity
contracts or custodial accounts through a selection process
determined by the institution in its sole and absolute discretion,except that if fewer than four providers are available the institution shall select the number of providers available. 
(b) Subject to division (D) of this section, allowing each
eligible employee to designate a licensed agent, broker, or company as a provider. 
I ask you - does this language "exempt(s) public entities from any purchasing requirements for 403(b) plans"?

Sure looks like a stretch to me. It says nothing of the sort, in fact it requires the institution to choose one of the following two options:

A.  Select a minimum of four providers, or

B.  Any willing vendor

It doesn't force an institution to scrap the any willing vendor language and it doesn't scrap procurement procedures. 

The bill gives the institution the option to limit providers to at least four. You'll notice that the language doesn't say that the institution can choose any provider it wants without a process. The language makes it clear that there must be a procurement process ("...shall arrange for the procurement") and that there must be a "selection process." 

So how exactly can the NTSA claim that the bill "exempts public entities from any purchasing requirements for 403(b) plans"? Does the NTSA believe that higher ed institutions lack the ability and processes to conduct an ethical procurement? Are Ohio Higher Ed Institutions so inept that they need the oversight of annuity agents as represented by the NTSA to oversee their procurement?

This is absurd.

If you are part of ASPPA I urge you to contact Brian Graff and denounce this blatant attempt to misrepresent Ohio legislation and to ask why ASPPA should continue to support the NTSA organization (which represents the opposite interests of most ASPPA members in my opinion).

Scott Dauenhauer, CFP, MSFP, AIF

Friday, April 11, 2014

NTSA Attacks 403(b) Bill In Ohio In Bizarre E-Mail Missive

I'm not sure what to make of the latest attack by the NTSA (formerly the NTSAA) on good people attempting to control their 403(b) programs.

It's such a bizarre e-mail that I'm starting to wonder if they are in full implosion mode. Not only is it desperate, factually inaccurate and hostile, it's an outright threat against legislators that might normally be in their corner.

What I know for sure is that the NTSA continues to be a smaller, focused organization hell bent on keeping the status quo - expensive, retail, non-fiduciary services in k-14 and higher ed 403(b).

The following is the recent NTSA Attack Missive (e-mail), see my analysis below it:

To: Undisclosed recipients:;
Subject: Immediate Action Needed for All Ohio Members! - AmendedURGENT ACTION REQUIRED! Send this message to all of your Ohio representatives, immediately. Advisors have the power and responsibility to make this stand to protect their business and clients!
NTSA has just been informed that the TIAA Cref money grab amendment will be introduced into the Ohio MBR (House Bill 483). The action will take place this afternoon in the House Finance and Appropriations Committee.

We need all Ohio members to call the all of the following state representatives offices now.

Amstutz  (614) 466-1474
Ryan Smith (614) 466-1366
Dovilla (614) 466-4895
Duffey (614) 644-6030
Sprague (614) 466-3819
Stautberg (614) 644-6886

Amendment Summary
  • This bill is a terrible piece of legislation that exempts public entities from any purchasing requirements for 403(b) plans
  • 403(b) providers will be picked at the sole and absolute discretion of public institutions, rife with conflicts and inherent abuse
  • This legislation will take away your business with absolutely no process or recourse

Message you need to send
  • Republicans should not be complicit in legislation that kills Ohio businesses
  • You are outraged that Republicans would participate in back room deals that resulted in the TIAA Cref money grab amendment in the budget
  • You will tell all of your clients and business partners that you can no longer work with them because of this Republican party give away to TIAA Cref
  • You will share the vote of every Republican that votes in favor of the TIAA Cref money grab legislation with all of your contacts and support Republicans in the primary that will stand with Ohio small business
  • You support the Hackett Proposal HB 512 as it protects Ohio businesses. And is not a money grabbing big business back room budget amendment.
This is the worst of back-room politics and we need to kill this effort to make it clear that this tactic will elicit an immediate painful response. Otherwise, we’ll just see this all over again in other states.

Chris DeGrassi
Executive Director, NTSA
cdegrassi@ntsa-net.orgw 703.516.9300
m 571.366.0975

This is certainly one of the more bizarre e-mails, but that is to be expected from the NTSA lately.

The first mistake is referring to the representatives who populate this organization as "Advisors," they are not (for the most part). This is not a slap in the face, they just aren't advisors, they are salespeople (this is not a judgement, only a statement of fact - this doesn't mean they couldn't become adivosrs).

You'll also notice that the NTSA is purposely disrespecting the financial services organization TIAA-CREF by not capitalizing CREF (which they know is capitalized).

Almost every claim by Degrassi and the NTSA is false.

The bill does not exempt public entities from "any purchasing requirements" and why shouldn't a public institution be able to manage who their 403(b) providers are?

This bill doesn't actually allow such "sole and absolute discretion" even though it should (when coupled by a strong procurement process and fiduciary responsibility).

The only true statement is that the "legislation will take away your business," but even that is false. I'm unaware of any "advisor" who would lose their business if a public employer acted in a responsible and fiduciary manner. A real advisor has a strong relationship with his clients, one that is NOT dependent on the ability to sell a high-cost, high-commission product.

The attack on the Republicans is even more bizarre as they are usually the strongest defenders of the NTSA and pissing them off could lose any goodwill the NTSA might have had. The only back-room politics going on is with the NTSA attempting to disparage, denigrate, demonize and defame people who have worked hard for years to bring a compromise bill up for debate.

The last dying breaths of the NTSA are gasping and this e-mail is proof. Unfortunately, the high-commission annuity providers who back the organization are alive and well, see here and here.

Scott Dauenhauer, CFP, MPAS, AIF

Tuesday, April 08, 2014

Alert Teachers - Want to goto Bora Bora? Quit and Sell Annuities From Midland

My wife and I have always dreamed of vacationing in Bora Bora (especially after watching the movie Couples Retreat). When I came across the following incentive from annuity and insurance company Midland National I figured out how I could do it. My "School Teacher" wife need only quit teaching and start selling Midland's annuity products. She need only sell $3.5 million in premium to qualify for a trip to Bora Bora.

Next time someone is trying to sell you an Equity or Fixed Index Annuity for your 403(b) program you should inquire as to what their incentives are to sell them.

Of course I was joking with the headline, don't quite teaching to hawk annuities to unsuspecting school employees. This document wasn't uncovered in some secret sting, it was available on the open internet for anyone to seek.

Scott Dauenhauer, CFP, MSFP, AIF

Thursday, April 03, 2014

CalSTRS Selects ING U.S. as New Recordkeeper for Defined Contribution Program


CalSTRS Selects ING U.S. as New Recordkeeper for Defined Contribution Program

ING U.S., which is rebranding as Voya Financial, is under contract for the next eight years

WEST SACRAMENTO, Calif. – The Teachers’ Retirement Board today selected ING U.S. as the new third party administrator, commonly called the recordkeeper, for the California State Teachers’ Retirement System supplementary savings plan, known as Pension2®.

Pension2 is the defined contribution part of the CalSTRS hybrid retirement system that also includes the traditional defined benefit pension and the defined benefit supplement, which is a cash balance program.

ING U.S., which will rebrand as Voya Financial in 2014, will take on its new role effective in the late summer or fall of 2014 on an eight-year contract with two one-year extension options. Specific contract terms are now under negotiation. The program’s current contract has been with TIAA-CREF.

“California educators have traditionally been under enrolled in low-cost, high-quality supplemental retirement savings options. Our desire is to increase participation by offering a competitive product that will enhance overall retirement security,” said CalSTRS Chief Executive Officer Jack Ehnes. “In a marketplace that offers CalSTRS members so many varied choices, some of which may not be in their best interest, we want educators to look seriously at the products and services we will be delivering with ING U.S.—soon to be known as Voya Financial—as our partner.” 

The 2013 CalSTRS “Retirement Readiness Assessment Report” found that nearly three-quarters of working members are concerned about being able to afford medical expenses in retirement, while 40 percent of retired members reported spending more than expected on health care in retirement. The report is a comprehensive survey of the financial standing and retirement planning of California’s 653,000 active and retired CalSTRS members.

“Significant costs, such as healthcare, will be a fact of retirement life for our members. Having options, such as those offered through Pension2, allow members to prepare for these contingencies while they have the time to invest and grow their resources,” Mr. Ehnes added.

ING U.S. was among three bidders for the contract along with the incumbent, TIAA-CREF, and JEM Resource Partners. Since 1995, CalSTRS has offered its members, along with classified employees of CalSTRS-covered employers, the opportunity to invest through pre- or post-tax payroll deductions in low cost, flexible 403(b), Roth 403(b) and 457(b) plans for additional retirement savings. Pension2 currently has more than 11,700 participants and manages assets totaling more than $558.8 million.

“We issued the request for proposals in October, 2013 with the thought of offering our participants, if necessary, a seamless transition from one provider to the next,” said CalSTRS Director of Defined Contribution Solutions Sandy Blair. “With this contract, we plan to deliver on that expectation while expanding our program and offering our participants improved customer service.”

“We’re honored that CalSTRS has placed its trust in our business and our people,” said Jamie Ohl, president of Tax-Exempt Markets for ING U.S. Retirement Solutions. “This is a testament to the strength of our team and the commitment we have to providing clients—including some of the largest retirement systems in the country—with the integrated capabilities and distinctive value they want for the long-term. As an advocate for greater retirement readiness, ING U.S—soon to be known as Voya Financial—looks forward to helping guide the members of the CalSTRS supplemental savings plan on their journey to and through retirement.”

About CalSTRS

The California State Teachers’ Retirement System, with a portfolio valued at $180.8 billion as of February 28, 2014, is the largest educator-only pension fund in the world. CalSTRS administers a hybrid retirement system, consisting of traditional defined benefit, cash balance and voluntary defined contribution plans. CalSTRS also provides disability and survivor benefits. CalSTRS serves California’s 868,000 public school educators and their families from the state’s 1,600 school districts, county offices of education and community college districts.
About ING U.S.

ING U.S. (NYSE: VOYA), which will rebrand as Voya Financial in 2014, is a premier retirement, investment and insurance company serving the financial needs of approximately 13 million individual and institutional customers in the United States. The company’s vision is to be America’s Retirement Company and its guiding principle is centered on solving the most daunting financial challenge facing Americans today—retirement readiness.  Working directly with clients and through a broad group of financial intermediaries, independent producers, affiliated advisors and dedicated sales specialists, ING U.S. provides a comprehensive portfolio of asset accumulation, asset protection and asset distribution products and services.  With a dedicated workforce of approximately 7,000 employees, ING U.S. is grounded in a clear mission to make a secure financial future possible—one person, one family, one institution at a time. For more information, visit  Follow ING U.S. on Twitter @ING_USA and Facebook.