Tuesday, August 25, 2015

Plansponsor 403(b) "Balance" Article Lacks Balance

Plansponsor recently posted an article "Can k-12 403(b)s Find A Balance", it was anything but balanced.

The problems start in the first sentence:

"Some players in the K-12 403(b) plan marketplace say the traditional model—in which plan participants have individual relationships with advisers..."
No, plan participants do not have individual relationships with "advisers", they buy products from salespeople who are mostly Registered Representatives and Life Insurance Agents, not Advisers. There is a difference between a salesperson and an advisor and this article deliberately obfuscates this distinction ignoring the huge battle going on at the Department of Labor right now.

The article essentially advocates for the status quo in k-12 403(b), multiple vendors with no fiduciary oversight. The author quotes two people and both are advocates for multiple vendor systems where commission based, non-fiduciary products are distributed. Amazingly the "advisor" quoted in the article recommends annuities....of which his firm sells (surprise, surprise)...some balance.

While auto-enroll is mentioned, it is almost immediately dismissed in favor of one-on-one "advice" from salespeople - a model that has failed in spectacular fashion in k-12. Auto-enroll would certainly go a long way toward improving contribution rates.

The article even includes the ridiculous quote:

“I think depending on built-in assumptions, especially how long someone is going to hold on to investments, you can make an argument that buy-and-hold type investors will incur less fees in commission-based investment than fee-based over the long-term,” Wolff says."
I won't even waste the space dissecting what is wrong with this quote. But I will say, where is the "balance"? Why didn't Plansponsor interview someone who actually works in this market on a Fiduciary basis?

It feels like Plansponsor is just writing articles for their advertisers or want to be advertisers. There is no balance in this article whatsoever.

Scott Dauenhauer, CFP, MPAS, AIF

Wednesday, August 19, 2015

The Annuity Store Attempts To Bully Me

Yesterday I received the following "take down" notice from Go Daddy (my blog hosting company). The Annuity Store insurance marketing company has hired an attorney to stop my blog post from showing their e-mail advertisements and what is behind Annuity recommendations that their agents make. I posted their e-mail advertisement to show the public what they don't see - this is a public benefit. Scroll down to see the claims made.

Dear Customer,
We have received a complete DMCA complaint alleging that copyright infringement is taking place on your hosted site. This notification was submitted pursuant to the Digital Millennium Copyright Act and GoDaddy’s Copyright Infringement Policy, which can be found here:
In accordance with this policy, as well as the hosting agreement you consented to upon purchase of the service, we will need to suspend this hosting account if this matter can not resolved by removing this content within the next 24 hours or submitting a complete counter notification as described in the policy.
You have two options at this point:
In order to resolve this situation and avoid suspension of your site you will need to completely remove the content that is the subject of the copyright complaint. 
If you feel that this complaint has been made in error and you wish to contest the claim, you will need to submit a complete counter notification in accordance with the DMCA. Let us know if you require further information and/or instructions on how to file a counter notification.
Please understand that as a web hosting provider, we are not able to make legal determinations as to who is right or wrong in an infringement claim. 
Let us know if you have any other questions at this time.
Kindest Regards,
ChrisCopyright DepartmentGo Daddy Operating Company, LLCCopyrightClaims@GoDaddy.com--------ORIGINAL NOTE-----------Subject:Subject: RE: Copyright Claim (Our File No.: 5912000.204) - [Incident ID: 26678507]From:klbynum@fleckman.comDate: Mon, 17 Aug 2015 19:04:09 +0000To:copyrightclaims@godaddy.com

Your resolution
Dear Chris,In response to your email below, I am re-forwarding the Notification of Claimed Copyright Infringement on behalf of The Annuity Store with the changes you haverequested.  Should you have any questions or require any further information, please do not hesitate to contact me.Dear GoDaddy Copyright Agent:Our firm represents The Annuity Store(“TAS”) in various legal matters, including trademark and copyright matters.  We write regarding unauthorized activity on the websitehttp://www.meridianwealth.com involving one of our client’s copyrighted works.  It is our understanding that the websitehttp://www.meridianwealth.com is hosted by GoDaddy.com, LLC (“GoDaddy”) and that the activity on this site is therefore subject to GoDaddy’s Terms of Service.  Please direct all correspondence to us at the e-mailor physical addresses provided herein.In late 2014, TAS sent the attached marketing communication via email to numerous financial professionals.  Scott Dauenhauer, an independent insurance agent, financial plannerand the operator of “The Meridian Blog” hosted at http://www.meridianwealth.com, was one of the recipients of this communication. It has come to our client’s attention that Mr. Dauenhauer subsequently posted the entirety of the marketing communication on his blog at
http://meridianwealth.com/2014/12/08/insurance-secrets-whats-driving-those-annuity-recommendations/,despite the very clear indication on the communication that it was intended “for financial professional use only – not for use with the public.” Mr. Dauenhauer is not contracted through TAS, nor was his posting of the communication in its entirety on a public-facing,personal blog authorized by TAS.  TAS has a good faith belief that use of the material in the manner complained of is not authorized by the copyright owner, its agent, or the law.  Accordingly, it is the position of TAS that use of its marketing communicationin this manner constitutes a violation of its copyright in that communication.In view of Mr. Dauenhauer’s unauthorized use of our client’s copyrighted work on the referenced web site hosted by GoDaddy, in direct violation of GoDaddy’s Terms of Service, we ask that GoDaddy immediately take down the unauthorizedmarketing communication on the website at http://meridianwealth.com/2014/12/08/insurance-secrets-whats-driving-those-annuity-recommendations/and disable all access to Mr. Dauenhauer’s post regarding that communication.  We would appreciate your immediate attention to this matter and request a response to this notification within ten (10) days advising us of how GoDaddy will comply with theserequests.  Should you have any questions or require any additional information, please do not hesitate to contact me directly at this email address or the phone number provided below.   I declare, under penalty of perjury, that the foregoing information in this notification is complete and accurate, and that I am authorizedto submit this Notification of Claimed Copyright Infringement on behalf ofTAS.  Best regards,
Karla Lambert Bynum
/Karla L. Bynum/Fleckman & McGlynn, PLLC
515 Congress Avenue, Suite 1800
Austin, Texas 78701
512.476.7644 fax


I posted this on my Meridian blog back in December. The company has since tried to shut that blog down, re-posting here.

Ever wonder why that “financial planner” is recommending the product they are recommending? It could be the compensation or the extra bonuses that are offered to incentive them to sell a certain company’s product.Given these incentive plans, is the product being sold really in your best interest? I’ll let you decide. Here is a recent advert that showed up in my e-mail:

Wondering which insurance company must be sold to secure that $1,000 Visa card (and trip qualification to Italy)? Here is the small print…enlarged:

*Available only on all Allianz Life Pro+® and Allianz Life Pro+ SurvivorSM Fixed Index Universal Life Insurance Policy Applications. Offer ends 12/31/14. Exclusions may apply; contact your Annuity Store Marketer at 800-825-6094 for complete details.

Policy #P54350 & #P61843 are issued by Allianz Life Insurance Company of North America.

Guarantees are backed by the financial strength and claims-paying ability of Allianz Life Insurance Company of North America.
Product availability and features may vary by state. New York production is not included.
Registered representative participation is subject to Broker/Dealer approval.

The Annuity Store reserves the right to alter or discontinue this promotion at any time. Agent must be in good standing. All federal, state and other tax liabilities arising from the award are the sole responsibility of the agent. VISA is not a participant in, or sponsor of, this promotion.

TAS226-38610 For financial professional use only – not for use with the public.

Notice that the marketing company doesn’t want you to know about this – marking the e-mail “For Financial professional use only – not for use with the public.” It seems to me the public SHOULD know about the incentives driving the product recommendations being made.

This practice should not be allowed.

Scott Dauenhauer, CFP, MPAS, AIF

Tuesday, August 18, 2015

Northbrook District 27 - Illinois Goes Single Vendor for 403(b)

In what is becoming a trend, the Northbrook, Illinois District 27 has chosen a single vendor for their 403(b) program. The administrator of the program will be the IPPFA (Illinois Public Pension Fund Association).

Read the Plansponsor article:

Scott Dauenhauer

Thursday, August 06, 2015

DOL Fiduciary Rule Impact on non-ERISA Government 403(b) Plans

In reading the updated Department of Labor proposal for a Fiduciary Standard I became quite disappointed that non-ERISA 403(b) plans were left out (as are all non-ERISA government plans), but the more I've studied and talked with others I've become somewhat encouraged.

If the Fiduciary Standard becomes a reality it could fundamentally change the way 403(b) plans are serviced going forward. The change wouldn't be because an "advisor" has a fiduciary duty to the participant, it's likely they still won't, but because the "advisor" would have a fiduciary duty to the participant in the event of a rollover to an IRA.

Under the new rule any advisor advising a participant to rollover their assets from the plan would become a fiduciary to that participant and also any recommendation within the IRA would be subject to the fiduciary rules, this is a huge problem for the vast majority of advisors.

Currently, recommending a rollover to an IRA is not a fiduciary act, nor is the recommendation (ok, there is some debate on this, but generally the advisor has no fiduciary duty). If the rule change goes into affect and such advice becomes fiduciary in nature the advisor will find it nearly impossible to collect a commission for the recommendation. This has the industry completely freaked out.

The effect on the 403(b) will likely be to see fewer rollovers and more exchanges within the 403(b) plan itself. A recommendation to exchange one 403(b) product for another is not subject to the fiduciary rule, but a recommendation to rollover to an IRA is. To avoid a fiduciary duty you will see more money stay within the 403(b) umbrella instead of being rolled out and you will see 403(b) providers attempting to come up with new 403(b) products to be approved within school districts.

While I am not 100% happy with the current version of the Fiduciary proposal (I'd like to see some changes to the BICE contract and some additional flexibility on behalf of the service providers in communications) I am more encouraged than I originally was. It still doesn't cover 403(b), but it will affect the 403(b) and if these plans can be structured correctly, could fundamentally alter the landscape.

As I study and learn more I'll update you on my thoughts and correct any errors made in this initial analysis.