Wednesday, January 27, 2016

It's a F**k n' Great Life at F & G Life - Puerto Rico!
St. Regis in Puerto Rico Anyone? Just Sell F&G Annuities...Sad.

If you want a great vacation in Puerto Rico all you need to do is sell $1.5 million in annuity products from F & G Life.

Yes, that's right, for selling on average only $125,000 per month of annuities (that's maybe 1  - 5 victims) an agent can get a 4 night stay at a top resort in Bahia Beach, Puerto Rico.

It's an F'n Great Life at F & G Life! But for the teachers it's just F'n Gallows.

The Safe Income Plus Fixed Index Annuity sold by F & G, the surrender period is 11 years. The commission is 7.25% AND also may qualify for the trip featured in this post.

Let's review. An agent sells $1.5 million of this product to its base of clients and receives potentially over $100,000 in commission plus a trip to the St. Regis in Puerto Rico. That's quite an incentive to sell F & G Life Indexed Annuity products. I wonder if this product would sell at all if not for the high commission and potential for an amazing vacation? My opinion is that it wouldn't.

Do you know what's behind the recommendation of your "advisor"? This type of incentive needs to be stopped. The insurance industry is hooked on Indexed Annuity products and the commissions and incentives that come with those sales, it's their crack.

If F & G has such great annuity products, wouldn't they sell themselves? Wouldn't real advisors WANT to recommend their products?

In this low interest rate/high volatility environment the ability of an index annuity provider to support a decent rate of return to the end client is severely restricted. Add in generous commissions and luxurious trips and it's nearly impossible for the end client to get a reasonable rate of return.

Yes, index annuities are great for retirement, just not yours (they're great for the agents retirement)!

Scott Dauenhauer, CFP, MPAS, AIF

Monday, January 18, 2016

Wild West: Providing Fiduciary Advice To Public School Employees | Now Available

Wild West: Providing Fiduciary Advice to Public School Employees is now available for purchase at all major e-retailers.

After working with teachers for almost two decades and finding very few competent, fiduciary-based advisors working in the space I decided to write a book to help the industry better learn how to work with this great niche.

I titled the book Wild West due to the conditions that most teacher retirement plans operate under. The products sold and the statements made to teachers and their colleagues would be criminal if done in an ERISA plan, yet teachers are not protected by ERISA and are taken advantage of every day.

The goal of this book is to create a much broader community of fiduciary advisors serving this market. I'm not asking you to (fiduciary advisors) to work exclusively with public school employees, simply to expand your knowledge base and be part of the solution they need.

The book is less than 150 pages and only 20 short chapters. It mixes the technical with the personal and issues a strong call to action that I hope many of you will follow. Many non-advisors have asked if they should read this book (teachers, administrators, etc.) and my answer is that they should consider Teach and Retire Rich by Dan Otter first, then perhaps my book.

The Table of Contents follows:

Chapter 1           Mini-Memoir
Chapter 2           The Fiduciary Opportunity
Chapter 3           The State of the School Employees Marketplace
Chapter 4           Business Models
Chapter 5           The 403(b) Retirement Plan
Chapter 6           403(b) Products
Chapter 7           Stable Value
Chapter 8           The 457(b) Retirement Plan
Chapter 9           Other School Employee Plans
Chapter 10         Compliance Third Party Administrators
Chapter 11         Enrolling into a 403(b) or 457(b)
Chapter 12         Defined Benefit Plans
Chapter 13         Social Security & School Employees
Chapter 14         California-Specific Laws
Chapter 15         Odds & Ends
Chapter 16         Pension Maximization
Chapter 17         Professional Organizations
Chapter 18         Unions: Good, Bad and the Ugly
Chapter 19         Dan Otter

Chapter 20         A Call To Action 

Buy at Google (coming soon)

The book is $14.99 but all the proceeds goto charity and I will make the book available to colleges and universities at no cost.

I've created a website for the book at and a LinkedIn group here.

Thank you to all who have helped me over the years get this book out, you know who you are.

Scott Dauenhauer, CFP, MPAS, AIF

Thursday, January 14, 2016

Confessions of an Equity Indexed Annuity Salesperson?

Response letters to potential regulatory changes can be a gold mine. I was recently reviewing some old responses to an SEC rule that would bring Equity Indexed Annuities (EIA) under the umbrella of the SEC and require insurance agents who sell them to be registered (Registered Reps of a FINRA Broker/Dealer).

One agent for a company called #ValuTeachers wrote a response and I'm excerpting it below. Please consider that if I were to write a parody response letter to the SEC (posing as an insurance agent selling these products) it probably wouldn't look much different. The entire letter is at the end.

Claim/Statement #1

"To make the equity index annuity a security product would damage the ability of people who need this particular product to receive a fair representation of the product."

My Response:

Two things, first, no one NEEDS an EIA product, no one. Second, a sales agent that is highly motivated to sell a particular product because of its high commissions and potential luxury vacation rewards is NOT capable of providing a "fair representation" of anything. If this agent is truly concerned about representing any product fairly, he should be lobbying for the end to commissions in exchange for product sales.

Claim/Statement #2

"It would first make thousands of current Life insurance representatives have to get securities licensed to continue selling the product. Most will not do so leaving the current clients that they have stranded. This rule has not been thought through with the clients' best interest in mind. If so the SEC would realize the need to keep this an insurance product which is already being regulated by the insurance departments in the various states. If we force thousands of life insurance representatives to get licensed what if they choose not to."

My Response:

An insurance agent who advises clients on what to do with their investments, including talking about the stock market, should certainly be regulated more than the state insurance commission regulates. 

This agent claims that if forced to register as a representative or an advisor, most insurance agents would rather abandon their clients than register. What exactly does this say about such agent or agents in general (I know a lot of insurance agents who are good people and would never abandon their clients)? It says they are lazy and really don't care about their client (note, I don't believe all insurance agents are lazy, just ones that agree with this particular agent). If they really cared, they'd not abandon their clients over a specific product requirement. I find it ironic that this agent believes the SEC should have "the client's best interest in mind" but that the agent shouldn't be required to put the client's best interest first...notice he is not arguing for a fiduciary standard. If thousands of insurance agents choose not to register in order to sell EIAs, fewer EIAs will be sold and more investors/savers will have been protected.

Claim/Statement #3

"Many questions come to my attention in thinking of the client. 1. Are current insurance agents out of compliance for taking care of their current client base when they call and have questions about a product sold to them by their insurance agent but they are not securities licensed? 2. If the insurance agent is not securities licensed but continues in servicing their client and a registered representative files a complaint with the SEC because the insurance agent is discussing securities without a license how can you regulate that? 3. Should the thousands of clients that have billions of dollars in these products be penalized by having their friend and trusted advisor that is an insurance agent no longer be able to help them with their equity index annuity? 4. Will the SEC pay the surrender charges incurred by clients when a registered representative transfers them out of their current equity index annuity and into another product? 5. Will the SEC be able to monitor the activity of the sell of equity index annuities as it has shown it's lack of ability to look into it's current obligations. The headlines are evidence to this very fact! WALL STREET CRISIS! Where is the SEC now that everyone has made their money and left."

My Response:

This rambling and nonsensical statement goes after Registered Representatives as criminals and again builds a straw man. Insurance agents will not abandon their clients and source of income if forced to register, they'll register and if they don't, someone else will steal their clients. This is not an attempt to avoid needless regulation, it's an attempt to stay essentially unregulated. The insurance industry still allows what amount to kickbacks in their sales process and allowing such a system to continue is the real purpose of this agent in my opinion, a perpetuation of a corrupt system.

Claim/Statement #4

"It has been my experience in dealing with securities licensed people that the only thing that everyone needs is to put money in the market and securities. Any fixed annuity is almost below them when in fact often times people instruct them to give them a safe investment. Whoops! Insurance companies sell insurance products and broker/dealers sell securities products. This is not a time when we need to be arguing over what type of product should the equity index annuity be but whether or not the SEC a federal organization that cannot even handle it's current obligations be given authority to regulate even more that they cannot." 

My Response:

So this agent's limited experience now makes him an expert on all products sold across the industry. He presents no evidence. He does get one thing right, insurance companies sell insurance products! But B/D's sell all sorts of products, not just market based securities. If you only have an insurance license, all you can sell is fixed annuities (which are not investment, but savings products), it's the same old adage, if all you have is a hammer, everything looks like a nail. I'm certainly not going to argue that the products B/Ds sell are good for clients, but the main reason (left unspoken), in my opinion that this ValuTeachers/LSW agent doesn't want additional regulations is because it will end up cutting his commissions and all the perks received from the insurance companies. This is about the gravy train, not the regulatory train.

Claim/Statement #5

"It is evident with the current crisis on Wall Street that the SEC should spend more time regulating Wall Street and leave the insurance products to the insurance companies."

My Response:

Umm, AIG anyone? They were an insurance company, right? Nuff said.

Claim/Statement #6

"I urge you to give careful consideration to this rule and see through the mere attempt at increasing the number of people paying fees to the SEC. The product is harmless in most cases to the investor. There have been abuses as there have been in the selling of mutual funds to investors who have said they do not want any risk. The SEC handles the registered representative that does wrong and the insurance departments are handling the insurance agents that do wrong."

My Response:

The SEC doesn't regulate brokers (Registered Representatives), FINRA does (technically there is some overlap). Can anyone with a straight face really say that the state insurance departments have a handle on the sale of Equity Indexed Annuities? Anyone who reads this blog knows they don't. These products do cause harm and are mostly sold because of the high commissions and lack of any need to register combined with sales contests that send agents to Cabo, Maui, Monte Carlo...etc.


I've reprinted the letter below, I found it on the net, here. This letter provides some insights into the way EIA agents think. They are attempting to defend their turf and their income, but we need to make sure that the defense of their income doesn't come at the expense of the client. EIAs need more regulation.
Scott Dauenhauer, CFP, MPAS, AIF

Wednesday, January 06, 2016

My Congressman Is Clueless - Fiduciary Rule Response

I contacted my Congressman to let him know that he should support the Department of Labor's Fiduciary rule. His response was basically a copy and paste of an industry lobbyist, no original thinking or real explanation as to why citizen's shouldn't be protected when they receive financial advice.

Here is representative Ken Calvert's lame response:

Dear Mr. Dauenhauer, Thank you for contacting me regarding the Department of Labor's proposed rule to impose a fiduciary duty on brokerage firms. I appreciate the opportunity to respond. As you may know, two federal agencies, the Department of Labor (DOL) and Securities and Exchange Commission (SEC) are expected to release separate rules in the coming months that would change the definition of a "fiduciary" to include broker-dealers providing advice to retirement investors on a varying fee structure. This highly anticipated proposal comes nearly five years after the Obama Administration proposed a similar rule that was ultimately not adopted due to an outpouring of serious concerns over the negative impacts of the change. The current system allows low-and-moderate income investors to seek the advice of brokers on all levels of investment by providing the flexibility of a commission structure rather than an ongoing fee for service. Though it sounds like we may disagree, I believe the DOL's proposal may prove to be considerably cost-prohibitive and actually price retail-investors out of the process by taking a "one-size-fits-all" approach. Unfortunately, this proposal would do more harm than good and could make it harder for Americans to invest for retirement, college tuition, or other purposes. On February 25, 2015, Representative Ann Wagner (R-MO), introduced legislation, H.R. 1090, the Retail Investor Protection Act, following the announcement of impending rule making. H.R. 1090 would require the DOL to wait on issuing new rules until the U.S. Securities and Exchange Commission (SEC), which has primary authority and expertise on the issue, dictates recommendations. The legislation also includes some important checks and balances on the SEC's rule-making process to ensure that retail investors are not actually harmed by these new rules. I was pleased to support this legislation when it passed the House on October 27, 2015 by a vote of 245-186. Rest assured, I will keep your comments in mind moving forward in the 114th Congress.Once again, thank you for your correspondence. I hope you will continue to contact me regarding issues of importance to you and your family. In the meantime, I encourage you to visit my website at and sign up for my weekly e-newsletters. For urgent updates on critical issues, follow me on Twitter (@KenCalvert) and check out my Facebook page (Congressman Ken Calvert). Sincerely,
KEN CALVERTMember of Congress
Perhaps it should have been signed "Ken Calvert, Industry Shill". I wonder if he has seen this video from Elizabeth Warren:

One more Congressman I won't be voting for - neither should you.

Scott Dauenhauer, CFP, MPAS, AIF