Monday, July 10, 2017

Everything Wrong With 403(b) Markets In One Slimy Vimeo Video

I subscribe to Google Alerts and recently I was alerted to a Craigslist ad that was recruiting people to sell commission based index annuities to unsuspecting teachers in Chicago.

I clicked on the link and then found a video.

It's a bit long, but gives you some insight into the thinking and compensation and marketing practices of these sales agents. No mention of doing real financial planning or teaching people to do real financial planning.

It's everything that is wrong with this industry in one video.

2015-12-23 11.22 Webinar Now from Chris Reid on Vimeo. It's time these practices were stopped. These people are not fiduciaries, they do not have educators best interest in mind. Nor are they qualified to provide competent financial planning (as demonstrated by a lack of credentials).


Thursday, April 20, 2017

In K-12 403(b) plans, employees and their unions can be their own worst enemy

Great piece by Investment News Journalist Greg Iacurci. Did you know the following about the NEA?:

In 2015-16, Security Benefit paid an annual base fee of $2.84 million, according to the filing. That fee can increase between 5% and 10% per year if Member Benefits "achieves some or all of mutually agreed upon market-opening and program promotion goals," the document said.
I applauded the NEA for signing on with the AFL-CIO in support of the DOL's Conflict of Interest Rule, let's hope they take that focus inward and start cleaning house.

In K-12 403(b) plans, employees and their unions can be their own worst enemy

Friday, March 31, 2017

More 403(b) Vendor Shenanigans & Trips...Those Amazing Trips

This past week I've come across several instances of what I consider improper marketing efforts by insurance agents for 403(b) vendors. 

As best I can tell, this week it's LSW and Midland, two of the worst 403(b) vendors in the industry in my opinion. 

I also found where LSW is having their Conference of Champions trip and have posted the details.

WaPo: Why so many teachers need a second job to make ends meet

The fact that this article has to be written makes me sad. Why so many teachers need a second job to make ends meet

Thursday, March 23, 2017

403bCompare Rebirth

Way back in 2000, a group of 403(b) activists lobbied the California state legislature to pass a bill allowing school districts to control their 403(b) vendor list, the bill didn't make it in the original form, but instead became a disclosure bill. The law that was passed created what we now call, a website where all 403(b) vendors in California must register if they want to offer their products to California public schools. They must register and disclose their products. There is no other database like this in the country.

I was involved in both the lobbying and the development of the original website and have provided consulting services to CalSTRS (who operates the site) ever since. I've watched over the past 18 months as the people at CalSTRS worked to redesign and modernize the site, the new site launched this week and I think they've done a great job.

 Just a few new features you will see is an expense ratio range (low - medium - high) and a disclosure of whether the product will pay a commission when sold (no data on what the commission would be at this point). Comparisons are now simpler and all the data for mutual fund and annuities are in real time, including performance information. There are also filters to help you exclude certain products and a design that should allow for simpler navigation.

I've linked to a brochure and flyer below and you can watch a few of the videos as well:

CalSTRS Press Release

CalSTRS 403bCompare Flyer

CalSTRS 403bCompare Brochure

Scott Dauenhauer, CFP, MPAS, AIF

Monday, February 27, 2017

Annuity Compensation Conflicts

Compensation conflicts with annuities abound. Most of the time the conflict is in selling one annuity over another to earn a higher commission or to earn a trip to a tropical paradise. However, there are also conflicts that exist once an agent has settled on a product to sell you - should they take their money now, or over time? I recently came across the following over at and found it interesting:

Tuesday, February 21, 2017

Opinion: Why I'm Skeptical On The NTSA's Fiduciary Press Release

Right about the time that the New York Times was beginning to release their stories on the significant issues in the land of 403(b), a trade organization (the NTSA - The National Tax-Deferred Savings Association) that represents 403(b) vendors, insurance agents, brokers and some Investment Advisors told Plansponsor magazine that they would change their policy as it pertains to "Fiduciary". The Plansponsor article is short on details but begins:

Wednesday, February 08, 2017

That TIAA Loan Lawsuit & My Opinion

TIAA is being sued for a loan scheme that benefits TIAA, not participants and my opinion is that TIAA is in the wrong. This doesn't mean they broke the law, but they lose the moral and ethical credibility they had accumulated by using a technique that the rest of the 403(b) industry uses, but most 401(k) plans did away with long ago.

Here is a link to the lawsuit.

According to Plansponsor:

"A new lawsuit argues the practices used by the Teachers Investment and Annuity Association (TIAA) to credit portions of interest payments made by participants on loans taken from their own retirement accounts back to the firm—rather than to the borrowing participant—violate the Employee Retirement Income Security Act (ERISA)."

I have first hand experience with this particular loan scheme. A client of mine was also taken advantage of by it several years back, though I did not learn of it until recently.

Thursday, February 02, 2017

403(b) Hack: Why You Might Want To Leave A Few Dollars In Your 403(b), Even If You're Retired And Don't Want It

When public school employees retire they should think twice before rolling their 403(b) money (or 457(b)) over to an IRA. I'm not talking about the hordes of insurance agents and brokers who are trying to sell you poorly structured products so they can take fancy trips, that's of course a good reason not to rollover, but there is another, potentially powerful reason why you should keep at least some money in a 403(b)/457(b) as long as you are retired.

Wednesday, January 25, 2017

Attention California School Districts: You ARE Fiduciaries For Your 457(b) Plans

This isn't the first time I've written about this topic and it won't be the last...unfortunately. If you are a board member or a district administrator for a California public school, it's highly likely you are ignoring a significant responsibility and this leaves you open to lawsuits.

Despite what you've been told (in all likelihood by your compliance administrator) you ARE a fiduciary in regards to the 457(b) plan you offer your employees. You don't have to take my word for it, one of the nation's top ERISA attorneys made the case...back in 2006. Yes, you were warned over a decade ago.

Wednesday, January 04, 2017


You may have noticed that I've posted very little in the past six months, even amidst a torrent of 403(b) news. There is a reason and I'll do my best to explain.

I've been fighting for better 403(b) plans since 1998. I've not been alone in the fight (if you want to read about those who have fought along side of me, pick up my book here). I understand that this fight is not exactly akin to fighting for Civil Rights or other important issues, but it is a meaningful fight and one that needs to be waged. It's just that sometimes you get tired of it, even when you are winning.

To be honest, 2016 burned me out fighting for the 403(b) - despite it being one of the most successful years we've had. It's not the first time I've 403(b)urned out, it won't be the last.

Some of the symptoms of 403(b)burnout:

Not wanting to write about it.

Not wanting to think about it.

Getting a headache when you do think about it.


Did I mention...despair...

There are more, but those will suffice. Mind you, I didn't give up the fight, I simply took a breather.

Even while feeling the effects of 403(b)urnout I recorded podcasts (some great podcasts by the way and you can listen to them here) and posted articles and answered reporters phone calls. But my heart wasn't always in it. I remember 15 years ago how nervous I was to talk to a reporter and how much I would fret about getting quoted, the second half of last year I almost didn't want to talk to any reporter (except for the amazing and under-appreciated Tara Siegel-Bernard of the NY Times who should win a Pulitzer for her work on 403(b) last year). This was not a problem with the reporters (though Tara did make it difficult to talk to anyone else!), it was me.

I love the 403(b) fight and will continue to wage it, but probably once every three or four years I get 403(b)urnout and I just need to let it run its course. It's taking longer this time, but just writing about it is making it easier. I do take solace in the fact that we've picked up so many allies in the past few years who have willingly taken up the fight and when I'm down, they are up. I know that our numbers are growing and that I'm not that important anymore, this actually helps. We are not done fighting and neither am I, but if you don't see me for a few months every few's ok, I'm just recovering from a bout with 403(b)burnout!

2017 is a new year and there is a lot of potential, for all those out there fighting for positive changes in the government 403(b) world, I commend you and I'm ready to get back on the horse and do battle.

Scott Dauenhauer