Don't Fall For This 403(b) "Match" Scam

Several private universities are being sued for overcharging participants, the companies offered were low-cost providers like TIAA, Fidelity and Vanguard...yet they are still being sued.

Meanwhile, in the public K-12 market we have companies like the one featured in the ad to the left literally lying to participants and potential participants about being eligible for an employer match. They represent companies like Midland National and Life of the Southwest, companies that are not in participants best interest.

I feel like I'm in the Twilight Zone. They don't call the public K-12 market the Wild West for nothing (I wrote a book for advisors titled "Wild West: Providing Fiduciary Advice to Public School Employees").


If you are a teacher and you receive the e-mail featured above, would you not think that your school district is offering a match of 5% if you begin contributing to your employer's 403(b)? I know that's how I would read it if I weren't in the financial services business.

Lucky for you, I am in the biz and can help you decipher this scam.

First, it's extremely unlikely the school district is offering any match and it's also unlikely they have endorsed or authorized the company featured to send the e-mail (if they did, they are opening themselves to significant liability). What is really going on?

It's actually pretty simple, this is an insurance agent using (in my opinion) underhanded and dishonest methods to lure unsuspecting teachers into buying high commission, retail annuity products that are likely better for the agent selling them than they are for the actual purchaser.

The participant doesn't actually get a "match", instead they get a "bonus" paid by the insurance company for every dollar placed in the annuity product. This "bonus" doesn't come for free, you pay for it in one way or another. One way a participant might pay for the bonus is through a longer surrender period on contributions, many annuity companies will add five years to the policy's surrender period and increase the surrender charge. This allows the annuity company to keep your money longer and make up for paying the bonus by underpaying interest for an additional number of years. Another way of paying for the cost of the bonus is to pull the strings of the policy to manipulate the rate paid so that it is lower than a comparable policy.

There is no free lunch, an annuity company is NOT going to give you free money. Every dollar they "give" you will be taken away in some form or fashion.

If you receive an advertisement similar to the one above you should ignore it. Better yet forward it to the state insurance commission.

Scott Dauenhauer, CFP, MPAS, AIF


Hat Tip to Don St. Clair for sending me the e-mail.

Are you 403(b) Wise? 403bwise.org is the place on the internet to learn, advocate and build community.

Bermuda, Ireland, Florida or Argentina - Just Sell Enough LSW Annuities

Want to goto Bermuda in 2018? Just become an indexed annuity salesperson who contracts with the National Life Group (also known as Life of the Southwest or LSW) and sell enough of their products and you could be heading there in business class!

Perhaps you want to stay in the United States, Naples, Florida at the Ritz-Carlton was a destination for 2017.

Want to go to Ireland or maybe Argentina? No worries, LSW has options for those as well. Again, you only need to sacrifice your soul and sell their surrender charge laden annuity and insurance products to unsuspecting people, including hard working school employees and you too can board business class.

The 403(b) and 457(b) markets are littered with companies and insurance agents selling indexed annuity products to teachers and other school employees who are not informed enough to know what they are purchasing. These products often come with 10 year or longer surrender periods with surrender charges exceeding 10%.

Don't believe me...see for yourself:

National Life Group Destinations by Scott Dauenhauer, CFP, MSFP, AIF on Scribd

These disgusting incentives should be not be legal. Scott Dauenhauer, CFP, MPAS, AIF

Are you 403(b) Wise? 403bwise.org is the place on the internet to learn, advocate and build community.

Look Out Teachers, LSW Has You In Its Crosshairs

I find all sorts of interesting things on the internet these days. Sometimes they are sent to me in my e-mail inbox, but the item I found and posted below is very different than incentive trips I've seen in the past. What's so different you ask? The following phrase:

"Sales in Individual Retirement Accounts or ERISA governed qualified plans paid on or after June 9, 2017 will not count towards the qualification criteria established for certain incentives." 

This means that insurance agents attempting to sell National Life Group insurance products AND who want to earn a trip to Buenos Aires, Argentina can only qualify for that trip by selling the products outside of IRAs and 401(k) plans (also ERISA 403(b)s).

This puts the crosshairs on two groups of people, those with assets outside of qualified (ERISA) plans (usually senior citizens) and public school employees through their 403(b) and/or 457(b). As I've written in the past, government 403(b) plans are not subject to ERISA and thus NOT subject to the new Department of Labor Fiduciary Rule. Teachers are quite literally not protected. Worse, they are among a shrinking group of people who aren't...which puts them directly in the crosshairs of insurance agents who need to make their quotas.

Be careful out there educators, never work with anyone who is not a fiduciary 100% of the time and who is not willing to put that in writing.

LSW Non-ERISA Trips by Scott Dauenhauer, CFP, MSFP, AIF on Scribd

Are you 403(b) Wise? 403bwise.org is the place on the internet to learn, advocate and build community.

Maui, Cabo or Sicily...Choose Your Annuity Incentive!

Ever wonder what's behind those annuity recommendations? Here's a taste.

I've posted a few of the potential trips that annuity producers can take this year and next for selling fixed annuities.

Do you want to goto Maui? Just sell $3.5 million in annuity premium and you'll get a stay at the Ritz-Carlton! Even better, if you sell enough you could take a trip across to the next island, Lanai for three more days. Here is a video from American Equity about what an agent can expect.

You can also check out their website:

http://marketingcenter.american-equity.com/aspx/Campaign.aspx?n=32&c=10

Perhaps Maui and Lanai are to far away, maybe you'd like something similar, but a little closer to home and with an advantageous exchange rate. Los Cabos, Mexico is behind door number 2! Amernican National will send you and a guest to The One and Only Pamilla resort.

2017 Cabos Conference

Perhaps beach destinations aren't up your ally. Maybe you want a little more culture. After all, whenever one things of an annuity salesperson they think "cultured"! Well, LSW (National Life Group) has all the culture you can handle with a trip to Sicily.

NLG Sicily Chairman's Club 2016 Qualification Flyer

Next time someone is pitching you an annuity, ask them about their compensation and what trips it might qualify them for (then watch their face turn white). This shit needs to stop.

These companies must be good because they have America or National in there name...good grief.

Scott Dauenhauer, CFP, MPAS, AIF