ASPPA 403(b) Research Falls Flat

Originally posted on my Meridian Wealth Blog on October 13th, 2011

http://meridianwealth.wordpress.com

http://meridianwealth.wordpress.com/2011/10/13/asppa-403b-research-falls-flat/

New ASPPA “Research” on 403(b) Threatens to Splinter Association
ASPPA’s Research Paper Supports Salespeople over Participants & Membership

Research Paper Falls Flat

This response to the ASPPA paper is my opinion.

On October 5th, ASPPA/NTSAA released their long touted research paper titled “Protecting Participation: The Impact of Reduced Choice on Participation by School District Employees in 403(b) Plans” along with a special website www.savemy403b.com. This research appears to be the work of their super not-so-secret group Project Albatross (NTSAA Sponsors).

What did this long awaited “study” reveal? Reducing vendor choices – bad | lots of vendor choices – good. What was far more interesting (and quite frankly, odd) was the lack of any actual study or research to back up the conclusions.

The paper written by ASPPA’s Pension Education and Research Foundation didn’t conduct a single study into participation rates and how they are affected by the offering of many vendors, a few vendors or a single vendor. Instead, the paper used studies that were not applicable and cherry picked dates from just a few school districts and twisted the data to fit the conclusions demanded by NTSAA corporate sponsors. In other words, the outcome was (in my humble opinion) predetermined.

ASPPA conveniently leaves out studies that don’t confirm their bias, such as the studies mention in the article “Too Many Choices” located here.

ASPPA must know that by putting out this paper they will upset the vast majority of their members in order to make happy a small minority of NTSSA sponsors. In the end, it’s apparent there is no supporting evidence, none. The question ASPPA members are asking now is why. Why is the leadership of a great organization now working feverishly to promote a non-fiduciary, retail environment at the expense of its long time members who have worked hard to promote the fiduciary cause? This study seriously dents the credibility of the organization.

I considered not forming a response to the research as I figured anyone who read it would immediately understand that there is no intellectual basis to confirm the foregone conclusion. However, the arrogance of trying to pass off what can only be labeled as “propaganda” as an actual research paper angered me enough to write this response.

What is missing from the paper is the debate that ASPPA refuses to engage in – should advisors who work with 403(b) plans be fiduciaries? It seems like a simple question, however there is much at stake and already considerable opposition forming within ASPPA to counter the turn against fiduciary principles taken with the absorption of NTSAA (The National Tax Sheltered Account Association).

If the answer to the fiduciary advisor question is no, ASPPA will find themselves increasingly at odds with their long time members and those in leadership positions will soon find they are being escorted out the door. If the answer is yes, ASPPA must divorce itself from NTSAA, there is no middle ground where the two organizations can meet. This is why ASPPA has chosen instead to be silent. ASPPA can’t serve two masters. Which faction will win the argument – the loyal fiduciary members or the small number of old school salespeople hawking equity indexed annuities?

Analysis of the “Data” Provided

What exactly is in this research paper that would lead one to believe that eliminating “choice” as defined by ASPPA would hurt participation rates?

The paper cites several studies from Schwab, TIAA, RAND & ING that have absolutely nothing to do with Protecting Participation and “Choice” in 403(b) plans (I’ve written a detailed analysis and will post it later). It then cites three examples of school districts that have reduced vendors and experienced a drop in participation, but doesn’t actually conduct a study to determine whether any of the findings have significance.

What follows is the only evidence ASPPA was able to provide to support their conclusion that reducing vendors hurts participation rates:

ASPPA’s “Proof” That Reducing Vendors Reduced Participation

ASPPA offers up three examples of reductions in participation occurring after vendors have been reduced, as follows:

55 Unknown school districts somewhere in Southern California
Indiana Area School District in Indiana County, Pennsylvania
Jefferson County School District in Colorado
What follows is the claim, data and my analysis (and opinions).
55 Unknown school districts somewhere in Southern California

Claim:

“An analysis of employees in fifty-five school districts in Southern California shows that over 50% of workers stopped contributing to their 403(b) plans when their existing provider was no longer available.”
Data Provided:

As of January 31, 2008, participants were making contributions to 194 investment providers for the plan. Seventy-eight of these investment providers were deselected.

As of January 31, 2008, there were 10,613 participants making contributions with investment providers who not later deselected. As of January 31, 2009, there remained 8,608 participants of this group.

During the process, 201 investment providers would not agree to coordinate information with the employer and were therefore deselected. Participants were contributing amounts to 78 of these investment providers as of January 31, 2008. As of January 31, 2008, there 846 participants who were making contributions to investment providers who were later deselected. As of January 31, 2009, there remained 376 participants of this group.

Analysis:

Lets start with the obvious – who are the 55 school districts? This information is not provided. There are over 1,000 school districts in California; using data from just 55 non-randomly selected districts is not statistically relevant or significant. Let’s also not forget that even after this massacre of providers, 116 were still left (who these mystery districts are is beyond me, I’m unaware of any district that could legally have 194 investment providers as there was NEVER that many available for use during the time periods described as every vendor must be registered with the state of California’s 403bCompare databank). Assuming you could have 116 investment providers, isn’t that enough? Even those that support the “Choice” argument have to draw the line somewhere, right?
The key to this data however is the time frame chosen: January 1, 2008 through January 1, 2009. The reader should ask themselves if anything significant happened during this timeframe that might have had an effect on participation, like perhaps:

1. Participants retiring – how many of those participants retired? Given that the percentage of participants who are older is usually much higher than the percentage of participants who are younger, people retiring would have a larger affect on participation rates.
2. Layoffs. I’m sure no one who was contributing to a 403(b) was laid off during this time period.
3. Other retirement plans. School employees also have access to a 457(b), how many switched to contributing to a 457(b) instead of a 403(b)? I happen to know of a county in Southern California or two that actively pushes to get participants into their 457(b) plans at the expense of participation in 403(b) plans. How many of these participants stopped contributions to a 403(b), but started to a 457(b)?
4. Greatest financial collapse since the Great Depression happened during this time frame – could that have an effect on participation?
5. Greatest housing collapse since the Great Depression was occurring during this time frame – could that have an effect on participation?

All of the above are valid reasons for lower participation, but the one ASPPA is hoping you don’t think about is the most obvious one, new IRS regulations went into effect:

1. (6) IRS plan document requirement. January 1, 2009 was the IRS deadline for having a plan document and thus many vendors were eliminated on December 31st 2008. If a participant didn’t make a decision as to a new vendor, their contributions were stopped – but they would not have realized this until February or later when they found no money was coming out of their paycheck and going into a 403(b). Inertia may have an affect in that they do not re-start (thus it was the deselection without a mapping) and once they finally realize they are not contributing they may have started re-contributing – we don’t know because the dates are cherry picked. How many actually started contributing again once they realized they were kicked out? Why didn’t the data go through January 31, 2010?

Could it be that ASPPA cherry picked the dates to make their numbers work? After all there was NO analysis provided to determine other causes. It appears they deliberately chose dates that would support their conclusions rather than performing an actual study to determine if their conclusions had any merit.
Indiana Area School District in Indiana County, Pennsylvania

Claim:

“Similarly, data reflects that the number of workers at a school district in Pennsylvania who participated in the 403(b) plan was significantly reduced when the school district switched to a single investment provider approach. The Indiana Area School District in Indiana County, Pennsylvania had nineteen investment providers in September 2008. By September 2010, after it switched to a single investment provider, nearly 40 percent of participants ceased participation in the plan.”
Data:

“Participation dropped from 118 employees participating at approximately $37,347 per month in September 2008 to 72 employees participating at approximately $25,680 per month in September 2010, reflecting a decline in participation of 38.98 percent.”
Analysis:

One district in one county of one state is not a sample size and is not evidence that going to a single vendor will decrease participation. Where is the analysis of other school districts that went single vendor and didn’t have a decrease in participation or how about the school districts that cut out dozens of vendors and either didn’t experience a decrease, experienced only a small decrease or even experienced an increase? The answer is that ASPPA didn’t do a study to find out this information because it wouldn’t confirm their preconceived idea that if you eliminate choice, your participation rate will plummet. So, here are a few items they left out of this “data”:

1. Retirees?
2. Layoffs?
3. Financial Panic?
4. Housing Collapse?
5. Availability of other retirement plans?
6. New IRS Regulations going into affect?

Just like the Southern California example, there is no information about the implementation of the single vendor program or how the program is doing today (they couldn’t call up the school district for September 2011’s data?). One data point does not a study make.
Jefferson County School District in Colorado

Claim:

“Data reveals that the number of participants substantially dropped when a single investment provider model was adopted by the Jefferson County School District in Colorado (known as “Jeffco Public Schools”).
Jeffco Public Schools had previously utilized up to fifty-five investment providers for its 403(b) plan. As of January 1, 2006, they selected a sole investment provider for the district’s 403(b) plan and redirected all contributions to the new investment provider. As indicated in the chart below, data provided from 2004 through 2009 reflects a significant decline in participation. The number of contributing participants dropped by approximately 54% from 2004, when multiple investment providers were available to 2009 when a single investment provider approach was used.”
Data:

Two RFP’s of which were not provided.

Analysis:

There is simply no analysis and no update since 2009 as to what participation is today. We have no idea why participation dropped in this situation and no reason to believe that because it may have occurred in this district that it would occur in other districts.
Again, one district does not make a study, there has been no actual study done by ASPPA on the effects of reduced vendors on participant participation in government 403(b) plans.

The ASPPA paper concludes with “The data reflects that 403(b) plans should be structured as efficiently as possible, but without eliminating choice.”

What data reflects such a conclusion? Most of the studies cited don’t even address the topic of the number of vendors and participation rates (actually none of them do) and most apply to 401(k) plans. If anything the studies presented support my conclusion that participants should be offered fiduciary advice, not recommendations from conflicted salespeople.

Instead of helping to transform the 403(b) market to one based on fiduciary principles ASPPA is working to ensure that it remains the last bastion of conflicted salespeople. There is a reason this market is referred to as the Wild, Wild West of retirement plans. The ASPPA leadership needs to seriously rethink the path they’ve started down before they find themselves to far down it to turn back.
Speaking of ASPPA/NTSAA leadership, Brian Graff continues to refuse to answer some very simple questions that I posed just a few months ago. I have heard from quite a few ASPPA members that are VERY interested in his response. Not to beat a dead horse, but here they are again:

1. Do you believe School Employees should always have their best interest put first by any advisor they work with, in other words, a conflict-free fiduciary standard?

2. Why shouldn’t all advisors who want to work with School Employees be held to a fiduciary standard?

3. Would ASPPA be open to allowing multiple 401(k) providers for their organization with no process for “screening costs, fees or other terms or conditions” and would they support such a structure for private sector 401(k)’s? If not, why and do you believe this would violate ERISA?

4. You have stated several times that competitive bidding and/or single vendor options will not lower costs and fees and that participation rates suffer under such regimes, disregarding the fact that this is standard practice in the 401(k) world which you represent. Where is your evidence to support such conclusions?

5. In your recent NTSSA article you claimed victory over the Los Angeles Unified School District (LAUSD), please explain how, by hiring a lobbyist law firm and sending threatening letters, you were not acting as a bully for the financial services industry?

Here is a link to Protecting Participation.

Scott Dauenhauer CFP, MSFP, AIF

Borzi & Graff – Two Different Views on “Choice”

Originally posted on my Meridian Wealth Blog on September 19th, 2011

http://meridianwealth.wordpress.com


http://meridianwealth.wordpress.com/2011/09/19/borzi-graff-two-different-views-on-choice/

Last week I attended NAGDCA (National Association of Government Defined Contribution Administrators) and had the pleasure of listening to the head of the EBSA (Employee Benefit Security Administration), and Assistant Secretary of the Department of Labor, Phyllis Borzi and asking her a few questions. One thing she said (as reported by Pensions & Investments) was:

Ms. Borzi discussed the Labor Department’s work on defined contribution plans. “What I’m all about is giving participants enough tools to make the best choices.”

She added: “I think the smaller the number of investment options, the better for plan participants.”

Contrast this with NTSAA/ASPPA’s head, Brian Graff who states in the 403(b) Advisor Magazine the following:

“The result of this kind of consolidation,” says Graff, “is not better products for teachers. The real consequence is that teachers have fewer choices, including the right to work with the very advisors they’ve grown to trust.”

and,

“NTSAA stands for the proposition that teachers should be able to choose the investment option that best suits their needs, “ Graff asserts in the article, “and the freedom to work with the advisor that they trust. The right advisors can help teachers be informed consumers and help them select from among their array of products the ones best suited to their clients’ unique needs.”

Keep in mind that ASPPA’s own retirement plan is not structured in such a way to provide for “choice” – they have a single vendor plan. The argument that NTSAA/ASPPA is making is that retirement plan participants in non-ERISA 403(b) plans should NOT benefit from the economies of scale that could reduce costs and provide for better retirement outcomes.

In my opinion, Advisors who are true fiduciaries will always find a way to work with their clients – they aren’t limited by the ability to sell one product or another – in fact, what makes them a great Advisor is that they are not selling products, but providing a service (that of financial advice).

Now, here is the odd thing – Mr. Graff is quoted in a Wall Street Journal piece stating “The IRA market is like the Wild West,” said Brian Graff, chief executive of the American Society of Pension Professionals and Actuaries, a trade group. “Things go on that would make people wince.” He is saying this as it relates to the DOL’s proposal to make fiduciaries of those who work with IRA’s. The irony is that the 403(b) is the original Wild, Wild West and operates much like the IRA market (except likely worse) – yet Mr. Graff does not support the same proposals for 403(b) as he does for IRA, curious.

Of course, not everyone is happy with Borzi’s position (which is the DOL position) as a recent WSJ editorial made clear “The Borzi Savings Bomb” and which appears to support the NTSAA/ASPPA “Choice” argument when it states:

“When it comes to new regulation, the Obama Administration has impeccable timing. Just as Americans are worrying about how much is left in their 401(k)s, the Department of Labor has decided it wants to reduce the plethora of options that we have for retirement accounts.”

The industry has been in uproar over Borzi’s “Savings Timebomb” of actually requiring those who purport to deliver advice actually put the best interest of those individuals they serve, first. Seems like an indefensible position to me – I wonder what a Senator or Congressman would say when asked the question “Would you want the financial advisor to your mother to be required to put her best interest first?” It’s hard to believe any would say “No”, and if they did the voters should think twice about re-election. Of course, this is the exact position being taken by most Senators and Congressmen.

It seems to me that the integrity of the US financial system was put in jeopardy by Wall Street banks who didn’t have a fiduciary duty to their clients…yet, we haven’t learned our lesson. I for one support Borzi (though I would make a few modifications to the Fiduciary definition – just minor tweaks).

Whose vision will win out in the 403(b) market? My hope is that the Borzi vision wins. I support her efforts in bringing additional transparency to retirement plans.

It’s been almost two months since I challenged NTSAA/ASPPA/Brian Graff to answer some easy questions publicly (see 5 Questions Brian Graff Should Answer Publicly – July 29th, 2011) and there has been no response, only censorship (see Censorship, False “Choice”).

I’ve spoken to numerous individuals who are members of ASPPA who are bewildered by the position taken – I hope they make their voice heard, I have.

Scott Dauenhauer, CFP, MSFP, AIF

NTSAA/ASPPA False “Choice”, Censorship & Graff Radio Silence

Originally posted on my Meridian Wealth Blog on August 26th, 2011

http://meridianwealth.wordpress.com 


http://meridianwealth.wordpress.com/2011/08/26/ntsaaasppa-false-“choice”-censorship-graff-radio-silence/

False “Choice”
ASPPA through their NTSAA branch has decided to side with old school 403(b) providers and are trying to keep the gospel of “choice” alive. The surface argument is that participants should be able to work with whatever advisor they choose. What is really behind this argument however is a set of high-cost providers trying to protect their turf and product lines. When ASPPA/NTSSA speaks of “choice” they are simply protecting their members, not participants – it’s code.

I think we can all agree that a participant should have the ability to work with whatever advisor they choose, however where I disagree with NTSAA is the qualifications and legal duties to those participants. I believe that an advisor should be required to always put the best interest of the participant first and find it tough to believe anyone could disagree with such a position. Where ASPPA/NTSAA fails in their position is where they promote products over people.

There is no reason a plan can’t have a single vendor, but offer multiple fiduciary advisors. This gives the participants a fiduciary plan with the benefits of competitive bidding along with their choice of advisors. They can continue to use their current advisors so long as that advisor adheres to a fiduciary standard.

ASPPA/NTSAA must answer the question why they don’t support a fiduciary standard for all advisors who work with participants.

The current argument over choice is a red herring, it’s really an argument over whether the participants should have an advisor who is a Fiduciary.

Brian Graff Update
Mr. Graff has been radio silent since I posed five questions to him in my blog post Five Questions Brian Graff…. Why the silence Mr. Graff? The questions are easy to answer, what are you hiding from?

Here is a link to Mr. Graff’s LAUSD escapades.

Keep in mind I am not attacking Mr. Graff on a personal level – I’m posing questions to him as the leader of an organization which has taken a position that is in my opinion anti-participant.

ASPPA Censorship?
Mr. Graff has been silent on questions posed to him, but obviously feeling the pressure. My post of questions experienced a lot of traffic and generated a lot of buzz. Instead of answering the questions ASPPA sent out Robert Richter to try to reframe the debate, but then decided they didn’t actually want a debate and refused to approve comments that were contrary to their position. So, I decided to post Robert’s response and MY response to him which ASPAA has refused to approve. What are you so afraid of ASPPA? Why the censorship? Shouldn’t the industry be debating this and how can ASPPA be against fiduciary advice in retirement plans? Richter’s post and my response is below:

From Robert Richter on LinkedIN:

403(b) Consolidation

Some of you may be a aware of an ongoing debate over some positions taken by ASPPA & NTSAA regarding 403(b) plans for K-12 public schools. ASPPA & NTSAA, along with a coalition of interested parties, will be rolling out a website and a campaign to clarify our positions and why the positions being taken are in the best interests of teachers and staff at our public schools. In the interim, a few comments are warranted. 

We know that due to regulatory changes, 403(b) plans have a greater resemblance to 401(k) plans. Aside from the substantive legal differences, however, one must understand that the delivery and implementation of 403(b) plans in K – 12 public schools is considerably different than 401(k) plans. There are no on-site human resource functions at each school to provide investment education and enrollment functions. Rather, schools have taken a passive approach to 403(b) plans – they allow a payroll slot for those teachers who want to participate in a 403(b) plan. It has been up to advisors to reach out to teachers to encourage them to participate in the plan and in how to invest those contributions. A soon be to be published study will demonstrate that the elimination of options in 403(b) plans (and the corresponding elimination of the existing relationship teachers have with advisors) results in significantly decreased participation rates by teachers. 

Another important distinction between 403(b) plans and 401(k) plans is that under ERISA, employers who sponsor 401(k) plans have a fiduciary responsibility to ensure that fees are reasonable compared to the services being provided. It’s not simply a matter of who has the lowest fees. The new fee disclosure regulations will also help ensure that conflicts of interest are more readily apparent. This fiduciary obligation, along with nondiscrimination requirements, requires sponsors of 401(k) plans to have an active role both with respect to the plan and to encourage employee participation. These factors do not exist in the public school environment. 

Notwithstanding this, some large bundled insurance providers are trying to push legislation that will effectively push smaller providers and advisors out of the market. They are lobbing state capitols to convince lawmakers that the state should take over 403(b) plans and significantly limit the number of providers, and sometimes pushing for a single provider. We don’t believe using legislation so that large insurers can gain a market advantage is in the best interest of public school employees. 

We are certainly not taking the position that the 403(b) market is perfect. As an organization, we continue to be concerned about issues relating to hidden fees. As you know, DOL’s fee disclosure rules do not apply to K-12 403(b) plans. So we are doing something about it. We have established a joint task force with the National Education Association and the Association of School Business Officials to create fee disclosure standards for public school 403(b) plans. These national standards will allow public school employees to make apples to apples comparisons of different 403(b) options so they know clearly how much they are paying and what services they are paying for. As we know in the 401(k) industry, it’s not all about fees and public school employees should not be denied the opportunity to work with a personal advisor and product provider they trust. 

I hope this will alleviates any concerns that ASPPA & NTSAA members have. More detailed (and more eloquent) explanations will be provided in the very near future.

My Response to Rober Richter which has yet to be approved by ASPPA, despite two comments in favor of Robert being approved after my comments were submitted.

Robert,

I see that you have decided against answering any of the questions that are actually on peoples minds. Here are the five questions you need to answer:

1. Do you believe School Employees should always have their best interest put first by any advisor they work with, in other words, a conflict-free fiduciary standard?

2. Why shouldn’t all advisors who want to work with School Employees be held to a fiduciary standard?

3. Would ASPPA be open to allowing multiple 401(k) providers for their organization with no process for “screening costs, fees or other terms or conditions” and would they support such a structure for private sector 401(k)’s? If not, why and do you believe this would violate ERISA?

4. You have stated several times that competitive bidding and/or single vendor options will not lower costs and fees and that participation rates suffer under such regimes, disregarding the fact that this is standard practice in the 401(k) world which you represent. Where is your evidence to support such conclusions?

5. In your recent NTSSA article you claimed victory over the Los Angeles Unified School District (LAUSD), please explain how, by hiring a lobbyist law firm and sending threatening letters, you were not acting as a bully for the financial services industry?

Your defense of the status quo and of brokers/agents over participants is disturbing on so many levels.

Your national standards for disclosure do NOTHING to require that the brokers/agents working with educators place those educators interest ahead of their own.

You fail to mention that it is NTSSA/ASPPA actively lobbying against Multiple Employer Plans that seek to provider lower cost, fiduciary based services to participants as well as advisory services. You are the one working to protect a dying industry (retail based fixed annuities sold by non-fiduciary agents and brokers).

You have ignored 403bCompare.com and you know that “comparing fees” simply ignores the fact that the people you represent sell products that are free of fees (spread products).

You have attacked consultants who pledge a fiduciary duty as essentially conflicted and yet you don’t point out the huge conflicts of the firms you represent.

Will you be the one to answer the questions I pose or will you hide behind Project Albatross? ”

LAUSD Responds To Brian Graff & NTSSA/ASPPA

Originally posted on my Meridian Wealth Blog on August 3rd, 2011

http://meridianwealth.wordpress.com

http://meridianwealth.wordpress.com/2011/08/03/lausd-responds-to-brian-graff-ntssaasppa/

The head of ASPPA/NTSSA has a lot of explaining to do. I’ve challenged his recent op-ed in a related post, please see: Five Questions Brian Graff & NTSSA/ASPPA Need To Answer Publicly

Even before his Op-Ed, Graff had been advocating for broker/agents rights over the rights of participants and he took his fight to the Los Angeles Unified School District (of whom he claimed victory over in his op-ed). His presentation to the committee was filmed and is available on YouTube, but I’ve also embedded for your viewing pleasure below.

The Committee that Graff made the presentation to at LAUSD has issued a statement of their own, and it takes Graff/ASPPA/NTSSA to task for supporting brokers over participants. I’ve included the response below.

Also see, A Tale of Two Cities…er, Retirement Plans.

5 Questions Brian Graff & ASPPA/NTSAA Should Answer Publicly

Originally posted on my Meridian Wealth Blog on July 29th, 2011

http://meridianwealth.wordpress.com

http://meridianwealth.wordpress.com/2011/07/29/5-questions-brian-graff-asppantsaa-should-answer-publicly/

Recently Brian Graff penned an op-ed for The 403(b) Advisor (see below), the official magazine of the National Tax Sheltered Account Association titled “Eliminating Choice Will Hurt Public Employees.”

The op-ed was an effort to show support by NTSSA/ASPPA of brokers and agents who act in a non-fiduciary capacity when advising school employees. Nowhere did the article talk about participant’s rights to conflict-free fiduciary advice; instead it focused on restraining competition by allowing any vendor that wants to offer a product (in a school district) to offer such product without obstruction. Mr. Graff certainly doesn’t support such a vision for the 401(k) industry, so why for the 403(b)?

As Mr. Graff begins his Project Albatross lobbying group (any chance the details on this will be made public Mr. Graff?) I believe it is time he answers some hard questions.

Here are five questions that I challenge Brian Graff to answer publicly and in writing. His response is welcomed to be posted unedited on the 403bWise.com website.

1. Do you believe School Employees should always have their best interest put first by any advisor they work with, in other words, a conflict-free fiduciary standard?

2. Why shouldn’t all advisors who want to work with School Employees be held to a fiduciary standard?

3. Would ASPPA be open to allowing multiple 401(k) providers for their organization with no process for “screening costs, fees or other terms or conditions” and would they support such a structure for private sector 401(k)’s? If not, why and do you believe this would violate ERISA?

4. You have stated several times that competitive bidding and/or single vendor options will not lower costs and fees and that participation rates suffer under such regimes, disregarding the fact that this is standard practice in the 401(k) world which you represent. Where is your evidence to support such conclusions?

5. In your recent NTSSA article you claimed victory over the Los Angeles Unified School District (LAUSD), please explain how, by hiring a lobbyist law firm and sending threatening letters, you were not acting as a bully for the financial services industry?

Mr. Graff – the fiduciary community is awaiting your response.

Scott Dauenhauer CFP, MSFP, AIF

A Tale of Two Cities…er, Retirement Plans

Originally posted on my Meridian Wealth Blog on July 18th, 2011

http://meridianwealth.wordpress.com

http://meridianwealth.wordpress.com/2011/07/18/a-tale-of-two-cities-er-retirement-plans/

I started working with Government Defined Contribution Plans in 1998, its been quite a ride and a lot has been accomplished, but there is much more work to do.


The link above will take you to my paper hosted by Scribd.


Scott Dauenhauer, CFP, MSFP, AIF

403(b) Paperwork is Out of Control - Thank You IRS

Last week I helped a client rollover a 401(k) to an IRA. The IRA was already opened and all we had to do was get online and make the distribution, a few clicks and we were done. Conversely, it could have been done over the phone in just a few minutes. For most 401(k) plans it is a simple thing now to get a rollover processed - not so for non-ERISA Government 403(b). I just finished the paperwork for a client and have my fingers crossed it will make it to all its destinations and not be rejected along the way - my estimate for time of receipt of rollover funds is anywhere from 60 - 120 days. Here is the process:

Open the IRA if it isn't already.
Contact provider of where 403(b) account is held and receive their paperwork.
Contact the TPA of employer where the client worked and find out if they require paperwork...they do. Send all the paperwork to the client to sign (this takes a few weeks to get the forms back and may or may not require a phone call to walk through it with them)
Receive paperwork back and fill it out, check for errors.
Create cover page and send both sets of paperwork (Current Vendor and TPA) to the IRA holder so that the IRA can sign that they are accepting the rollover.
Pray that the IRA provider reads the coverage and keeps the originals, signs where required and then forwards the originals to the TPA.
Pray that the TPA approves the request and doesn't require more paperwork and that the TPA actually forwards the originals to the current 403(b) vendor.
Pray that 403(b) Vendor receives back their account paperwork in good working order and an approval from the TPA to process.

As long as all those steps happen, the rollover should happen...should! Gotta love the 403(b) market.

BTW - the paperwork is having fun traveling, here is a list of its destinations:
Murrieta to Hemet
Hemet to Murrieta
Murrieta to Cincinnati
Cincinnati to Florida
Florida to North Carolina
Check goes from North Carolina to Cincinnati...


Scott Dauenhauer CFP, MSFP, AIF

Lincoln Financial Group - "...extremely profitable business....403(b)"

Lincoln Financial Group has an interesting press release today about how profitable they are, stating:

With $164 billion in assets under management as of July 1st, 2011, Lincoln Financial Group hopes to further increase their already extremely profitable businesses: annuities, disability, life, and group life insurance, as well as 401(k) and 403(b) and savings plans.

I always want the companies doing business in the 403(b) market to be profitable, this leads to better and more innovative services - however it is disturbing to hear a company describing their 403(b) business as "extremely profitable." There is only one way for 403(b) business to be "extremely profitable" and that is on the backs of those participants in their 403(b). Scott Dauenhauer, CFP, MSFP, AIF