www.403Compare.com Holds What May Be Last Advisory Council Meeting......Are They On Track?
I attended the advisory council meeting for the website created out of the AB 2506 legislation on Thursday. The meeting was probably the last meeting before the website goes live on July 1st, 2004. The meeting was not heavily attended, but the attendees were all very serious about they wanted to accomplish.
Eric Norton, the project manager did a great job of bringing together several disperate agendas and finding compromise. There was however a lively discusson on what "Guaranteed annual rate of return" actually means.....what we found out is that fixed annuity is rarely fixed and has more variables than you might expect! We did finally agree on a definition (it was the one that we actually started out with), but it took about 45 minutes.
All in all, I am quite impressed with the progress and what the end result will look like. Each time I see what Eric and his team are doing I get more excited about what is going on. The best news of the day was that the fee for vendors has now dropped to around $8,000 (assuming all the vendors who sent in "letters of intent" actually register).
There were quite a few advocates in the meeting trying to make sure that the end user (the educator) was always in the forefornt when building the database. Despite the work of a few vendors to undermine the usability of the site, I believe that the educator will be able to navigate the site, learn a lot, and in the end benefit tremendously.
July 1st is coming, that will be the day that sovereinghty is handed over to the Iraqi people and educators that own 403(b)'s in California! While I believe there is still a lot of work to do in the 403(b) arena, I think we are making a ton of progress - who would have thought four years ago that we would be where we are today.
Till next time......
ScottyD
Monday, March 29, 2004
Envoy Plan Services Bought By Keenan & Associates
Envoy Plan Services will officially be owned by Keenan & Associates beginning April 1st (this is not an April Fools Joke). Envoy has entered into an agreement to be purchased by Keenan and has already moved it's operations to the Keenan office in San Clemente. The move should not affect operations and should be a good fit for Keenan. Robert Hornaday wills stay with company and become a Sr. Vice President at Keenan.
Recent developments have put the kibosh on the method Envoy was charging for its services. Envoy now earns it's revenue via fees charged to the districts it serves, a welcome development (more on this in the next Teachers Advocate). I will keep you updated as to how things will change and how they will affect you.
Till next time.....
ScottyD
Envoy Plan Services will officially be owned by Keenan & Associates beginning April 1st (this is not an April Fools Joke). Envoy has entered into an agreement to be purchased by Keenan and has already moved it's operations to the Keenan office in San Clemente. The move should not affect operations and should be a good fit for Keenan. Robert Hornaday wills stay with company and become a Sr. Vice President at Keenan.
Recent developments have put the kibosh on the method Envoy was charging for its services. Envoy now earns it's revenue via fees charged to the districts it serves, a welcome development (more on this in the next Teachers Advocate). I will keep you updated as to how things will change and how they will affect you.
Till next time.....
ScottyD
Thursday, March 04, 2004
Loophole closes, Mandatory notice to begin in 2005
HR 743 was signed by the President on March 2nd (2004) and closes the last day loophole that educators used to avoid the Government Pension Offset (for details see my website). It also required that employers whose employees don't pay into Social Security (read School Districts) must provide written notice to all new employees and have them sign a statement acknowledging that they understand the GPO & WEP and its affects, this must be in place by January 1st, 2005.
While the NEA and AFT are fighting for outright repeal of the provisions it is clear by the passage of this legislation that nobody is really listening. I suspect a lot of congressmen and women are giving lipservice to these provisions, but in reality they know they can't support them because the cost is too high and social security is already in trouble. Don't expect a repeal anytime soon, don't plan on recieving social security - if you does get repealed, then guess what - You will have some extra money in retirement, just don't count on it!
ScottyD
HR 743 was signed by the President on March 2nd (2004) and closes the last day loophole that educators used to avoid the Government Pension Offset (for details see my website). It also required that employers whose employees don't pay into Social Security (read School Districts) must provide written notice to all new employees and have them sign a statement acknowledging that they understand the GPO & WEP and its affects, this must be in place by January 1st, 2005.
While the NEA and AFT are fighting for outright repeal of the provisions it is clear by the passage of this legislation that nobody is really listening. I suspect a lot of congressmen and women are giving lipservice to these provisions, but in reality they know they can't support them because the cost is too high and social security is already in trouble. Don't expect a repeal anytime soon, don't plan on recieving social security - if you does get repealed, then guess what - You will have some extra money in retirement, just don't count on it!
ScottyD
Monday, March 01, 2004
The Coming Fall of the Pension Plan
The trend in the private sector has been away from provided employees a pension plan, or Defined Benefit plan. A Defined Benefit plan is one in which an employer agrees to pay the employee a set amount of money at retirement for the rest of that employees life (in essence, the benefit amount is defined). There is usually a formula to figure out what the actual benefit will be. These plans are very expensive and all the risk is taken by the employer, not the employee. A DB plan also favors workers who are long time employees and retire later in life (after age 60). The plan that these companies are moving over to is called a Defined Contribution plan (DC) and in most cases is funded through a 401(k). In a 401(k) the employee assumes the investment duty and is responsible for funding his/her own retirement. The risk is thereby shifted from the employer to the employee. Over the past few years I have been predicting that the trend in the private sector will begin moving to the public sector (government). Over the past year we have heard governors, mayors, and legislatures all float trial balloons to gauge peoples reaction. The reaction has usually been extremely negative from workers, but more positive from taxpayers (who ultimately pay for a portion of the benefit). While no government plans that I am aware have made the switch (except for Florida, but it wasn't a complete switch, just another option), it is only a matter of time. Daniel Weintraub, a writer for the Sacramento Bee proposed just such a plan this weekend in his column. Many people believe Social Security should be switched from a DB to a DC plan funded with private accounts. When governments start seeing the money they could save by eliminating the higher cost DB plans they will begin salivating - it will take a long time, perhaps a decade or two, but eventually they will wear down the unions and convince the taxpayers that the a DC plan is the way to go. Keep in mind that I am not advocating for, or against either plan, just keeping you aware of the trends and how I see them playing out. For those of you in a DB plan, don't worry, usually a switch is made only for new hires. I have been to meetings with Unions on this issue and they are vehemently against the idea of DC plans, they want to keep the DB plans - so expect them to continue to fight for that benefit. As for me, I would rather have a DC plan with a generous match than a DB plan - but remember, I know what I am doing - I am trained in this area - most people aren't. Most people cannot invest on their own successfully, so perhaps the answer is something like what Florida has done - give the workers a choice of either the DB or the DC. Only time will tell, but remember where you heard it from first!!
Till Next Time....
ScottyD
The trend in the private sector has been away from provided employees a pension plan, or Defined Benefit plan. A Defined Benefit plan is one in which an employer agrees to pay the employee a set amount of money at retirement for the rest of that employees life (in essence, the benefit amount is defined). There is usually a formula to figure out what the actual benefit will be. These plans are very expensive and all the risk is taken by the employer, not the employee. A DB plan also favors workers who are long time employees and retire later in life (after age 60). The plan that these companies are moving over to is called a Defined Contribution plan (DC) and in most cases is funded through a 401(k). In a 401(k) the employee assumes the investment duty and is responsible for funding his/her own retirement. The risk is thereby shifted from the employer to the employee. Over the past few years I have been predicting that the trend in the private sector will begin moving to the public sector (government). Over the past year we have heard governors, mayors, and legislatures all float trial balloons to gauge peoples reaction. The reaction has usually been extremely negative from workers, but more positive from taxpayers (who ultimately pay for a portion of the benefit). While no government plans that I am aware have made the switch (except for Florida, but it wasn't a complete switch, just another option), it is only a matter of time. Daniel Weintraub, a writer for the Sacramento Bee proposed just such a plan this weekend in his column. Many people believe Social Security should be switched from a DB to a DC plan funded with private accounts. When governments start seeing the money they could save by eliminating the higher cost DB plans they will begin salivating - it will take a long time, perhaps a decade or two, but eventually they will wear down the unions and convince the taxpayers that the a DC plan is the way to go. Keep in mind that I am not advocating for, or against either plan, just keeping you aware of the trends and how I see them playing out. For those of you in a DB plan, don't worry, usually a switch is made only for new hires. I have been to meetings with Unions on this issue and they are vehemently against the idea of DC plans, they want to keep the DB plans - so expect them to continue to fight for that benefit. As for me, I would rather have a DC plan with a generous match than a DB plan - but remember, I know what I am doing - I am trained in this area - most people aren't. Most people cannot invest on their own successfully, so perhaps the answer is something like what Florida has done - give the workers a choice of either the DB or the DC. Only time will tell, but remember where you heard it from first!!
Till Next Time....
ScottyD
Friday, February 20, 2004
The Thrill of Victory, The Agony of Defeat - Envoy Learns its Fate
The Attorney Generals office of the State of California has taken a big step in protecting educators best interests, and I bet most educators have no idea. Early last year, a company by the name of Envoy Plan Services created a firestorm of controversy when they came out of nowhere and started adminstering several California school district 403(b) & 457(b) retirement plans. The controversy surrounded how they charged for their services. Envoy charged vendors for their services - this effectively cut out low, mid, and many high cost vendors from district providers lists and created an opportunity for Envoy to funnel money into their own products. Myself, CalSTRS, 403bwise, and many mutual fund, insurance companies, and broker/dealers joined together in a rather wierd informal alliance to ensure that teachers would not be subjected to the long term affects of Envoy (see my Teachers Advocate newsletter for all the details).
Yesterday, the Attorney Generals office effectively put a stop to Envoy Plan Services method of charging for their services by putting out an opinion stating that charging vendors is not an option in California, it is prohibited. For the full text of the opinion you can go to 403bwise.com. This is a victory for school teachers in California.
The question becomes "what will school districts do?" They should do several things. First, they should review their contract with Envoy and consider firing them if Envoy will not Cease & Desist their current arrangement for compensation. Second, they should decide if they want to pay for Envoy's services themselves (unlikely), if they don't they have several options. Thirdly, they need to work on behalf of the vendors who have paid Envoy's fee for the time periods invovled and require that Envoy or the E & O carrier for Envoy refund all fees that the vendors paid. The requirement of those fees was illegal and thus the vendors should be reimbursed and Envoy should pay for it. If school districts do not do these things they will face additional scrutiny by the media, unions, educators, planners, and vendors - something they probably don't need right now.
If Envoy decided to change its ways and offered a structure that works for everyone, perhaps I wouldn't be against them as the TPA, but at this point I have problems with the way they have handled things as well as the ethics of the company.
This is a victory for educators, and a defeat for Envoy - I have no doubt however that we haven't seen the last of Envoy....stay tuned!!
ScottyD
The Attorney Generals office of the State of California has taken a big step in protecting educators best interests, and I bet most educators have no idea. Early last year, a company by the name of Envoy Plan Services created a firestorm of controversy when they came out of nowhere and started adminstering several California school district 403(b) & 457(b) retirement plans. The controversy surrounded how they charged for their services. Envoy charged vendors for their services - this effectively cut out low, mid, and many high cost vendors from district providers lists and created an opportunity for Envoy to funnel money into their own products. Myself, CalSTRS, 403bwise, and many mutual fund, insurance companies, and broker/dealers joined together in a rather wierd informal alliance to ensure that teachers would not be subjected to the long term affects of Envoy (see my Teachers Advocate newsletter for all the details).
Yesterday, the Attorney Generals office effectively put a stop to Envoy Plan Services method of charging for their services by putting out an opinion stating that charging vendors is not an option in California, it is prohibited. For the full text of the opinion you can go to 403bwise.com. This is a victory for school teachers in California.
The question becomes "what will school districts do?" They should do several things. First, they should review their contract with Envoy and consider firing them if Envoy will not Cease & Desist their current arrangement for compensation. Second, they should decide if they want to pay for Envoy's services themselves (unlikely), if they don't they have several options. Thirdly, they need to work on behalf of the vendors who have paid Envoy's fee for the time periods invovled and require that Envoy or the E & O carrier for Envoy refund all fees that the vendors paid. The requirement of those fees was illegal and thus the vendors should be reimbursed and Envoy should pay for it. If school districts do not do these things they will face additional scrutiny by the media, unions, educators, planners, and vendors - something they probably don't need right now.
If Envoy decided to change its ways and offered a structure that works for everyone, perhaps I wouldn't be against them as the TPA, but at this point I have problems with the way they have handled things as well as the ethics of the company.
This is a victory for educators, and a defeat for Envoy - I have no doubt however that we haven't seen the last of Envoy....stay tuned!!
ScottyD
Saturday, January 31, 2004
403(b) Market Could Double In The Blink Of An Eye
A bill has been introduced in the House of Reps that would extend the 403(b) to state & local government employees. This would almost immediately double the number of possible 403(b) participants (and the number of people who could potentially buy my book!!). As you might expect I support this bill and hope it passes - if it does it could create an opportunity for major changes throughout the 403(b) industry and an all out war among the debating theories of how 403(b) plans should be distributed. I don't expect this bill to get much attention any time soon as it didn't come from the people who normally are behind this type of stuff, however if enough people show their support we just might see some action on this. I am doubtful it will be passed under the current budget constraints and it really isn't needed - after all, how many government employees can afford to contribute to two retirement plans (403(b) & 457(b)) in the same year? It's a bit overkill, but I support it anyway - even if just for selfish reasons!
Read my website and 403bwise.com for continued coverage of the extended 403(b) and LSA's & RSA's.
Till next time......ScottyD
A bill has been introduced in the House of Reps that would extend the 403(b) to state & local government employees. This would almost immediately double the number of possible 403(b) participants (and the number of people who could potentially buy my book!!). As you might expect I support this bill and hope it passes - if it does it could create an opportunity for major changes throughout the 403(b) industry and an all out war among the debating theories of how 403(b) plans should be distributed. I don't expect this bill to get much attention any time soon as it didn't come from the people who normally are behind this type of stuff, however if enough people show their support we just might see some action on this. I am doubtful it will be passed under the current budget constraints and it really isn't needed - after all, how many government employees can afford to contribute to two retirement plans (403(b) & 457(b)) in the same year? It's a bit overkill, but I support it anyway - even if just for selfish reasons!
Read my website and 403bwise.com for continued coverage of the extended 403(b) and LSA's & RSA's.
Till next time......ScottyD
What Did I Tell You About Variable Annuities
http://www.nytimes.com/2004/01/30/business/30insure.html?pagewanted=1
Hmmmmm........Looks like mutual funds aren't the only scandalous game in town. As many people have suspected for a long time, the VA industry is guilty of not acting in the best interests of its clients - of course I doubt anyone is really surprised. The investigations are just starting, but I expect this to be bigger than the mutual fund industry scandals and spread much further than just market timing. The VA industry is an industry that is driven by greed and high commissions, look for some major lobbying from NAVA and ACLI to sway the regulators, lawmakers, and policyholders that the VA companies are innocent bystanders - don't believe a word.
ScottyD
http://www.nytimes.com/2004/01/30/business/30insure.html?pagewanted=1
Hmmmmm........Looks like mutual funds aren't the only scandalous game in town. As many people have suspected for a long time, the VA industry is guilty of not acting in the best interests of its clients - of course I doubt anyone is really surprised. The investigations are just starting, but I expect this to be bigger than the mutual fund industry scandals and spread much further than just market timing. The VA industry is an industry that is driven by greed and high commissions, look for some major lobbying from NAVA and ACLI to sway the regulators, lawmakers, and policyholders that the VA companies are innocent bystanders - don't believe a word.
ScottyD
Monday, January 26, 2004
Variable Annuities Are Next
Mark my words - Variable Annuities are next in line to be caught up in mass scandal. If you think that mutual fund scandals were bad, I suspect what we learn about Variable Annuities will be much worse. I don't like or dislike Variable Annuities - they are simply a tool - though most of the VA products on the market are pure junk. VA's are not subject to breakpoints and they are used instead of mutual funds because of it - of course it also doesn't hurt that VA's come with features that allow advisors to use the term "guarantee" - be very weary of an advisor selling you a variable annuity.
ScottyD
Mark my words - Variable Annuities are next in line to be caught up in mass scandal. If you think that mutual fund scandals were bad, I suspect what we learn about Variable Annuities will be much worse. I don't like or dislike Variable Annuities - they are simply a tool - though most of the VA products on the market are pure junk. VA's are not subject to breakpoints and they are used instead of mutual funds because of it - of course it also doesn't hurt that VA's come with features that allow advisors to use the term "guarantee" - be very weary of an advisor selling you a variable annuity.
ScottyD
More State Attorney General Stuff & The Junk e-mail Keeps Coming
As for the latest on the State's Attorney Generals office decision about the Envoy situation....I am now leaning toward believing the AG's office will rule against Envoy. I am not usually one to believe rumors, but the rumor mill is strong that the AG's office will come out with an opinion against the fee Envoy charges vendors. I suspect that Envoy believes they will be able to stay in business even if the fee is ruled illegal, I don't know how they plan on doing it but I bet they have something up their sleeve. It might be possible that they will give away their TPA services in exchange for the right to market to the educators their high cost, junky products - I would actually be fine with that as long as the fees are not charged to the vendors. I would rather have them gone - but my real beef is with the fee and how it will affect teachers long term.
ScottyD
As for the latest on the State's Attorney Generals office decision about the Envoy situation....I am now leaning toward believing the AG's office will rule against Envoy. I am not usually one to believe rumors, but the rumor mill is strong that the AG's office will come out with an opinion against the fee Envoy charges vendors. I suspect that Envoy believes they will be able to stay in business even if the fee is ruled illegal, I don't know how they plan on doing it but I bet they have something up their sleeve. It might be possible that they will give away their TPA services in exchange for the right to market to the educators their high cost, junky products - I would actually be fine with that as long as the fees are not charged to the vendors. I would rather have them gone - but my real beef is with the fee and how it will affect teachers long term.
ScottyD
Wednesday, January 14, 2004
Envoy & The State Attorney General
I spent a few minutes speaking with the individual working on the opinion regarding Envoy today. The gentleman was very concerned about the topic from all sides of the debate (which is good). I explained my rationale for being against the fee and believe that he listened to it and will take it into account. By no means am I positive that the AG's office will rule against Envoy in this situation - there is a possibility that Envoy will win out. Either way the issue of legality should be cleared up. I will have some additional comments soon.
Until next time....
ScottyD
I spent a few minutes speaking with the individual working on the opinion regarding Envoy today. The gentleman was very concerned about the topic from all sides of the debate (which is good). I explained my rationale for being against the fee and believe that he listened to it and will take it into account. By no means am I positive that the AG's office will rule against Envoy in this situation - there is a possibility that Envoy will win out. Either way the issue of legality should be cleared up. I will have some additional comments soon.
Until next time....
ScottyD
Paying For Shelf Space & The Toothless SEC
For those of you who don't know, I came from the brokerage industry. I served time at three major brokerage oufits, Merrill, Morgan Stanley, & Smith Barney. Each of these firms favored certain fund companies - no surprise that the funds they favored were "loaded" funds. I knew for a fact that these "favored" funds had arrangements with the company and were paying the company a fee for having a "favored" status, everybody knew it. The correct term is "paying for shelf space." It is the practice of paying a broker/Dealer (industry speak for a brokerage firm) to put your fund company on a favored list - it is a classic "pay to play scheme". The arrangements are never explicitly disclosed, but every broker knows they exist in one form or another - if they don't then they are either ignorant or plain stupid. The SEC just released a study saying that it found abuses at 13 of 15 unnamed brokerage firms in a probe of "revenue-sharing." Here's the funny part, foxnews.com reports "As scandals simmered across the $7-trillion mutual fund business, the SEC said it found that "revenue sharing" -- or mutual funds paying brokerages to tout the funds' shares -- is "common practice," based on a probe launched in April 2003." The funny thing is the probe was only launched about 9 months ago, despite the fact that the SEC knew this was going on for probably at least a decade, if not more. Why did the SEC all of a sudden launch this probe? Elliot Spitzer. The NY State Attorney General Elliot Spitzer has ruthlessly gone after fund companies and broker/dealer for conflicts of interest - had the AG not stepped in the SEC would never had started a probe and none of the enforcement activities would be happening. The SEC has not did its job for years and now is trying to play catch up with Elliot Spitzer in order to save face.
I am not defending the practice of "paying for shelf space," simply saying that the practice was well known by the industry and the SEC and the SEC chose to do nothing about it, now they suddently care? There efforts too clean up the industry are a little late, by not enforcing existing rules (or spirit of the rules) they effectively have told the industry that what they are doing is ok, we will look the other way. They are sending a mixed message to Wall Street and mutual fund companies (and inevitabley Variable Annuities) - that message: We will look the other way while you clearly violate shareholders interests, as long as we aren't embarrased by a state attorney general, if we are, then we will enforce and come down on you as if you are evil.
Well, the companies are basically greedy and evil, but the SEC might as well have been a partner in the wrongdoings because they never acted as a regulator and constantly turned there head when they knew bad things were going on. Heck, I knew bad things were going on after only a few months at a brokerage firm - I was only 23 years old....
As stated before, I think it is rather slimy to pay a company to promote your product. It is a huge conflict of interest - but it is an industry norm that has been tolerated by the SEC, basically a tacit endorsement. Now the fund companies are under investigation for paying these fees and there reputations are at stake. I don't promote any of the funds that are implicated, or that will be implicated because the funds I use rarely show up in brokerage firm accounts - the reason: they won't pay for shelf space. However, some of the fund companies being implicated are good, honest fund firms - American funds come to mind. It will be interesting to see how the SEC handles this issue going forward. The have been asleep at the wheel so long, the question is, have they awoken in time to steer the car away from the ditch?
If the SEC truly were an enforcement agency then Elliot Spitzer and his band of publicity hungry state AG's would not be involved in the numerous mutual fund, broker-dealer, & eventually variable annuity scandals that have been unearthed and will be unearthed. Shame on the SEC, they've been toothless for so long - does anyone really believe they suddenly have fangs?
Until next time...
ScottyD
For those of you who don't know, I came from the brokerage industry. I served time at three major brokerage oufits, Merrill, Morgan Stanley, & Smith Barney. Each of these firms favored certain fund companies - no surprise that the funds they favored were "loaded" funds. I knew for a fact that these "favored" funds had arrangements with the company and were paying the company a fee for having a "favored" status, everybody knew it. The correct term is "paying for shelf space." It is the practice of paying a broker/Dealer (industry speak for a brokerage firm) to put your fund company on a favored list - it is a classic "pay to play scheme". The arrangements are never explicitly disclosed, but every broker knows they exist in one form or another - if they don't then they are either ignorant or plain stupid. The SEC just released a study saying that it found abuses at 13 of 15 unnamed brokerage firms in a probe of "revenue-sharing." Here's the funny part, foxnews.com reports "As scandals simmered across the $7-trillion mutual fund business, the SEC said it found that "revenue sharing" -- or mutual funds paying brokerages to tout the funds' shares -- is "common practice," based on a probe launched in April 2003." The funny thing is the probe was only launched about 9 months ago, despite the fact that the SEC knew this was going on for probably at least a decade, if not more. Why did the SEC all of a sudden launch this probe? Elliot Spitzer. The NY State Attorney General Elliot Spitzer has ruthlessly gone after fund companies and broker/dealer for conflicts of interest - had the AG not stepped in the SEC would never had started a probe and none of the enforcement activities would be happening. The SEC has not did its job for years and now is trying to play catch up with Elliot Spitzer in order to save face.
I am not defending the practice of "paying for shelf space," simply saying that the practice was well known by the industry and the SEC and the SEC chose to do nothing about it, now they suddently care? There efforts too clean up the industry are a little late, by not enforcing existing rules (or spirit of the rules) they effectively have told the industry that what they are doing is ok, we will look the other way. They are sending a mixed message to Wall Street and mutual fund companies (and inevitabley Variable Annuities) - that message: We will look the other way while you clearly violate shareholders interests, as long as we aren't embarrased by a state attorney general, if we are, then we will enforce and come down on you as if you are evil.
Well, the companies are basically greedy and evil, but the SEC might as well have been a partner in the wrongdoings because they never acted as a regulator and constantly turned there head when they knew bad things were going on. Heck, I knew bad things were going on after only a few months at a brokerage firm - I was only 23 years old....
As stated before, I think it is rather slimy to pay a company to promote your product. It is a huge conflict of interest - but it is an industry norm that has been tolerated by the SEC, basically a tacit endorsement. Now the fund companies are under investigation for paying these fees and there reputations are at stake. I don't promote any of the funds that are implicated, or that will be implicated because the funds I use rarely show up in brokerage firm accounts - the reason: they won't pay for shelf space. However, some of the fund companies being implicated are good, honest fund firms - American funds come to mind. It will be interesting to see how the SEC handles this issue going forward. The have been asleep at the wheel so long, the question is, have they awoken in time to steer the car away from the ditch?
If the SEC truly were an enforcement agency then Elliot Spitzer and his band of publicity hungry state AG's would not be involved in the numerous mutual fund, broker-dealer, & eventually variable annuity scandals that have been unearthed and will be unearthed. Shame on the SEC, they've been toothless for so long - does anyone really believe they suddenly have fangs?
Until next time...
ScottyD
Monday, January 12, 2004
What Your Broker Isn't Telling You About Dividends
The last tax act that passed congress made many dividends taxable at only a 15% rate (sometimes less), this is significant because they are usually taxed as ordinary income (when held outside retirement plans - dividends inside retirement plans are tax-deferred and tax as ordinary income when distributed). This is a significant development in the world of stocks and has some people changing their portfolios. What most people don't know is that their dividends may actually be taxable as ordinary income, not at the 15% rate - the reason? Their brokerage firm.
In the new tax act their is a provision that makes dividends taxable as ordinary income if received from the lending of your securities. Without getting into the specifics, brokerage firms make big money lending your stocks to other institutions (such as hedge funds), however when they do this the institution that borrows the stock receives the dividend and you receive an "in-lieu" payment of equal amount, the problem is that this "in lieu" payment is taxable as ordinary income because it isn't really a dividend. There is a simple solution to this problem, don't open a margin account - if your taxable assets are held in a straight "Cash" account without Margin than your brokerage firm cannot lend your securities out.
Don't count on your brokerage firm to tell you this though. As I stated earlier, they make big money lending your securities out to others and face a conflict of interest by telling you to switch to a cash account. They lose out on potential gains by telling you to switch, yet it is usually in your best interest. This is yet one more example of how brokerage firms take advantage of their clients and do not put their interests first. If you think this is limited to just the major brokerage firms that I usually rag on (Merrill, Morgan, Smith Barney - etc) you are wrong. Fidelity is in on it as well - the disclosure they send to their clients reads: “You are not entitled to any compensation in connection with securities lent from your account or for additional taxes you may be re-quired to pay as a result of any tax treatment differential between substitute payments and actual interest,” - of course you first have to find this disclosure...Goodod luck.
If Fidelity and the other institutions were truly putting your interests first they would do more - they would write letters in plain english and urge you to switch your account to a cash account and even include the forms. Better yet they would automatically switch you if you didn't sign an opt-out form. This is just one more reason you need someone looking out for you - you can't count on the regulators and you can't count on your brokerage firm.
If you want more info on this subject just e-mail me and I will send you a link to a good article.
Until Next Time............
ScottyD
The last tax act that passed congress made many dividends taxable at only a 15% rate (sometimes less), this is significant because they are usually taxed as ordinary income (when held outside retirement plans - dividends inside retirement plans are tax-deferred and tax as ordinary income when distributed). This is a significant development in the world of stocks and has some people changing their portfolios. What most people don't know is that their dividends may actually be taxable as ordinary income, not at the 15% rate - the reason? Their brokerage firm.
In the new tax act their is a provision that makes dividends taxable as ordinary income if received from the lending of your securities. Without getting into the specifics, brokerage firms make big money lending your stocks to other institutions (such as hedge funds), however when they do this the institution that borrows the stock receives the dividend and you receive an "in-lieu" payment of equal amount, the problem is that this "in lieu" payment is taxable as ordinary income because it isn't really a dividend. There is a simple solution to this problem, don't open a margin account - if your taxable assets are held in a straight "Cash" account without Margin than your brokerage firm cannot lend your securities out.
Don't count on your brokerage firm to tell you this though. As I stated earlier, they make big money lending your securities out to others and face a conflict of interest by telling you to switch to a cash account. They lose out on potential gains by telling you to switch, yet it is usually in your best interest. This is yet one more example of how brokerage firms take advantage of their clients and do not put their interests first. If you think this is limited to just the major brokerage firms that I usually rag on (Merrill, Morgan, Smith Barney - etc) you are wrong. Fidelity is in on it as well - the disclosure they send to their clients reads: “You are not entitled to any compensation in connection with securities lent from your account or for additional taxes you may be re-quired to pay as a result of any tax treatment differential between substitute payments and actual interest,” - of course you first have to find this disclosure...Goodod luck.
If Fidelity and the other institutions were truly putting your interests first they would do more - they would write letters in plain english and urge you to switch your account to a cash account and even include the forms. Better yet they would automatically switch you if you didn't sign an opt-out form. This is just one more reason you need someone looking out for you - you can't count on the regulators and you can't count on your brokerage firm.
If you want more info on this subject just e-mail me and I will send you a link to a good article.
Until Next Time............
ScottyD
Saturday, January 10, 2004
Envoy Situation Is Submitted To State Attorney General
The California State Attorney Generals office is set to offer its opinion on the Enovy situation. CalSTRS originally referred the Envoy problem to the state AG and then Envoy submitted a request for a formal opinion through an El Centro Congresswoman (Bonnie Garcia - Bonnie, be careful who you deal with...). The request was poorly worded and designed to decieve (that is my opinion - you can read the actual request in the latest teachers advocate - should be out soon). The request gave little context and no history of why the opinion was being sought. The opinion request was eventually revised with a much simpler wording as follows: May a school district assess a fee for providing deferred compensation plans to cover the district's administrative costs?
I have heard through the grapvine that the AG's office will have its opinion written and released within the month. I submitted a five page commentary in regards to the opinion that provided for a proper history and context. It is my belief that the opinion will not be in favor of Envoy. We will have to wait and see. The question remains what will happen if the AG's office says the fee is illegal? I actually don't know - but I do know that the media outlets will probably love to report on school districts who are doing things that are illegal - especially when the teachers bear the brunt of it. If the school districts don't drop Envoy (or at least begin making plans to drop Envoy) then I will bring the full pressure of the media down on Envoy and the districts until the correct decision is made. Unfortunately I can't just make a couple calls and "poof" the media responds - but I do have several people in the media that I think would love this story and good stories catch like wildfire, especially when money is invovled.
If for some odd reason the AG opinion supports Envoy then I have another trick up my sleave - I have found another portion of law that may render Envoy's fee illegal - of course I can't give that away yet. I may reveal this in my next Teachers Advocate, but I don't want to give the other side (Envoy) any more advanced notice than they deserve!
For those of you who think I am picking on Envoy - you are right. I think the company is rotten to the core and harmful to the long term financial health of school dsitrict employees. I would not be waging battle except that Envoy clearly violates what is in the best interest of my cilents and employees of the school districts. If they didn't I wouldn't have a problem.
Until next time..................
ScottyD
The California State Attorney Generals office is set to offer its opinion on the Enovy situation. CalSTRS originally referred the Envoy problem to the state AG and then Envoy submitted a request for a formal opinion through an El Centro Congresswoman (Bonnie Garcia - Bonnie, be careful who you deal with...). The request was poorly worded and designed to decieve (that is my opinion - you can read the actual request in the latest teachers advocate - should be out soon). The request gave little context and no history of why the opinion was being sought. The opinion request was eventually revised with a much simpler wording as follows: May a school district assess a fee for providing deferred compensation plans to cover the district's administrative costs?
I have heard through the grapvine that the AG's office will have its opinion written and released within the month. I submitted a five page commentary in regards to the opinion that provided for a proper history and context. It is my belief that the opinion will not be in favor of Envoy. We will have to wait and see. The question remains what will happen if the AG's office says the fee is illegal? I actually don't know - but I do know that the media outlets will probably love to report on school districts who are doing things that are illegal - especially when the teachers bear the brunt of it. If the school districts don't drop Envoy (or at least begin making plans to drop Envoy) then I will bring the full pressure of the media down on Envoy and the districts until the correct decision is made. Unfortunately I can't just make a couple calls and "poof" the media responds - but I do have several people in the media that I think would love this story and good stories catch like wildfire, especially when money is invovled.
If for some odd reason the AG opinion supports Envoy then I have another trick up my sleave - I have found another portion of law that may render Envoy's fee illegal - of course I can't give that away yet. I may reveal this in my next Teachers Advocate, but I don't want to give the other side (Envoy) any more advanced notice than they deserve!
For those of you who think I am picking on Envoy - you are right. I think the company is rotten to the core and harmful to the long term financial health of school dsitrict employees. I would not be waging battle except that Envoy clearly violates what is in the best interest of my cilents and employees of the school districts. If they didn't I wouldn't have a problem.
Until next time..................
ScottyD
Wednesday, January 07, 2004
I'm Back!
Sorry for the long absence from this blog - I have been busy with life and business and have neglected the blog! My next Teachers Advocate will be out very soon and will have updates from the last two months of what has been happening in the world of teachers and retirement plans. you can view it at www.403bretire.com.
AB 2506
I just returned from a trip to Sacramento where we had another Advisory Committee meeting on AB 2506. For those of you who don't know what AB 2506 is - it is a bill that is being implemented by CalSTRS that will create a registration process (for 403(b) vendors) and a databank that will allow comparison and disclosure of 403(b) plans sold to educators. I believe this is an important project and the the rest of the nation is wathching to see how this turns out. What follows is my update:
The project is being led by Eric Norton, a project manager hired by CalSTRS and the project is overseen by Ed Derman (Deputy CEO) & Jack Ehnes (CEO of CalSTRS). I think Eric and his team are doing an incredible job and I am quite impressed at the progress being made and excited about the debut of the website, . The website will make its debut on July 1st, 2004. I have scene preliminary screen shots of the project and can assure you that it is going to look great. I believe that the educators who are eligible for 403(b) products will be very happy with this new tool. The project is still far from complete, the next 6 months are very critical and their are a lot of details still to be worked out, but overall everything seems to be on track. The meeting today officially unveiled the website name and dealt mainly with the search functionality of the website - there was a lot of disagreement among the attendees as to what should and shouldn't be allowed in a search function. I think the discussion was very constructive and that the Project team will be able to further refine their plans for this important function. I would like to hear from the readers on this one - please e-mail me at scott@meridianwealth.com and let me know what is important to you when attempting to find a 403(b) product. In other words, what criteria would you like to see available to be able to be searched on.
The most important aspect of the new site will be the educational content - the project teamed unveiled prelimiary topics today and I think that by the time everything is finished it will be rich in valuable content. This site promises to be very educational, in short it will be a great tool. Despite some vendor negativity I thought the meeting went well and the project is on track. There will always be people who want to see this project get derailed or watered down and their presence is felt in the room, but rest assured that myself and many other people (including the good people at CalSTRS) are 100% behind this project and have the educator in mind - a first in the 403(b) world!!!! (Only slightly joking!!).
Ok - I am tired and need some rest, I'll write on some other topics soon.
ScottyD
Sorry for the long absence from this blog - I have been busy with life and business and have neglected the blog! My next Teachers Advocate will be out very soon and will have updates from the last two months of what has been happening in the world of teachers and retirement plans. you can view it at www.403bretire.com.
AB 2506
I just returned from a trip to Sacramento where we had another Advisory Committee meeting on AB 2506. For those of you who don't know what AB 2506 is - it is a bill that is being implemented by CalSTRS that will create a registration process (for 403(b) vendors) and a databank that will allow comparison and disclosure of 403(b) plans sold to educators. I believe this is an important project and the the rest of the nation is wathching to see how this turns out. What follows is my update:
The project is being led by Eric Norton, a project manager hired by CalSTRS and the project is overseen by Ed Derman (Deputy CEO) & Jack Ehnes (CEO of CalSTRS). I think Eric and his team are doing an incredible job and I am quite impressed at the progress being made and excited about the debut of the website, . The website will make its debut on July 1st, 2004. I have scene preliminary screen shots of the project and can assure you that it is going to look great. I believe that the educators who are eligible for 403(b) products will be very happy with this new tool. The project is still far from complete, the next 6 months are very critical and their are a lot of details still to be worked out, but overall everything seems to be on track. The meeting today officially unveiled the website name and dealt mainly with the search functionality of the website - there was a lot of disagreement among the attendees as to what should and shouldn't be allowed in a search function. I think the discussion was very constructive and that the Project team will be able to further refine their plans for this important function. I would like to hear from the readers on this one - please e-mail me at scott@meridianwealth.com and let me know what is important to you when attempting to find a 403(b) product. In other words, what criteria would you like to see available to be able to be searched on.
The most important aspect of the new site will be the educational content - the project teamed unveiled prelimiary topics today and I think that by the time everything is finished it will be rich in valuable content. This site promises to be very educational, in short it will be a great tool. Despite some vendor negativity I thought the meeting went well and the project is on track. There will always be people who want to see this project get derailed or watered down and their presence is felt in the room, but rest assured that myself and many other people (including the good people at CalSTRS) are 100% behind this project and have the educator in mind - a first in the 403(b) world!!!! (Only slightly joking!!).
Ok - I am tired and need some rest, I'll write on some other topics soon.
ScottyD
Tuesday, November 04, 2003
457 Plans Watch Out - Fiduciary Responsibility & Fund Scandals
Government 457(b) plans have a fiduciary responsibility associated with them and it is time that plan sponsors start realizing this. Many mutual fund companies are coming under increased scrutiny as the practices of these companies are being revealed by a probe from none other than Elliot Spitzer, the New York State Attorney General. State pension systems are pulling their money out of these companies in droves and it is time that 457(b) providers start looking at their liability in this situation. The question plan sponsors need to be asking is whether or not they want to continue to allow their plans to offer funds from the companies in question. The quick answer is "probably not." Whatever the answer is, the question better have been asked and the responses better be documented. A plan sponsor is going to have a hard time keeping funds from companies like Alger, Strong, Janus, & Putnam in the lineup. The problem is that most plan sponsors refuse to acknowledge any liability and will fail to take action, this will lead to lawsuits claiming breach of fiduciary responsibility and ultimately to more scandals. This is your warning Plan Sponsors - take charge now or expect to be charged (with breach of fiduciary responsibility).
More on this topic as it develops.....
ScottyD
Government 457(b) plans have a fiduciary responsibility associated with them and it is time that plan sponsors start realizing this. Many mutual fund companies are coming under increased scrutiny as the practices of these companies are being revealed by a probe from none other than Elliot Spitzer, the New York State Attorney General. State pension systems are pulling their money out of these companies in droves and it is time that 457(b) providers start looking at their liability in this situation. The question plan sponsors need to be asking is whether or not they want to continue to allow their plans to offer funds from the companies in question. The quick answer is "probably not." Whatever the answer is, the question better have been asked and the responses better be documented. A plan sponsor is going to have a hard time keeping funds from companies like Alger, Strong, Janus, & Putnam in the lineup. The problem is that most plan sponsors refuse to acknowledge any liability and will fail to take action, this will lead to lawsuits claiming breach of fiduciary responsibility and ultimately to more scandals. This is your warning Plan Sponsors - take charge now or expect to be charged (with breach of fiduciary responsibility).
More on this topic as it develops.....
ScottyD
Monday, October 20, 2003
The Retaliation Begins...The Backlash From My Advocacy Efforts Against Envoy Plan Services
Time to add another company to the 403(b) trash heap - this time it is FTJFundchoice, a relative newcomer to the 403(b) market. FTJ learned quickly about the 403(b) market and quickly sunk to the level of every other 403(b) company that is usually available on district provider lists. I made public certain documents that FTJ would have rather me keep quite about and now they are retaliating against me rescinding my selling agreement with them. The documents never should have been kept secret, but they were in order to protect the greed of some people involved. What this means is basically I can't look at client accounts that are held at FTJ. You may ask why I would want to have accounts at a company that I feel is unethical? Well, I don't have a choice. You see FTJ is connected to the hip with Envoy Plan Services in several Orange County Districts and I am forced to move money to these people. I actually think FTJ has a pretty good product, the problem is poor ethics at the top. The company is so focused at building assets that they are willing to sign agreements with companies like Envoy Plan Services that completely betray the educator and even the districts that allow them to operate. I will be posting the agreements online at www.403bretire.com in a few days for your viewing pleasure.
Ever since I started my campaign against Envoy I began getting tons of spam and viruses through e-mail, sometimes hundreds a day. My e-mail has been used for opt-in mailing lists and who knows what else. Can I say for sure that the people at Envoy and Retirement Solutions Group are behind this activity? No, but I find it curious that whenever I defeat them in something that the activity multiplies. I want to make it clear that I am not whining, I can take critiscm and childish antics just fine, I am documenting this so that people can see first hand how these companies treat people.
My internet was down all day today and I got a speeding ticket on my way to San Diego - I sure would like to blame somebody, but instead I think I will take the higher road and take a little personal responsibility. My internet was down becuase of a router I installed (though come to find out it was faulty) and I got a speeding ticket because I was speeding...... (though I was going with the flow of traffic!!).
I will continue the fight against the industry despite the fact that my allies are dropping like flies (more on this later). One day the 403(b) industry will be looked at with envy, not with spite.
I hope all is well everyone who reads this - I always enjoy the commentary that I get back, keep it coming!
ScottyD
Time to add another company to the 403(b) trash heap - this time it is FTJFundchoice, a relative newcomer to the 403(b) market. FTJ learned quickly about the 403(b) market and quickly sunk to the level of every other 403(b) company that is usually available on district provider lists. I made public certain documents that FTJ would have rather me keep quite about and now they are retaliating against me rescinding my selling agreement with them. The documents never should have been kept secret, but they were in order to protect the greed of some people involved. What this means is basically I can't look at client accounts that are held at FTJ. You may ask why I would want to have accounts at a company that I feel is unethical? Well, I don't have a choice. You see FTJ is connected to the hip with Envoy Plan Services in several Orange County Districts and I am forced to move money to these people. I actually think FTJ has a pretty good product, the problem is poor ethics at the top. The company is so focused at building assets that they are willing to sign agreements with companies like Envoy Plan Services that completely betray the educator and even the districts that allow them to operate. I will be posting the agreements online at www.403bretire.com in a few days for your viewing pleasure.
Ever since I started my campaign against Envoy I began getting tons of spam and viruses through e-mail, sometimes hundreds a day. My e-mail has been used for opt-in mailing lists and who knows what else. Can I say for sure that the people at Envoy and Retirement Solutions Group are behind this activity? No, but I find it curious that whenever I defeat them in something that the activity multiplies. I want to make it clear that I am not whining, I can take critiscm and childish antics just fine, I am documenting this so that people can see first hand how these companies treat people.
My internet was down all day today and I got a speeding ticket on my way to San Diego - I sure would like to blame somebody, but instead I think I will take the higher road and take a little personal responsibility. My internet was down becuase of a router I installed (though come to find out it was faulty) and I got a speeding ticket because I was speeding...... (though I was going with the flow of traffic!!).
I will continue the fight against the industry despite the fact that my allies are dropping like flies (more on this later). One day the 403(b) industry will be looked at with envy, not with spite.
I hope all is well everyone who reads this - I always enjoy the commentary that I get back, keep it coming!
ScottyD
Wednesday, October 15, 2003
Envoy Swings and Misses Again in San Diego
Envoy Plan Services was added to the San Diego City Schools Board Meeting Agenda late Monday afternoon, no doubt in attempt to squelch any opposition. I am happy to report that once again Envoy was shut down. The CSEA (Classified School Employees Association) led the charge along with a six page letter from myself. The CSEA was also joined by the SDEA, MetLife, and a representative from LPL. This group of people put forth a unified message that appeared to convince the Board to vote against the issue, a vote never happened as the issue was instead tabled. You can read all about the situation here on the blogger and on my website at www.403bretire.com. San Diego has made an extremely wise decision and it is my hope that they not bring up the Envoy issue again. I will post my rebuttal letter on the website shortly. This is a victory for the 6,000 participants in San Diego as well as the employees who are not yet contributing to a 403(b) plan. Please join me in thanking those people who spoke at the meeting and defeated Envoy.
ScottyD
Envoy Plan Services was added to the San Diego City Schools Board Meeting Agenda late Monday afternoon, no doubt in attempt to squelch any opposition. I am happy to report that once again Envoy was shut down. The CSEA (Classified School Employees Association) led the charge along with a six page letter from myself. The CSEA was also joined by the SDEA, MetLife, and a representative from LPL. This group of people put forth a unified message that appeared to convince the Board to vote against the issue, a vote never happened as the issue was instead tabled. You can read all about the situation here on the blogger and on my website at www.403bretire.com. San Diego has made an extremely wise decision and it is my hope that they not bring up the Envoy issue again. I will post my rebuttal letter on the website shortly. This is a victory for the 6,000 participants in San Diego as well as the employees who are not yet contributing to a 403(b) plan. Please join me in thanking those people who spoke at the meeting and defeated Envoy.
ScottyD
Monday, October 13, 2003
Envoy Attempts To Slide Into San Diego at The Last Minute......
I was up till midnight last night reading the agenda for the Board meeting tomorrow of the San Diego City Schools, I was looking specifically to see if Envoy Plan Services was on the agenda for approval - they were not, at least that was what I thought. It turns out they have now been added at the last minute. This is what I expected, they want to get this through without opposition and the best way to do it is to not let anyone know it will be voted on.
I just found out about it and have just finished reading a statement by Gamy Rayburn and Scott Patterson, the Director of Accounting Operations and Chief Financial Officer, respectively. The document was not written (in my opinion) by either of them, it was in fact written by Robert Hornaday of Envoy Plan Services. The document is meant to be misleading and contains many inaccuracies. This report will be presented to the board as the truth (regardless of what the truth really is). The document admits that it never seeked out a competitive bid and cites Capistrano School District as one if its "happy" districts - not true.
I will keep you updated - for those in San Diego - goto the board meeting and let your voice be heard.
I was up till midnight last night reading the agenda for the Board meeting tomorrow of the San Diego City Schools, I was looking specifically to see if Envoy Plan Services was on the agenda for approval - they were not, at least that was what I thought. It turns out they have now been added at the last minute. This is what I expected, they want to get this through without opposition and the best way to do it is to not let anyone know it will be voted on.
I just found out about it and have just finished reading a statement by Gamy Rayburn and Scott Patterson, the Director of Accounting Operations and Chief Financial Officer, respectively. The document was not written (in my opinion) by either of them, it was in fact written by Robert Hornaday of Envoy Plan Services. The document is meant to be misleading and contains many inaccuracies. This report will be presented to the board as the truth (regardless of what the truth really is). The document admits that it never seeked out a competitive bid and cites Capistrano School District as one if its "happy" districts - not true.
I will keep you updated - for those in San Diego - goto the board meeting and let your voice be heard.
Sunday, October 12, 2003
School Districts - It's Your Integrity at Stake
Over the past few years I have ruffled quite a few feathers in quite a few k-12 school districts, mainly in adminstration. My quest for better supplemental retirement plans for educators has sometimes led me down the path of criticizing people in leadership positions in k-12 & community college districts. As you might imagine, this hasn't endeared me with these districts. Suddenly, a 5'8" 155 pound man becomes a "threat," and the "enemy." This line of thinking by these districts is very distressing to me because it means in some way that I have failed. I have failed to educate them enough to help them clearly understand the issues involved so that they can make a wise decision. In reality, I don't think I am the failure, the truth of the matter is that these districts NEVER allowed me the opportunity to share my thoughts or expertise. I will never target a district without first approaching management and asking them to hear me out. It is only after a district has made it clear that they don't want to hear from me that I begin the task of taking the issue to the people of their district and ultimately begin ruffling feathers.
In the past few months I have targeted quite strongly the Capistrano Unified School District. Up until 2003 I had adored this district. I loved working with educators in the district and loved working with the few people I knew on staff. However, a few very poor decisions were made by one of the leaders and I questioned them about it. I offered my expertise and guidance free of charge. I explained to them that I was a completely unbiased source as I don't accept money from anyone but my clients for the services I provide. Furthermore, my clients interest always come first. I even went and stood for four hours at the board meeting waiting for my two minutes to speak to the board and explain to them the problems they were about to face. Not a single member of the board contacted me, nor did the adminstrator who had made the final decision to hire a company by the name of Envoy Plan Services The district now believes I have put them in my crosshairs and that I want to somehow destroy them - the truth is that I only want them to do what is right for their employees. You see, it is my opinion that the district's very Integrity is at stake in this situation. Integrity is something is gained with the little decisions and if the little decisions are made without the employees interest in mind, what will happen with the big decisions?
The Capistrano Unified School District has an incredible opportunity to show what it is made of and to show the public and their employees that they have integrity even in (what they percieve) as the small decisions. It is time to simply admit they made a mistake in hiring Envoy Plan Services, correct that mistake by firing them and then do what is in the employees best interest by hiring another entity (my vote at this point is OCTFCU). There are a number of reasons why this move is best and I will get them at a later writing. The point of this message is that the decisions the districts make every effect their integrity. It is O.K. to make a mistake or a bad decision, Lord knows I make my share of mistakes and bad decisions, afterall we are only human. I am not out to make enemies or to put a "target" on anyone's back, only to see to it that my clients and the employees of this district have their voices heard and their interests protected. I know that Capistrano Unified will right this wrong as I have faith in the person who made the decision initially. Carleen Wing-Chandler made the recommendation to the board to hire Envoy and I believe she made that decisions in her heart believing it was the right one. In fact, given the facts she had Envoy must have seemed like her only choice. I believe that the victims in the case are both the employees of the distirct and the district itself - with Envoy being the responsible party. I believe Carleen was lied to by Envoy Plan Services, or at the very least not given the whole truth. Only a partial picture was painted. It is my belief that when the full picture is presented that the district will make the right decision - I have faith in them that they will do what is right. If you are from the district or are on the board and reading this, I once again extend my services free of charge to educate you on the real issues involved so that you can make a decision based upon all the facts. I don't want to sell you anything or recieve any recognition, I only want to do what is right for your employees. I don't make any money spending time on issues such as these and to be honest, they drain me and hurt the growth my business, but I have a deep belief that if I do what is right for the teachers that it will come back to me in some fashion at some point. Please contact me at 949-916-6238.
Scott Dauenhauer, CFP
Over the past few years I have ruffled quite a few feathers in quite a few k-12 school districts, mainly in adminstration. My quest for better supplemental retirement plans for educators has sometimes led me down the path of criticizing people in leadership positions in k-12 & community college districts. As you might imagine, this hasn't endeared me with these districts. Suddenly, a 5'8" 155 pound man becomes a "threat," and the "enemy." This line of thinking by these districts is very distressing to me because it means in some way that I have failed. I have failed to educate them enough to help them clearly understand the issues involved so that they can make a wise decision. In reality, I don't think I am the failure, the truth of the matter is that these districts NEVER allowed me the opportunity to share my thoughts or expertise. I will never target a district without first approaching management and asking them to hear me out. It is only after a district has made it clear that they don't want to hear from me that I begin the task of taking the issue to the people of their district and ultimately begin ruffling feathers.
In the past few months I have targeted quite strongly the Capistrano Unified School District. Up until 2003 I had adored this district. I loved working with educators in the district and loved working with the few people I knew on staff. However, a few very poor decisions were made by one of the leaders and I questioned them about it. I offered my expertise and guidance free of charge. I explained to them that I was a completely unbiased source as I don't accept money from anyone but my clients for the services I provide. Furthermore, my clients interest always come first. I even went and stood for four hours at the board meeting waiting for my two minutes to speak to the board and explain to them the problems they were about to face. Not a single member of the board contacted me, nor did the adminstrator who had made the final decision to hire a company by the name of Envoy Plan Services The district now believes I have put them in my crosshairs and that I want to somehow destroy them - the truth is that I only want them to do what is right for their employees. You see, it is my opinion that the district's very Integrity is at stake in this situation. Integrity is something is gained with the little decisions and if the little decisions are made without the employees interest in mind, what will happen with the big decisions?
The Capistrano Unified School District has an incredible opportunity to show what it is made of and to show the public and their employees that they have integrity even in (what they percieve) as the small decisions. It is time to simply admit they made a mistake in hiring Envoy Plan Services, correct that mistake by firing them and then do what is in the employees best interest by hiring another entity (my vote at this point is OCTFCU). There are a number of reasons why this move is best and I will get them at a later writing. The point of this message is that the decisions the districts make every effect their integrity. It is O.K. to make a mistake or a bad decision, Lord knows I make my share of mistakes and bad decisions, afterall we are only human. I am not out to make enemies or to put a "target" on anyone's back, only to see to it that my clients and the employees of this district have their voices heard and their interests protected. I know that Capistrano Unified will right this wrong as I have faith in the person who made the decision initially. Carleen Wing-Chandler made the recommendation to the board to hire Envoy and I believe she made that decisions in her heart believing it was the right one. In fact, given the facts she had Envoy must have seemed like her only choice. I believe that the victims in the case are both the employees of the distirct and the district itself - with Envoy being the responsible party. I believe Carleen was lied to by Envoy Plan Services, or at the very least not given the whole truth. Only a partial picture was painted. It is my belief that when the full picture is presented that the district will make the right decision - I have faith in them that they will do what is right. If you are from the district or are on the board and reading this, I once again extend my services free of charge to educate you on the real issues involved so that you can make a decision based upon all the facts. I don't want to sell you anything or recieve any recognition, I only want to do what is right for your employees. I don't make any money spending time on issues such as these and to be honest, they drain me and hurt the growth my business, but I have a deep belief that if I do what is right for the teachers that it will come back to me in some fashion at some point. Please contact me at 949-916-6238.
Scott Dauenhauer, CFP
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