Complete Marketing Strategy - 401(k)

Discussion in 'Retirement Planning Forum' started by GalvIns, Sep 27, 2016.

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  1. scagnt83
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    scagnt83 Well-Known Member

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    The original post was promoting a 401k product because it pays a very high comp. Big no no in the 401k world.

    And it basically implied that an advisor should go out there with this 1 product and do 401k plans... which would be a violation of ERISA for an Advisor to consider just 1 product when advising a Plan Sponsor.

    I pointed that out and suddenly the post is edited to what is there now. My issue is that the OP is clearly not knowledgable on the current regs regarding 401k plans. Yet they are advertising themselves as a source of knowledge for agents to utilize.

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    Anico 401k plan

    It is just a very antiquated product and there are MUCH better plans for the client.

    1.
    The fund options are terrible and there are only about 12 or 15 of them last I checked. Compare that to others that offer literally hundreds of options for the advisor to create a lineup with.


    2.
    The majority of 401k Plans have a CDSC of just 1 year (if any), or at most 2 years. (contingent deferred sales charge... ie Early Surrender Charges)

    ANICO has a 7 year CDSC on their 401k last I checked. That is seven times longer than the average on the market.


    3.
    The reason they have a 7 year CDSC is that they pay the agent 4x-6x more in comp than most modern/competitive 401k products.


    4.
    They way they are able to pay comp that high is that the funds are expensive and kicking back 12b1 fees to Anico. On top of that, the Asset Based Recordkeeping Fees Anico charges are a good bit higher once you get over the $200k mark.


    401k platforms such as this one started to get a really bad rap back in the early 2000s (for obvious reasons). That helped to spawn many of the more competitive and client friendly plans that are out there today to choose from.


    - To summarize, Funds are locked up for longer than necessary and charged fees that are higher than necessary. Oh, and the agent makes 4x-6x more than the competitive products... that pretty much speaks for itself to any experienced agent... especially since 401k comp is a much "harder" cost within the Plan vs. traditional insurance comp.
     
    Last edited: Oct 5, 2016
  2. pfg1
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    pfg1 Well-Known Member

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    Thanks for the response.
     
  3. GalvIns
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    GalvIns Well-Known Member

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    I didn't notice this thread continued! Sorry for the delay, the reason I like the 401(k) more than the SEP goes as follows:

    After age 50, you can put more money in a 401(k) than a SEP. There is no catch-up provisions in SEP

    You can't take loans from SEP. I'm a big fan of taking loans against your own 401(k) for college tuition, rental property, etc...

    I also wanted to correct Scagent, there are 52 different investment options from the big names, Fidelity, Algers, T. Rowe Price, Federated, and Invesco. You can also have Morningstar manage your money. You get a free look at their proposal based off a risk-tolerance assessment provided to the client.

    He is right about the surrender charges, they are longer than most. It's adjusted as you get get further away from day 0, but they still exist for awhile.
     

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