If Your Not Keeping Up with This You Should Be!

[Franz Kafka]

Uh, right.

The market wasn't meant for speculators, traders, or wealthy or not wealthy people. The market was meant to help companies raise capital (through the stock and bond markets) and hedge (options and futures markets).

This is completely misinformed, and stinks of non-securities licensed FIA slinging.

People that took the care to have a reasonably allocated, low cost investment portfolio, made out just fine through the crash of 2008. Every single client of mine is positive, even if they bought in during the 4th quarter of 2007, net of fees.

If someone was dumb enough to be in 100% stocks in their 50's, and then sell at the bottom, that isn't the markets fault, it's the investors fault.

That's like blaming an insured for buying the wrong insurance for their situation because they were too lazy or cheap to consult with an experienced agent. Or someone who gets PWNED by the IRS because they were too cheap to pay an accountant ensure their taxes get done properly.

Uh right.

I worked in securities long before you ever fondled a girl's chest for the first time. Isn't it odd how all these "experts" are fresh out of college? You and that young punk njh lfg should exchange some notes. How much asset do you manage? Don't lie like he did.

Never mind, time will "learn you".

 

[iceco1d]

Uh right.

I worked in securities long before you ever fondled a girl's chest for the first time. Isn't it odd how all these "experts" are fresh out of college? You and that young punk njh lfg should exchange some notes. How much asset do you manage? Don't lie like he did.

Never mind, time will "learn you".

Better off not making ASSumptions, my crodgety friend. I've got news for you...

Your one-size-fits-all FIA solution depends on publicly traded companies to make profits, so they can pay their debts. You see, your FIA contracts are backed largely by corporate bonds, issued by these evil publicly trade companies (that means they have stocks, in case you slept through that part of the Series 7).

So you see, if the stock market goes bust, that can only be because those companies all filed bankruptcy. If that happens, they will no longer be making their bond payments.

If they are no longer making their bond payments, that means the insurer general accounts will become essentially worthless.

And if insurer general accounts become worthless, they will be unable to return any of your FIA contract holders funds. Which means the guarantees you promised your clients will also be worthless.

Bummer.

Oh, and with the S&P, Dow, EAFE, and NASDAQ all at 0, or near zero, I don't think any of the State Guaranty funds will be kicking in to come to the rescue.

You see, the movement of the stock market will always be up over the long term (after all, the evil politicians and the "1%ers" are all HUGE stockholders, and they call the shots)...the ups and downs in the middle are just sharks taking money from fools.

Now, not that it's relevant to this discussion, but since you asked (alleged)...I have a B.S. and an M.B.A. in Finance and I'm not even in my 20's. As for AUM, I'm just shy of $25 million.

Why'd you leave the securities industry? Get fired? Or just couldn't compete?

I think people like you give FIAs a bad name. You're a one trick pony, and use total B.S. fear tactics to peddle annuities. Pathetic.
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By the way, I'm at an INDEPENDENT broker/dealer, and I can do fixed life/annuity business direct if I want. I have no problem with FIAs whatsoever. I think they are a useful product and have their place for a lot of people.

I have a problem with one trick ponies using pure fear tactics to sell products. People like Franz are the reason we have to endure "beware of annuities" propaganda, and fill out 458,458 pages of paperwork and suitability info, just to sell a FIA.

 

[Franz Kafka]

AUM ...

At least the other young punk had an ADV to show .. don't you do rollovers for teachers? (or did I get mixed up with someone else?)

If I did get mixed up with someone else post your ADV (it's a public info).

BTW it seems like all you've ever done since you joined the forum was asking evil insurance agents about selling FIAs while bashing them at the same time. I don't get it. I rarely ever talk about FIAs and haven't even sold one in a long time.

So what is it that I am "ASSuming"?

 

[iceco1d]

AUM ...

At least the other young punk had an ADV to show .. don't you do rollovers for teachers? (or did I get mixed up with someone else?)

If I did get mixed up with someone else post your ADV (it's a public info).

BTW it seems like all you've ever done since you joined the forum was asking evil insurance agents about selling FIAs while bashing them at the same time. I don't get it. I rarely ever talk about FIAs and haven't even sold one in a long time.

So what is it that I am "ASSuming"?

That "other punk" is an IAR of his own RIA. I'm an IAR of my b/d's corporate RIA. posting the corporate RIA wouldn't prove anything except that my b/d has billions under management. If you were such a securities pro, you'd know that.

As for me doing rollovers for teachers, that is very true. Is there a problem with doing business with teachers?

As for bashing FIAs, you have me confused with someone else. In fact, I just got back from being banned for a week for getting heated with "KJ From Miami" and defending FIAs.

Go read my post in those threads, and tell me I'm here to "bash FIAs."

I have a problem with one trick ponies and closed minded people that form opinions about things they clearly don't understand. I don't care if it's KJ bashing FIAs for no good reason, or you spewing lies about unjustified fear about the stock market.

I can't stand smoke and mirrors. I can't stand B.S. and dishonest sales practices. That crap makes my job harder. Whether it's stocks, mutual funds, life insurance, or annuities.

 

[Franz Kafka]

I'm an IAR of my b/d's corporate RIA. posting the corporate RIA wouldn't prove anything except that my b/d has billions under management. If you were such a securities pro, you'd know that.

So you are an IAR. Well, post something that in any way resembles AUM of 24mm because I can't imagine public school teachers putting their 403b money with an RIA (maybe they do - I don't know).

If you don't want to - which is fine - at least post how long you've been registered with SEC as an IAR because you stink like a brand new newbie to me (maybe my sense's bad).

As for me doing rollovers for teachers, that is very true. Is there a problem with doing business with teachers?

No problem there at all. I just have a hard time believing an IAR has 24mm from rollover 403b money (that would be quite impressive if true).

I have a problem with one trick ponies and closed minded people that form opinions about things they clearly don't understand. I don't care if it's KJ bashing FIAs for no good reason, or you spewing lies about unjustified fear about the stock market.

Hmm .. so what is my one trick pony?

How many defined contribution plans have you done since you know so much more about them?

Are you saying that the billions and billions of 401k money lost in the market are lies? And DOL's concern about them is based on unjust fear? Or maybe you'd say they were "mismanaged". How would you have managed a 401K?

How long have you worked with the stock market or futures market or corporate bonds market? What real life experience do you have with them?

I can't stand smoke and mirrors. I can't stand B.S. and dishonest sales practices. That crap makes my job harder. Whether it's stocks, mutual funds, life insurance, or annuities.

Hmm ..

 

[iceco1d]

So you are an IAR.

I am an IAR (of a corporate RIA), a Registered Rep (of a broker/dealer), and an independent life & annuity agent.

Well, post something that in any way resembles AUM of 24mm

I'm not sure how I can do that, but I'm open to suggestions. I'm also not sure how that's relevant, even if I were lying about it (which I'm not).

because I can't imagine public school teachers putting their 403b money with an RIA (maybe they do - I don't know).

Why on Earth not? Not trying to sound like a jerk, but it sounds like you don't have a good grasp on what an RIA (vs. a Registered Rep) even is. Granted, about 50% of all 403B assets are in fixed annuities, 25% in variable annuities, and only 25% in mutual funds (of which, probably less than 5% are in fee-based accounts with RIAs).

If you don't want to - which is fine - at least post how long you've been registered with SEC as an IAR because you stink like a brand new newbie to me (maybe my sense's bad).

6 years.



No problem there at all. I just have a hard time believing an IAR has 24mm from rollover 403b money (that would be quite impressive if true).

Thanks. But that's actually not that big of a deal. There are guys at my firm that have well over $100 million in assets. I'm sure there are guys at AXA, Metlife, VALIC, etc. with similar numbers (or larger).

The thing about my state, is that it's not just the 403B assets, but retiring teachers can rollover about $100K - $150K from the state pension system (and still collect a pension).

Plus, the 403B game in any state is not about the 403B per se. That's just the door opener. The next step is to get the 529 plan for the kids, the term life for the young couple, the pension max case for the retiree (and the pension rollover), the Roth IRAs for both spouses, and any old 401K/etc. assets from the spouse (and teacher, where applicable).

Most of my teacher clients have small amounts of money with me (but are putting money in every month). But I do have a few dozen with $100 - $200K, and even a few others with over a million (remember, some teachers are married to doctors, lawyers, etc.).


Hmm .. so what is my one trick pony?

Sounds to me like your only option to sell investor is a fixed or indexed annuity.

How many defined contribution plans have you done since you know so much more about them?

Hundreds. I've done no less than 65 per year for the last 3 years straight (403B, 457, SIMPLE, SEP, etc.).

Are you saying that the billions and billions of 401k money lost in the market are lies?

Not lies. Just stupidity or exaggerated. If you invested in something as simple as a Vanguard Balanced Index Fund in 2007, you MADE MONEY since then. If you were 100% in stocks, or leveraged, or sold out at the bottom instead of "staying the course" and rebalancing your account on a regular basis, then maybe you lost money. That's on the investor, not the market, and not mutual funds or stocks.

If I buy a FIA with a 9 year surrender schedule, and redeem it after 1 year and cost myself 8% in surrender charges, it's not the FIAs fault, it's mine. I didn't do my planning, and poorly executed the strategy that was intended.


And DOL's concern about them is based on unjust fear?

I think so. Every crisis is "different this time." And everytime, we recover, and move on.

Or maybe you'd say they were "mismanaged". How would you have managed a 401K?

Simple. Low cost allocation of stocks (U.S. and International, Large, Mid, and Small Caps), bonds (short and medium duration, all investment grade, with some TIPs, GNMAs too), commodities, real estate, and fixed account. Anywhere from 50 - 75% in stocks, depending on age and risk tolerance. Rebalance 2x per year. Preferably have a bias towards dividend paying stocks vs. growth stocks, but not necessary. Used covered call options when possible as a volatility reduction and income generation strategy (probably not available in a 401K, and certainly not necessary).

How long have you worked with the stock market or futures market or corporate bonds market?

15 years.

What real life experience do you have with them?

Academic. Personal. Investment Club. Retail brokerage.

Hmm ..

Note: Anything in this post (and any other post on this message board) is not, and should not be construed as investment legal, tax, or investment advice. It is purely fictional, and should not be used in real life at any time, for any reason, by any person.

 

[Franz Kafka]

Not trying to sound like a jerk, but it sounds like you don't have a good grasp on what an RIA (vs. a Registered Rep) even is. Granted, about 50% of all 403B assets are in fixed annuities, 25% in variable annuities, and only 25% in mutual funds (of which, probably less than 5% are in fee-based accounts with RIAs).

Never been an IAR so maybe you can teach me. Registered reps rollover to loaded funds and make up front commissions. You rollover to no load funds and take a cut every year. What makes you so much better than an RR?

6 years.

I see. So you're about 30 years old and you've figured out the market. Actually 24mm in 6 years for an IAR would not be impressive considering some wirehouses require 20mm in 2 years.

Sounds to me like your only option to sell investor is a fixed or indexed annuity.

I don't sell investments (at least not since I dropped B/D). I worked for a private LP firm - what you'd call a hedge fund nowadays - since dot com years.

Hundreds. I've done no less than 65 per year for the last 3 years straight (403B, 457, SIMPLE, SEP, etc.).

I was actually thinking about starting corporate 401k plans but that doesn't matter.

Not lies. Just stupidity or exaggerated. If you invested in something as simple as a Vanguard Balanced Index Fund in 2007, you MADE MONEY since then. If you were 100% in stocks, or leveraged, or sold out at the bottom instead of "staying the course" and rebalancing your account on a regular basis, then maybe you lost money. That's on the investor, not the market, and not mutual funds or stocks.

So how much would I have made if I invested in a Vanguard Balanced Fund in 2007. INDU is actually about 40 pts down from 5 years ago so the bond index must have really performed after taking out the annual fees.

Every crisis is "different this time." And everytime, we recover, and move on.

Is that right? Since when?

Simple. Low cost allocation of stocks (U.S. and International, Large, Mid, and Small Caps), bonds (short and medium duration, all investment grade, with some TIPs, GNMAs too), commodities, real estate, and fixed account. Anywhere from 50 - 75% in stocks, depending on age and risk tolerance. Rebalance 2x per year. Preferably have a bias towards dividend paying stocks vs. growth stocks, but not necessary. Used covered call options when possible as a volatility reduction and income generation strategy (probably not available in a 401K, and certainly not necessary).

Now that's very very interesting.

Do you personally know of any IAR that does that with a corporate 401k plan?

What real life experience do you have with them?

Academic. Personal. Investment Club. Retail brokerage.

Since when have finance major and an MBA considered real life experience with the market? How much of real money have you made or lost through investment clubs/ retail brokerage?

 

[scagnt83]

The only way to pull off a 401k strategy such as that is to have a true "Open Architecture" plan. Meaning the Trustee and Broker come up with an investment lineup of their own choosing for the plan.

No offense to the strategy, but a Trustee (the ultimate Fiduciary on the plan and the one with the majority of liability) would be insane to sign off on an Investment lineup such as this. Way too much liability.
Not that it wouldnt be sound, but that its WAY too complicated for the average retail investor to pull off on their own.

You would need individual guidance from an IAR.
So, Ice, how much would you charge a 10 person company to actively manage those 10 different accounts and have 22 meetings per year about it?
Most would charge at least 1.5%, if not 2.5% or more.
Then the platform provider would charge 30bps - 60bps.
And the TPA would take the same.
(those numbers are assuming an average size plan)
That puts your low cost plan around 3%+ in total asset charges to the participant.
(Most of my plans that size are around 1%-1.5%, plus around 1% for fund expenses.)


I am making this point not to bash your theory, but to illustrate the complexities in the 401k market.
And its not getting any better for the moment.


But to help illustrate Ice's point; I pulled one of my better plans statements from Jan. The 10 year returns were almost all positive. And ranged from 0.5% to 10%, they averaged around 4% probably.
The 5 year returns were mixed, nothing stellar.
And the 3 year returns were nice of course.
Those returns were net fund expenses.

But timing is everything with the market.
And many retail investors have terrible timing.

Furthermore, traditional investment theory has been skewed by a bias modern media.
Look at the connections between the big institutions and modern financial media. The media has a vested interest to keep people in the market.
And this does not bode well for the near retiree who doesnt have a long investment timeframe before retirement.

Traditional basic portfolio allocation says to subtract your age from 100 and thats your equity allocation.
So a 65yo should have only 35% in equities.

Lets say that 65yo is retired and taking income.
Another 2008 would mean around 14% drop in their account value.

Now they have two choices.
Take 14% less income, or take the same amount and eat up more of your principle...
- The "Reduced Income" method will take around 6+ years of 10% gains to recover from.
- The "Tap into extra Principle" method will take around 8+ years of 10% gains to fully recover from.
(the S&P 500 has never had 6+ continuous years of double digit gains)


IMO retirees and near retirees are way too overexposed to market volatility.

 

[Franz Kafka]

a Trustee (the ultimate Fiduciary on the plan and the one with the majority of liability) would be insane to sign off on an Investment lineup such as this. Way too much liability.

Exactly. Funny thing is if the Trustee only allowed fixed accounts leaving no possibility for participants to ever lose their principal, they're much more liable to get sued. It's essentially danged if you do and danged if you don't for the plan sponsors.

 

[scagnt83]

Exactly. Funny thing is if the Trustee only allowed fixed accounts leaving no possibility for participants to ever lose their principal, they're much more liable to get sued. It's essentially danged if you do and danged if you don't for the plan sponsors.

Pretty much!

Take away the tax advantages like the libs want and there wont be much reason for small biz owners to keep 401Ks around.

It used to be a big employee retention tool. But its increasingly becoming a liability thats not worth the time/effort/risk if its not enough benefit to them...


One of the kind of new claims against Trustees these days is that the Fixed Account isnt a suitable QDIA... it needs to be in a risk "controlled" equity fund (aka: Target Date or Risk Based) since historically over a long period this has outperformed fixed rates...

That means a person who has taken no interest or effort in choosing an investment for their 401k automatically has their premium put at risk....

How not being able to loose any money is not suitable for someone who doesnt give a sh#t, ijdfk....