Kimberly Lankford did a great job in a recent article on 403(b) plans. In addition to pointing out many of the flaws, she recounted the story that got me into working with School Employees and their wild, wild west retirement plan. An excerpt is below:
These teacher-retirement plans often limit their offerings to insurance products, such as annuities, and they charge much higher fees than 401(k)s. But the biggest difference is the way 403(b) plans are sold. Instead of a menu of funds — with easy access to information about fees and performance — many school systems just hand out a list of sales reps. Scott Dauenhauer of Murrieta, Cal., discovered the differences in 1998, when he was a financial adviser and his wife, Shauna, started a new teaching job. “A guy walked into my wife’s classroom and said he’s from the state pension system and that the district sent him to talk about her retirement options,” he says. “It turns out that he was not there representing the pension system or school district.”
The Dauenhauers called the school district to find out more about the 403(b) options and were sent a list of about 30 company names and phone numbers. “There was no option of signing up for a low-cost product, and they were all either variable annuities or equity-indexed annuities or mutual funds sold by a broker,” Scott says.
It always fun to be mentioned in the media and my wife got a kick of being mentioned also – but more importantly, calling attention to the issues that are affecting public school employees is the key.
Great Job Kim, keep up the good work.
Scott Dauenhauer, CFP, MSFP, AIF