Return to the Retirement Forum | Post a Follow-Up

 o
Be very careful .... when investing your retirement $$

Posted by gajopa (My Page) on
Sat, Jul 14, 07 at 12:55

I retired 8 years ago and transferred my 401K to Raymond James Investors. The broker guaranteed me, in writting, 6.5% return. I couldn't get my money out for 7 years but 6.5% guaranteed seemed like a good deal. I took a monthly draw on it for the amount the broker said I could without jepordizing the principle. Every month when my statement came the balance was going down much too fast. Every time I called and asked about it she told me the correct amount would show up at the end of the 7 year period. So,after 7 years nothing showed up and I got worried and told her I wanted to take my money out. Bottom line is ~ I made not one penny on my money for those 7 years plus I lost over $13K of the principle and they charged me $500 to write me a check. The same thing happened to numerous people in the area (and probably others that I don't know about). We are in a lawsuit now to try and recoup our money. Just wanted to caution you that "guaranteed" doesn't always mean it is.


Follow-Up Postings:

 o
RE: Be very careful .... when investing your retirement $$

Hi gajopa,

Into what kind of investment did they have your assets invested?

Did they discuss that with you before you made the investment?

I am very sorry that you had such an unsatisfactory result!

How unfortunate that so many people spend so little time and energy on learning how money and investments work, during the years of their lives!

And sometimes pay a high price as a result. I am sad that you suffered such a loss.

ole joyful


 o
RE: Be very careful .... when investing your retirement $$

Joyful, it was an annuity and she had it invested into 4 different stocks and at this point I don't remember what they were. The atty says they should have never issued a guarantee on an annuity. I've heard that one of the brokers is suing Raymond James for not training her correctly. My brain simply doesn't understand much about investments so that's why I liked the idea of a guaranteed amount. The broker is a very seasoned financial person so I felt confident letting her handle it. She has now lost her license. Thanks for your concern.


 o
RE: Be very careful .... when investing your retirement $$

Hello again gajopa,

Learning how money works usually pays good dividends: neglecting to do so can be painful.

Most annuities legitimately called so are issued by insurance companies.

You give them a pot of money, and they guarantee that they'll pay you a given amount, for whatever number of years, or for the rest of your life, or for the rest of the lives of both the buyer and the spouse, usually. Often with a guarantee that, should the original contractors not survive 10, 15 years, or whatever, they'll continue to pay through the rest of that guaranteed period.

Some people have been hurt by such, when the insurance company that issued the contract fails ... but not often. In some cases, various insurance companies have stepped in and continued to pay at least part of the benefits that the failed company had promised.

Whne interest rates are low, the rates that are offered on annuities aren't high, so in recent years of low interest rates, many people didn't like to choose annuities as a worthwhile way to fly.

Too bad you hadn't known where to find a financial planner who wasn't selling financial stuff. And made use of that person's skills.

A few dollars invested there might have saved you not only a substantial number of dollars ... but a good measure of heartache, too.

Most financial planners can sell usually only a few of the large number of systems that are available.

I prefer to manage my own money.

Good wishes for better results in future.

ole joyful


 o
RE: Be very careful .... when investing your retirement $$

I am sorry you lost your money to a corrupt broker. At least this woman lost her license. I hope you are able to recover some of your money.

Thank you for mentioning the name of the brokerage. I have a friend who is invested with them. I will share this information with them.

When we first came into some money, we had little experience with stocks, etc and looked for an advisor. We made appointments to talk with several different types of "professionals". Brokers, CFP's, accountants. Before we contacted anyone, we tried to educate ourselves as much as possible so we would know what to expect (and avoid). We read many financial books and surfed the internet for information before making our first appointment. It was interesting.

The source of information that proved the most helpful was the book "Brokerage Fraud-What Wall Street Doesn't Want You to Know"-by Tracy Pride Stoneman and Douglas J. Schulz.

The authors have experience as a)securities attorney/Judge/NASD-SYSE arbitrator and b) expert witness for securities fraud cases. The sleeve of their books states " Very often, financial services professionals fail to tell you about the dark side of the brokerage firm business, the investments they recommend, the handling of your accounts, and what you can do about it. The secrets and insights presented in this book will help ensure that you become a better-and better invested-consumer."

Before you entrust ANY more money to brokers, etc., you might want to check this book out from your local library as well as visit the following person's website for some very good information about keeping control of YOUR money.

Forbes.com Best of the Web
E.F. Moody Jr. www.efmoody.com. With 3250 pages and 1650 links, the site bills itself as the "largest and most comprehensive independent financial site ...
www.forbes.com/bow/b2c/review.jhtml?id=456 - 24k -
(read the link-How to Find a Financial Planner)

Here is a story that recently appeared in the Motley Fool. Best of luck to you and thanks for sharing your story.

Beware of Brokers Bearing Annuities

By Buz Livingston, CFPWed Jul 25, 5:12 PM ET

The first baby boomers are making plans for retirement, with their 401(k) plans stuffed with savings. In response to the pending onslaught of soon-to-be retirees, the insurance industry has metamorphosed into "retirement planning." However, it's promoting marketing techniques designed more to generate sales than to expand investors' holdings.

Companies offering variable annuities, including Hartford (NYSE: HIG - News) and the John Hancock division of Manulife (NYSE: MFC - News), often add extra features, also known as riders. Agents like these provisions, since they sound good and help win over risk-averse customers. But they often prove completely unnecessary, adding nothing to the value of the annuity or its eventual payout.

For instance, one type of rider is called a guaranteed minimum accumulation benefit (GMAB). It promises that the value of a variable annuity will rise by at least a certain percentage -- often 6% -- over time. Sounds nice, doesn't it? But there's a catch.

The troubles with GMAB
For beginners, the fees to add a GMAB can be obscenely expensive. If you add mortality and expense charges, administrative costs of the variable annuity, and the extra GMAB fee, you could easily pay expenses topping 3% each year.

That wouldn't be so bad if you actually got something from it. But the odds are good that you'll never need such a benefit. Some annuities tied to the stock market use a long timeframe -- such as 10 years -- to apply the GMAB. That means that in order to get a benefit from the GMAB, the market would have to earn less than 6% annually over a 10-year period. Historically, the last time that happened was 1984 -- a period that included the tail end of the 1973-74 bear market. The GMAB feature isn't likely to cost the insurance companies anything close to what they'll make on it.

Pensions and annuities
Another marketing ploy annuity salespeople trot out is the benefit of annuitizing 401(k) rollovers. They argue that the rollover will be taxed as ordinary income, so why not buy an annuity with it? That line of reasoning is true. Yet often, the annuities they recommend -- especially equity-indexed and variable annuities -- are unsuitable investments for retirees.

Retirees who want to replace a salary or create a pension-like cash stream should consider an immediate fixed annuity. Although it often won't pay a death benefit to your heirs, it will usually offer higher payouts during your lifetime. Check out low-cost providers such as Vanguard or Integrity Life for options on immediate annuities. In addition, if you want a beneficiary to get back at least what you paid for the annuity, you can choose a return-of-premium benefit.

Zealous annuity marketers will sometimes misrepresent an annuity's fees and commissions. (I've heard them do so myself.) Don't fall for it! Except in rare cases, the higher costs for annuities simply mean that you're giving more of your hard-earned money to your broker. Most of the time, comparable mutual funds in a rollover IRA make much better investments.

Fool contributor Buz Livingston, CFP owns none of the stocks listed and appreciates your feedback. He believes investors will benefit from professional advice. The Fool's disclosure policy is always on your side.

Copyright 2007 Motley Fool
Copyright 2007 Yahoo! Inc. All rights reserved.


 o
RE: Be very careful .... when investing your retirement $$

In Canada we can choose to mature our tax-deferred retirement fund into a Registered Retirement Income Fund that offers a number of choices of investment, including a self-managed system.

Many choose this maturity option.

And one can choose to put some of it into an annuity, should one choose, at any time during the life of the investment.

One is required to withdraw a portion annually, about 7 - 8% at age 71 and an increasing percentage to 20% annually required at age 90 and beyond.

ole joyful


 o Post a Follow-Up

Please Note: Only registered members are able to post messages to this forum.

    If you are a member, please log in.

    If you aren't yet a member, join now!


Return to the Retirement Forum

Information about Posting

  • You must be logged in to post a message. Once you are logged in, a posting window will appear at the bottom of the messages. If you are not a member, please register for an account.
  • Please review our Rules of Play before posting.
  • Posting is a two-step process. Once you have composed your message, you will be taken to the preview page. You will then have a chance to review your post, make changes and upload photos.
  • After posting your message, you may need to refresh the forum page in order to see it.
  • Before posting copyrighted material, please read about Copyright and Fair Use.
  • We have a strict no-advertising policy!
  • If you would like to practice posting or uploading photos, please visit our Test forum.
  • If you need assistance, please Contact Us and we will be happy to help.


Learn more about in-text links on this page here