Security benefits: nea directinvest issues

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Topic Author
Bayoufrogg
Posts: 39
Joined: Mon Apr 03, 2017 12:05 pm

Security benefits: nea directinvest issues

Post by Bayoufrogg »

Looking for some info on legal right to utilize 403b7 through security benefits "nea directinvest" (or any investment really) without financial advisor. I've seen the info posted before, but cant seem to find it. See below for details.

Trying to enroll in security benefits 403b7 nea directinvest fund. Our account is setup online. We made it to step 5, which is salary reduction with HR.

Payroll manager calls and says CFO
says we must use an approved vendor (financial advisor) or the 3rd party administrator will not accept our payroll reduction. I explain that this fund is a "DIY", online investment fund as part of a settlement and we have followed all the appropriate steps thus far. The payroll manager verbalizes the contact at security benefits says we cannot do it without an advisor. I ask for the name of the security benefit contact they have on file. When she gives the name, I recognize him as a financial advisor. I mention that he is not employed by security benefits, is a financial advisor, and is not a fiduciary. Of course he would say we cannot invest without an advisor.

We went through this same thing months ago with the 457b state deferred compensation program. Employer told us can't enroll without an approved financial advisor. It took many of calls from the state rep to get employer to invest our money. Sadly, the chances of security benefit going to bat for us like the state rep are slim. We will have to do the legwork on our own.

From what we have read at some point, we have a legal right to use this investment vehicle without an advisor. We just need to show supporting legal documentation to employer. Any help greatly appreciated.
krow36
Posts: 2470
Joined: Fri Jan 30, 2015 5:05 pm
Location: WA

Re: Security benefits: nea directinvest issues

Post by krow36 »

EdLaFave in Orange County, FL went through a very similar experience. He has documented it on his blog and maybe on this forum, although I can’t find it right now. https://educatorsfightingforfairness.wo ... our-story/. His district HR people insisted his wife could not use Direct Invest although SB was on the vendor list. They were uninformed and wouldn’t relent until a rep from company not involved in the district’s 403b plan informed them that they should (must?) allow it.

I think you are correct that the district cannot determine which of a vendor’s options the employee chooses. It’s ridiculous that the district is denying an option sponsored by the National Education Association, the national teacher’s union and lobby organization.

I agree that SB and the NEA are probably not going to be much help, and it’s up to you (and maybe some colleagues?). Maybe write a letter to person over the CFO? Or to the school board? Actually SB and the NEA should be willing to tell the district that they shouldn’t restrict your choice of the SB plans.

The first of the NY Times articles on teachers and their poor 403b plans discussed the SB/NEA low-cost 403b plan but didn’t actually give its name (NEA Direct Invest). It’s near the end of the article. https://www.nytimes.com/2016/10/23/your ... chers.html
corysold
Posts: 960
Joined: Mon Mar 24, 2014 12:58 pm

Re: Security benefits: nea directinvest issues

Post by corysold »

I don't have much to add, other than my wife uses the DirectInvest and we don't use an advisor for it. I set the entire thing up for her.

I did call Security Benefit directly and talked to a rep (not a financial advisor, an actual Security Benefit customer service rep or similar) who helped walk me through the process. So that might be an option, get a direct contact in customer service that will vouch for you that you don't need an advisor.
EdLaFave
Posts: 434
Joined: Fri Dec 26, 2014 1:31 am

Re: Security benefits: nea directinvest issues

Post by EdLaFave »

I enrolled in Security Benefit's NEA DirectInvest and it absolutely does not involve an adviser.

I documented the plan here.
I documented the issues we had enrolling, which you're currently experiencing, here.
I documented all of the paper work we had to go through to enroll here.

Stream of consciousness on this issue:

If your path is anything like ours then you're going to have to fight. Hopefully you can find somebody at Security Benefit to help. You might even be able to find one of the advisers who knows the rules to help you...they'll probably get tired of answering your calls and you showing up in their office and just give in by telling the district to set it up for you just so they don't have to deal with you any more. The more co-workers you can get on the side the better off you'll be. It might even be worth simultaneously trying to get Vanguard and/or Fidelity added to your vendor list, maybe that can be done faster than sorting out Security Benefit.
Topic Author
Bayoufrogg
Posts: 39
Joined: Mon Apr 03, 2017 12:05 pm

Re: Security benefits: nea directinvest issues

Post by Bayoufrogg »

UPDATE:
The school's CFO, the payroll manager, the payroll manager's immediate boss, and the TPA (third party administrator) all initially gave us the run around. Payroll said it wasn't an option. When we asked why, they said the TPA knows all the rules and its not an option.

We spoke with CFO and he said not an option. No one gave us a reason other than Security Benefits requires a representative.

We kept pressing for answers. I sent Ed Lafauves website and the N.Y. Times article to them as educational tools.

We verbalized it was okay if we were not eligible to enroll, but wanted an educated/factual reason. We kept insisting that Security Benefits customer service verified our eligibility and opened the account already (which they did both online and via phone). BTW, the direct line for NEA DIV (800-747-3942) routed my wife to very open/helpful Security Benefit employees. They were even willing to call the school board, if needed. Call this number as opposed to the main Security Benefits customer service number.

Eventually, after many emails and phone calls, the TPA said they would like more information on the funds. They said we would now be eligible for the NEA directinvest fund, but had some reservations. They talked about the possible benefit of opening an AUM for us because they knew we did not
want an advisor. They now agreed to allow us to invest without a financial advisor/rep, but
wanted a piece of the pie. I maintained there was no managed fund they could put together that
would come close to the cost of NEA directinvest; they had to agree.

The TPA had us fill out their own salary reduction form similar to the form on
Security Benefits NEA DIV website . Our second withholding was completed just a few days ago. The interface is easy to use and has an auto-rebalancing feature as well.

Im still amazed at the lengths we had to go through. It was not just for one account but two. We
got the same run around months ago when trying to enroll in 457b DCP. At least this time it was 8 weeks instead of 4 months.
EdLaFave
Posts: 434
Joined: Fri Dec 26, 2014 1:31 am

Re: Security benefits: nea directinvest issues

Post by EdLaFave »

The nerve to ask for an invented-on-the-fly AUM fee to allow you to enroll in an approved vendor’s self-directed plan infuriates me. I would not maintain my composure if they went from saying the plan doesn’t exist to saying you can enroll in it, but only if you pay them off. The only reason you want that plan is because you’re running away from the very same type of extortion that exists in the other plans. Ugh!!!

Either way, I’m really happy you got this sorted out and that my site may have played some small role. Congratulations and please get all of your coworkers to follow in your footsteps! This exploitation only persists because we allow it to.
krow36
Posts: 2470
Joined: Fri Jan 30, 2015 5:05 pm
Location: WA

Re: Security benefits: nea directinvest issues

Post by krow36 »

Bayoufrogg, thanks for posting about the problem you had in getting access to NEA Direct Invest. It will be encouraging to others who meet similar resistance. It seems that resistance from school districts to go without an "advisor" is fairly unusual, fortunately. You deserve an award for battling through the HR barriers. :)
sschullo
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Location: Long Beach, CA
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Re: Security benefits: nea directinvest issues

Post by sschullo »

This particular story has a happy ending. But how many more thread discussions here and 403bwise.com will it take persistent people like the OP to just find and save in a low-cost retirement plan and using the 403(b)? It is insane in the real world!

The 403b should be just another tax-deferred retirement plan, but in the public K12 profession, it is beyond belief. The entire country wants people to take responsibility for their retirement plans. That's all the OP wanted and what we want. This story is not much different from what I experienced 25 years ago. However, the 403(b) with public K-12 school districts and the unions is bizarre and freakish. What in the world was on people minds to create this retirement plan monster?

37 published articles from magazines, M* and newspaper have all said the same thing over and over again, the 403(b) as, Bill B. quoted a reporter, that teachers "find themselves in one of the dankest, foulest-smelling cellars of the financial world--the 403(b) plan." Not much has changed after 20 years of these reports.

Bayoufrogg, congrats and I hope your wife knows how lucky she is.
Never in the history of market day-traders’ has the obsession with so much massive, sophisticated, & powerful statistical machinery used by the brightest people on earth with such useless results.
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