403b Aware: 403b Self-Help Group was Born

1998-2002

Chapter 3

A Self-Help Group was Born

1998-2002

NOTICE TO READERS! This chapter 3 is an early version of my book, “Fighting Powerful Interests.” For the finished and completed published book, go to the home page and obtain the free pdf. (Click here and scroll down. Subscribe to our blog and download the book!).

To my surprise, twenty-five Los Angeles Unified School District (LAUSD) colleagues contacted me expressing support after reading Kathy Kristof’s Los Angeles Time’s article, The Fourth R. After five years of communicating with district and union personnel followed by 403b investment articles published in the union newspaper, a huge door opened. My colleagues’ response showed they did notice the same corrupted 403b policies I experienced. Many mentioned their issues with the district’s mystifying barriers requesting Vanguard. Take a look (edited for space):

  Dear Stephen, I was very interested in the article about you in Sunday’s L.A. Times. I, too, have had the same experience with LAUSD regarding Vanguard Funds. The school districts’s position on this is extreme in that they won’t even permit the use of California’s State Teachers Retirement Systems (STRS) mutual funds.  If there is any way I can be of assistance in helping you push the Board to change its policy, please feel free to contact me.

Dean Cohen, Teacher

 

Dear Stephen, I really enjoyed Kathy Kristof’s article about you and our 403b wars with the District. I have been investing in a no-load and am pleased with my results. It’s good to see that you are persistent in your pursuit. Here is my pitch: I have good relations with [he names board members and the union officers]. If you would like to turn your “one man war” into a “two man war,” I like to help you both expand the number of mutual funds available to us through payroll deduction. [Upon Ed’s invitation, I attended my first teacher’s union meeting].

Ed Kaz, Teacher and Chapter Chair at Reseda HS

 

Dear Stephen, I was very pleased to read “The Fourth R.” Thanks for getting media attention to a problem that has been of concern to me and my colleagues for many years. Like you I have been concerned about my 403(b) options. When I asked the District about expanding the options for better returns and lower fees, I was told about the “hold harmless” agreements. Unlike you, I became discouraged and gave up when I became aware of the ponderous process to execute a tax-free exchange. I am eager to learn more about your experience and how I can finally move into a better performing program for my 403(b) money. Would you write or call me?

Esther Ginsberg, Educational Audiologist

Dear Mr. Schullo, This morning I read about your quest to have the district approved Vanguard as an option for 403b plans. Now that you are the de facto leader of this movement, please let me know what I can do to help you.

Joe MacDonald, teacher

Dear Steve,

You must have some clout if you were able to get Kathy Kristof to feature you in the TIMES! Congratulations. I was then pleased to see your informative article in the UTLA paper [United Teachers-Los Angeles union’s newspaper].

            I agree with you that more needs to be available to the teachers i.e. VANGUARD. If I can help you in any way, I would be more than happy. However, I have also found many teachers are oddly apathetic when it comes to finances. Several, I discovered, didn’t know what the 403B was! Anyway, keep up the good work. And yes – I believe I would be interested in an investment club.

Louise Delaney, Teacher

Our First Meeting

Spurred by these responses a meeting was a must. All twenty-five respondents were invited to Leo Politi Elementary on April 9^th, 1998. Little did I realize Joe, Louise, Dean, Ed, Brad and Esther (and others) would become friends for many years. My lone previous leadership role was Captain of the Cumberland High School football team. We lost all our games, so I had to learn fast. Slightly gun-shy I expected a better future for this interest group.

Twenty-eight people showed. It was a genesis for a group of like-minded colleagues leading to our newly formed self-help group. The only agenda for this first meeting was a presentation by the local Investment Club PR person to share how their organization works. My idea was to form a self-help group using their model. Investment Club members had to create a legal partnership with a pot of money to invest in individual stocks. I squelched the idea. An Investment Club was too complicated, didn’t meet our purpose of educating colleagues, gaining low-cost 403b choices nor updating old district policies. This meeting was significant—I met Sandy Keaton and Esther Ginsberg and others who would become heroes and fighters for quality low-cost 403b plans.

Our Meetings Continue

Our next meeting was at Sandy’s school. Despite the rain and little publicity, 20 educators showed up. A financial adviser from Prudential asked if he could attend to our meeting. We assented as we didn’t have a workable agenda. We had no precedent.

This adviser spoke about investing and answered questions. He read my investment articles in the United Teachers-Los Angeles (UTLA) newspaper and was impressed.  “Someone was doing the right thing,” he said, looking at me and smiling. He knew teachers were shafted by investment advisers. His fiancée’ was an LAUSD teacher. So he had a personal interest in our quest to become knowledgeable investors. This all sounds good, right? Wrong.

“My Wife is a Teacher…”

This adviser taught us a valuable lesson about evaluating financial professionals. As educators, we judge people by our relationship with them. We want understanding of the plight of our profession to feel appreciated. We trust people who share our important life values and social activities. How nice when an adviser has a personal or professional relationship with you through work, place of worship, little league, the gym or other worthy organization. It is a frequent leap of faith to jump to the conclusion you can trust this friend or colleague with your money. Financial advisers are smart, friendly and interesting people and might make great friends, but don’t mix the two. “My wife/husband/fiancée’/mother is a teacher,” or “I used to be a teacher” are fortuitous trust-inducing sales pitches. This should have nothing to do with your money and yet are as frequent as the number of daily visitors to Machu Picchu.

This familiar criterion for trusting goes out the window when selecting a financial adviser.  These associative sales pitches work. Once you realize the conflict of interest and multipage fine print contract is designed to use your money to benefit the salesperson and their company, you can say “no thank you” with confidence.

After the meeting Sandy and I realized our mistake. The speaker didn’t say he sold insurance products, but his disclosure of an insurance license was enough—no more advisers without vetting. He said good stuff in front of us with a flattering comment about my articles and mentioned his fiancé was an LAUSD teacher, but this background information was beside the point. We couldn’t know what he would sell to unsuspecting colleagues in classrooms, union halls or school cafeterias in the future. Even when asked, salespeople have a well-rehearsed evasive response such as: “I can’t answer your question until I evaluate each person’s situation. We offer choice and the company pays the fees,” blah, blah, blah.

From then on we vetted speakers who shared our investment philosophy of low-cost 403bs with mutual funds. We learned when advisers make offensive comments about TIAA CREF or Vanguard they have an opposing investment philosophy. It was nothing personal—it’s their right to voice opinions. It is also unprofessional conduct verbally berating Vanguard and TIAA CREF to unsuspecting educators. Furthermore, it’s unethical behavior and a conflict of interest to sell commission laden products to clients who don’t know low-cost options are also available.  

When I discovered mutual funds, I asked an “adviser” if she could invest my 403b in mutual funds. She shot back, “I’ll never recommend mutual funds to teachers because they’re too risky!” Her condescending, cheap-shot and unethical remark catapulted me to invest and do it myself. I never spoke to another insurance agent again. Unethical adviser behavior is everywhere where educators and staff are grateful to have this “nice” person take an interest in their retirement nest egg. They must be avoided.

403b Aware

We named our 403b support group 403b Aware, signifying a warning to stop-and-think before blindly signing up for TSAs.

Mission Statement

Our mission is to educate UTLA members on the political and economic realities of retirement planning using the little know and mysterious tax-deferred 403b. We are UTLA members, but most importantly, no one among us is a professional financial adviser.

Our mission was simple—tell members about all options and show colleagues how to avoid or get out of TSAs. This challenge was not tried before. But the core-group members Sandy Keaton, Brad Rumble, Joe MacDonald, Dean Cohen, Ed Kaz, Esther Ginsberg, Louise Delaney and Marc Becker were ready. We bonded for one primary reason:

We were all screwed by TSA sales pitches, learned our lesson and wanted our colleagues to avoid our mistakes.

Instead of complaining among ourselves and patted ourselves on the back for correcting our mistakes, we offered a genuine service to our colleagues. The Paradise Café in Universal City became our central meeting location. We had our own room, as long as we ordered a meal.

The early meetings focused on creating a safe environment. We helped people understand their annuities’ excessive costs, which compound yearly and eat away most of their final nest egg. For some the hardest step was transferring from annuities into mutual funds. Some colleagues followed up while others procrastinated. Appealing to the tens of thousands of LAUSD colleagues who blindly signed the TSA forms while ignoring their statement, remained a serious challenge. Most Americans have no idea of the costs of their personal plan, whether TSA or loaded mutual fund.

Our agenda was quickly established. The demand for genuine, frank and understandable objective information was loud and clear. Teachers/school psychologists/nurses/counselors/principals and Sandy’s entire audiology department attended our meetings. They heard about our meetings from word of mouth or reading my columns in the union newspaper. Every time a new person attended I asked for their email. It didn’t take long to compile a list of over a hundred followers to keep them informed of meetings.

How can we get other educational professionals interested in supplemental retirement planning with bona fide safe long-term growth: stocks and bonds? Seventy-five percent of our colleagues don’t save a dime because they mistakenly believe their pension plan will fund their retirement 100%. Pensions and Social Security were never created to fund our retirement entirely.  With our CalSTRS Pension, one would have to work 38+ years to get 100% of a teacher’s salary. How many of us can or want to work 38 years? Hello!

Our physical and mental health are at-risk and students’ academic progress compromised when we are stressed or burned-out. Nobody wins. To make matters worse, a 100% pension benefit is based on the final year teacher’s base salary and ordinary income taxes must be paid each year. Our pension is not indexed to the inflation rate. I met teachers at our meetings who were visibly exhausted and in their 60s, who couldn’t retire. They didn’t plan. It’s tragic.

United Teachers—Los Angeles

We worked our way through the union’s infrastructure starting with the Finance subcommittee. The room was packed with the same people who read the L.A. Times article. We made our pitch to have the union work with LAUSD to expand the number of lower cost 403b vendors. The committee members listened, asked questions and passed our first motion, “UTLA will work with the district to offer more low-cost mutual funds.” The finance committee Chair was surprised at the turn out. He was not interested in 403b issues. But he carried our motion to the next level and it passed in the House of Reps meeting, the largest governing body of our union.

The following day, Day Higuchi, my union’s President called. He assigned his assistant Sam Kressner to work with me. I was pleased with his promptness and was eager to get started with Sam. The first topic Sam and I tackled was to find out if LAUSD was using an over restrictive hold harmless agreement. Sam asked the states largest teachers’ union California Teachers Association (CTA)’s chief legal counsel to look at the district’s document. It remained the major reason Vanguard would not sign.

Sam sent me the fax he received from the CTA attorney. She agreed with our opinion the agreement was too restrictive.  Sam wrote up a letter to LAUSD citing CTA’s opinion. He wrote (edited for brevity):

“United Teachers Los Angeles represents thousands of LAUSD employees eligible to participate in a Tax Shelter Annuity 403(b) Program. We are extremely concerned about the restrictions on investing funds with some of the largest and most reputable mutual fund companies in the United States.

I have been in contact with Beverly Tucker, Chief Counsel for the California Teachers Association. She has reviewed the LAUSD Custodial Accounts TSA Company Agreement and specifically analyzed the Indemnity and Defense clause….

            It is her opinion that the LAUSD language which requires a TSA company to indemnify the District against its’ own negligent actions, or that of its’ employees is per se unreasonable and thus unlawful because it deprives employees of their choice of a provider.”

 LAUSD Board Member David Tokofsky

LAUSD Board Member David Tokofsky received a copy of Sam’s letter and invited Sam, Sandy and I to his office. David in turn referred a Sam’s letter to LAUSD’s legal counsel, O’Melveny and Myers, seeking a review. This was legal counsel’s response:

“… contrary to Beverly Tucker’s (CTA’s Attorney) assertion in the memorandum you provided that such a hold harmless clause is per se unreasonable, its widespread use over the years by California school districts without any successful court challenge leads me to conclude that it is reasonable.”

What a rationalization. Just because it was in widespread use over the years with many districts “without any successful court challenge,” he simply says it’s “reasonable.” His response was trivial and myopic but not surprising. Recall from Chapter 2 the insurance industry gained enormous power over the thought processes of districts’ boards of education, benefits administration and legal counsel about liability. The attorney also said in his short report, “Were the District to be more responsible for the TSA Program, it would require the District to obtain more and costly monitoring facilities and personnel.” Didn’t he know our district payroll department was fiscally flawless, according to Invesco, and lower cost vendors would happily pay for their own mistakes? There was no need for additional expense nor more district responsibility for a common sense indemnity agreement.

Legal counsel’s final say was not challenged by a court case. It was never our intention to launch legal action. To them, the 403b has long been a trivial issue and a done deal for 30 years—why change? With the mounting evidence based on CTA’s attorney, the print media publications about the 403b now many LAUSD employee complaints about those bogus gross-negligence liability allegations were dismissed like yesterday’s newspaper.

We were badly mistaken when we appealed to their common sense. How could bright and capable professionals who consult large institutions not see what we see? Well, it’s not about common sense. It’s about a huge bureaucracy which cannot exam itself no matter how damaging its outdated policies are to employees. Why go the extra mile if you are on retainer? Millions of dollars of educator wages at stake and the leaders responsible are blind because of a well rehearsed liability story.

Even though we lost the battle, our 403b Aware group meetings continued by sharing our genuine and forthright message direct to colleagues. We focused our precious efforts via our meetings at the Paradise Cafe. I wrote more investment columns in the union newspaper and we remained ready for additional media publicity.

We passed our second and last motion: “It will be UTLA policy to provide objective information about all 403b options to members.” I created the following table titled: Your retirement: exploring the 403b option. Steve, the Union Newspaper editor published this Table.

(PLEASE NOTE: This graph was published in July 21, 2000 and does not represent LAUSD’s available 403b companies in 2013).

This simple table shows how vendors can be categorized by fees and their investment philosophy. UTLA members could judge for themselves, which vendors are high cost TSAs to low cost. It was not necessary to publish all 140, 403b vendors. The 112 TSA companies and the 25 load mutual fund companies are marketed and sold by the numerous agents and commissioned mutual fund advisers respectively and swarm the districts 24/7 like the famous bats at Carlsbad Caverns. 403b Aware wanted UTLA members to be informed of all choices, so they could have the best 403b plan possible. Only three no-loads Invesco (I used), Neuberger & Berman and USAA are available without marketing or sales people. That’s why the information in this table is important. Let teachers know these options too. Those lounge lizards will not inform educators.

We stopped talking with LAUSD and trying to pass additional motions through UTLA. It took too much time. Our request for the district to drop the gross-negligence, indemnity clause went nowhere and our union never followed-up by adding more no loads. There was no political will from either for reform. Besides, those no loads would not sign LAUSD’s ludicrous hold harmless agreement anyhow. We were back to square one.

It would now take a broader groundswell of district employees, administrators, teachers, support staff, bus drivers and other union members to complain to their union leadership or Board of Education members. Since not enough people were complaining yet, the three-decade status-quo appeared permanent. Sandy and I continued to meet with board member David Tokofsky and Sam Kressner because they kept their doors open. David was the one elected leader from either LAUSD or UTLA who remained interested.

Mainstream News Media Published 12 Articles on High Cost 403bs

After Kiplinger’sand Kristof’s catalyst articles about high fee and lousy 403bs choices, a flood of 403b articles appeared in big and small newspapers across the country. All hell broke loose. The dam finally broke in the decades old chronic silence of school districts’ 403b across the country. By 2001 at least twelve articles appeared all reporting similar 403b problems (see references for all print media 403b publications).

The second largest teachers union in the country, American Federation of Teachers (AFT), also published a GREAT 403b article in 2000 in their trade magazine, American Teacher—called Shark Attack! This hard-hitting article was spot-on and discussed in detail in Chapter 5.

And Not So Good News

Even with solid and national print media support for our group’s cause, our LAUSD colleagues were not getting the message. TSA sales continued unscathed. Each year, like clockwork, LAUSD’s insurance agents sell over $100 million worth of TSAs (constant for at least three decades up to 2014!). So far this new onslaught of 403b exposure had little or no effect on the insurance industry’s nonstop, runaway sales of TSAs to LAUSD employees. Why weren’t our colleagues hearing or reading about these reports which were all over the mainstream media? The news makes it appear people outside the educational institutions know the 403b mess, but not teachers.

Workshops?

If we wanted to take our message to a larger audience face-to-face—the rank and file—we needed to offer workshops. But where? Would colleagues listen to their nonprofessional peers talk about investments and personal finance?

A workshop at the annual UTLA Leadership Conference held each August in Palm Springs might break open union intransigence and help spread our message. UTLA is one of the largest locals in the country with about 45,000 members (1999). The Conference organizers invited all UTLA leaders with 600-800 Chapter Chairs attending. Chapter Chairs are the equivalent of the “Union Steward” in the private sector. They are classroom teachers, audiologists, psychologists and substitutes, elected by the school site members who represent them at union meetings. UTLA mandates Chapter Chairs to attend meetings at UTLA headquarters and report updates to members at their school site. Chapter Chairs would take our 403b message to their school sites.

The conference offered dozens of workshops from addressing the district’s new education initiatives, negotiation strategies, organizing members for protests and updates to our health and dental benefits. A 403b benefit seminar was never offered before. The 403b was hardly known and not identified as a regular benefit despite the AFT’s Shark Attack publication. The union’s Retirement Issues standing subcommittee discusses the pension plan, health and dental benefits, not the 403b.

During the spring of 2000 we launched a broadside at our annual union leadership conference. Apparently our group’s message was trickling through the union’s leadership ranks. Our consistent presence at union meetings for the past two years paid off. Our 403b workshop application was accepted. We were scheduled for 1.5 hours Sunday morning, August 20^th, 2000.

Demystifying 403(b): Make this Little Known, but Important Benefit Work for Your Retirement

Agenda

Workshop Goal:  Share our experiences for improving the 403b plan

1. Why we stopped putting 403b money in annuities.
2. Defining a mutual fund and why they are better
3. Recognizing a risky investment and how to avoid them
4. Explaining the difference between savings and investment
5. How to think long term
6. Buy and hold strategy
7. Define and locate Socially responsible investing.
8. Define Dollar Cost Averaging, load and no-load and how the monthly deduction in your 403b adds up over the years.
9. You must develop a plan to supplement CalSTRS (Our Pension).
10. How we transferred from an annuity to a mutual fund.

Panelists:

Joe MacDonald:  Teacher, House of Rep.

Sandy Keaton:  Audiologist, Chapter Chair.

Brad Rumble:  Coordinator, Rosemont Ave Elementary.

Steve Schullo:  Computer lab teacher, Leo Politi Elementary, House of Rep.

In the 403b application we wrote, we are NOT professional financial planners. We do not represent any company and have no economic connection with the financial information provided.  The panel wants members to know that they have alternatives.  We have led the fight to pass motions through UTLA to begin to educate members of this benefit.

Unfortunately, I did not attend my own presentation because of an unexpected health problem. Never the less, Sandy, Joe and Brad did a fine job. The room was packed with members. One member was angry at one of the union approved 403b vendors. This member happened to be a ranking elected member of the UTLA Board of Directors—he could cause serious problems for one of the union’s own 403b “approved vendors.” But nothing came of it. Once a vendor was “union approved” it was for life, notwithstanding one or two dissatisfied members.

Sandy was amused at the union’s approved vendors who were at the door listening the entire 1.5 hours. Similar to most professional conferences it’s standard practice for union-approved vendors to set up tables and advertise their products and services. Members get free pens, coffee cups and dinners at expensive restaurants to drum-up sales. Of course, members pay for all of this ultimately.

There was little doubt the 403b vendors were threatened by our no-nonsense workshop. We took matters into our hands by providing objective financial information about all choices, especially the no-load mutual funds.

The union approval system was similar to the district’s hands-off policy to insure no dollar cost to LAUSD or UTLA. UTLA allowed any vendor to place expensive ads in the union newspaper to provide additional income. Both permit the vendors 100% control over 403b information and distribution with no oversight—our educator-led workshop exposed the unspoken institutional arrangement between the district, UTLA and vendors. The vendors had no control over the 403b information provided in our workshop.

One Regular Employee Changed the Payroll Stub

Sandy thought the district’s payroll stub should read “403b”instead of “TSA” (the part of the payroll stub for participating employees in tax deferred programs which shows the amount deducted from wages). She urged Sam Kressner to write a letter to LAUSD’s payroll director to fix it.  Our group of ragtag 403b Aware educators replaced the “TSA” label with the accurate IRS code “403b.” How did we do it? Easy—we knew the district would respond to liability. This pink slip was inserted in each employee’s payroll stub:

Dear Employee:

Please note that, effective April 14, 2000, the designation on the payroll stub for participating employees in Tax Shelter programs was changed from “TSA” to “403-b.” The acronym TSA implies annuity plans only, although the District has allowed deduction for both custodial and annuity plans as authorized by the Internal Revenue Section 403-b.—Payroll Services Branch Staff

LAUSD responded immediately because of a potential liability threat. This time and perhaps the only time in our district’s 403b history, LAUSD unintentionally benefited their employees. This seemly insignificant and innocuous label was an unintended result of the successful insurance industry marketing of the acronym “TSA,” discussed at-length in chapter 2. Thus, the paystub provided a “free institutional advertisement” on every payroll stub once a month for years, subliminally reinforcing the already powerful brand-name TSA as the only retirement plan—the annuity. Recall the 403b(7) accounts with mutual fund companies were legal since congress passed ERISA in the 1974 pension law.

Change Came From One Regular Employee

The payroll stub was a perfect example of reform coming from the employee ranks—not from the district’s high-paid attorneys, consultants, union officers or benefits administration. This change originated from one LAUSD employee. We were thrilled and proud we did something good for the district’s employees and the union members. Changing the district’s payroll stub label was an important step towards wrestling our beleaguered 403b away from the powerful TSA industry.

Transfers

We helped our colleagues transfer from TSAs/loaded mutual funds into no-loads. We heard many (and now familiar) horror stories. Educator after educator replicated our shared stories:

1. They were unaware of lower-cost alternatives.

2. Agents lied about not getting out of the annuity and then intimating us into not transferring (One agent told a teacher that a transfer might be some type of “money laundering and may be illegal”).

3. Insurance agent’s services were “free.”

4. Paying over-the-top fees for either annuity products or loaded mutual funds with quarterly advisory fees.

A few colleagues were livid at everybody involved: TSA industry, LAUSD and UTLA who put a “Union Approved” stamp on expensive products. They were angry their naiveté was exploited by the union’s endorsement and district’s blind eye. Most educators were content with our genuine, no-nonsense help, corrected their 403b and moved on.

By 2002 our agenda expanded into many topics:

Here was an example of our advanced agenda:

January 17, 2002

Agenda

1. Who, what and why does 403b Aware exist? Review 403b Aware Brochure.
2. Report on American Federation of Teachers 403b task force meeting in Wash. DC by Steve (details in Chapter 5).
3. Presentation on the proposed California State bill, ab2506, to reform insurance code 770.3 by the TIAA CREF’s West Regional Director, Brian Cressey (details in Chapter 5).
4. Report on Meeting with LAUSD’s Board Member David Tokofsky by Steve & Sandy
5. 403b workshops

• Need panelists at Monroe HS. Sat. 8:30-11:30AM, Feb 23 (Details next Section).
• Need people to help get a workshop at State union CFT convention in March and National AFT in Las Vegas in July, 2002 if accepted.

1. New 403b book by Scott Dauenhauer and Dan Otter, by Scott.
2. Call UTLA member services committee to hold a vendor approval meeting for TIAA CREF (Details Chapter 6).
3. Enron debacle and the lesson to diversify.
4. Delay of deferrals from our paycheck to investment companies.

Attracting Ethical Professionals

Carolyn Widener, Executive Vice President of Los Angeles Community College Faculty Guild and California State Teachers Retirement System (CalSTRS) Board Member visited our meetings and liked what she observed. We were honored to have our first dignitary. CalSTRS has always encouraged educators to supplement the pension plan with a 403b.

After a few years, our meetings began attracting ethical advisers who shared our revolutionary and transparent 403b philosophy.

1. Scotty Dauenhauer, a fee-only financial adviser who subsequently became a consultant to CalSTRS’ Pension2.
2. TIAA-CREF’s Southern California Director Brian Cressey (Mr. Cressey’s gallant efforts to get UTLA union-approved are detailed in Chapter 5 and to reform Insurance Code 770.3 are detailed in Chapter 7).

Who would of guessed any existed? Carolyn, Scott and Brian were already attracted to the ethical high road and it was our pleasure to learn from them and became friends.

Our Regular Meetings Continued Unabated

Our 403b Aware group continued to meet about 5-6 times per year at the Paradise Cafe. Over the years we served a couple of hundred colleagues. By now we talked to so many colleagues we became experts on getting out of a TSA. Unfortunately, there was never a shortage of colleagues who needed a new direction.  We kept in contact with Kathy Kristof. Her former colleague Paul Lim moved to U.S. News and World Report and wrote his 403b article (See all articles in the reference section). Our group helped Kathy Kristof kick-off her comprehensive follow-up report on 403bs in 2006.

TSA Agents Fight Back

Our upstart articles and meetings did not go on unnoticed by the TSA sales force, especially the UTLA “union approved” vendors. One of my union articles was delayed. When I saw Steve, the editor, at the next union meeting, I asked him what’s going on. He said the union’s TSA “approved vendors” objected to my articles. He said they thought it was unfair and one-sided. “Well, yea.” I responded, “I am on the side of the members. I have been a loyal and supportive member of this union and they aren’t members.” Steve thought for a second, smiled and walked away. Nothing more was said. He was satisfied with the explanation and he knew our 403b Aware group was looking after the members’ best interests. I continued to write articles and he published them. We all were well-served by Steve and his successor, Kim Turner. They knew these articles provided genuine information to union members.

Summary

This chapter would not have been written without Kathy Kristof’s foresight. From the moment I called, she had a pen in hand and began documenting this cause. Her published article in the Los Angeles Times brought together like-minded colleagues to form an incredible self-help group.

403b Aware was organized by trial and error and then we jumped into presenting workshops, changing the district payroll stub 403b label and providing opportunities for frustrated colleagues to vent anger, while helping the transfer of their TSAs into no-load funds.

We were convinced ethical advisers did not exist in the 403b world because of our collective negative TSA histories. It was encouraging a few professionals supported our belief about getting out of expensive and low performing TSAs into low-cost mutual funds.

Our unique bond to create our self-help group was magical and a force for good. None of us questioned each other’s motive for providing solid objective information to our beleaguered colleagues. We did it because it was the right thing to do and nobody else was doing this. None of us became discouraged in the face of this stark reality, the district’s steadfast power to the status quo, the tens of thousands of our colleagues remain steadfastly uninterested and unknowing about the missed opportunity to grow their retirement nest egg much more than a TSA and our union’s growing resistance to our cause. As long as colleagues came to our meetings asking for help, we pressed on.

When UTLA and LAUSD leadership did nothing, we pursued with energy and confidence supporting each other. We knew we were doing the right thing as our colleagues understood the threat to their own bottom line. Realizing low cost options were also available made their decision easier.

403b Aware made progress in five areas, 1998-2002:

1. Planned and led 403b investment workshops.
2. Changed the payroll stub label from “TSA” to “403b.”
3. Met genuine ethical advisers.
4. Passed motions through the union.
5. Increased press awareness.

5.   Most gratifying was helping the droves of colleagues with our workshops.

403b Aware Group sample email responses from our colleagues

Steve, Thanks again to you and the 403b Aware Group for your priceless services to the LAUSD community.

Hi,

I thought you’d like to know the latest wrinkle from ….. I called today to see if the mess was resolved with my account since we are going into week 3 of this ordeal. All the guy keeps telling me is it will be finished shortly. He then proceeds to tell me that his manager mentioned to him that by me putting money in the reserve account and then transferring it over to Vanguard, it may be a type of money laundering and may be illegal.

You can stop laughing now. I proceeded to inform him it’s called a 90-24 transfer and it’s perfectly legal. Nothing but silence. Who do these people think they are? Unbelievable!

Dear Steve,  Thank God for people like you!!  My wife and I are new teachers with LAUSD, and are getting ready to establish our 403b.  We are both complete novices, and will be relying heavily on your website!!

Thanks,