Here are summaries of three important news stories affecting your money and finances…
1. Investment brokers fight rule to favor best interests of clients
Did you know that brokers are not necessarily required to act in your best interest – even if it’s your retirement savings at stake?
The investment industry – from large Wall Street firms to small independent financial representatives – is spending millions of dollars to fight a rule that would require a broader group of brokers and planners to put their clients’ interests ahead of their own.
The Labor Department said it would release the proposed rule in January, but has already indicated it may miss that deadline. That’s not the first delay on this, though. The rule was originally introduced in 2010 and was rescinded the following year after brokers and lawmakers protested. Wow!
2. Is your employer overriding your 401(k) investment selections?
If you’ve read my New York Times best-selling book, The Bank On Yourself Revolution, you know that employers are increasingly automatically investing employees’ 401(k) money into certain types of “default” investments, typically Target Date Funds (TDF’s) – that have proven to be both costly and generally poor performers. While you do have the ability to opt out, few employees do.
The main reason employers do this is that the Pension Protection Act of 2006 gave them protection from liability when they automatically do this. (Translation: You can’t sue your employer if you lose your shirt.)
Well, the newest wrinkle you need to be aware of is that some employers, on the presumption that you make poor investment choices, are now overriding workers’ existing selections and re-enrolling them into new funds – again typically TDF’s.
Employees have the options of sticking with their current selection (if it’s still offered), or choosing another mix. But, unless you specifically opt out, your 401(k) will be re-allocated to the company’s chosen default investment.
More and more employers are expected to re-enroll workers’ money. Think your plan administrator makes better choices than you?
A study from the Center for Retirement Research at Boston College last year found that plan administrators choose funds that lag comparable indexes. About the best thing the study would say was that their choices were marginally better than a monkey throwing darts, or a random-name generator!
This news comes right on the heels of two other 401(k) revelations I wrote about last month.
A better retirement plan alternative…
The Bank On Yourself method has never had a losing year in more than 160 years. You can know your bottom-line guaranteed numbers and results before even deciding if the plan makes sense for you. Bank On Yourself lets you fire your banker, bypass Wall Street and take back control of your financial future.
To find out how your savings could grow (guaranteed) and how you can reach your goals and dreams without taking unnecessary risks, request your free Analysis, if you haven’t already.
3. Consumer Alert – Learn the Scary Truth
I just received an email from a subscriber who was sold an Indexed Universal Life insurance policy (IUL) – a relatively new financial product that’s fast becoming one of the most over-hyped products around today. It’s also potentially very dangerous to your financial health.
The irresistible promise of IUL is that it lets you share in a portion of the gains of the stock market in those years it goes up, but protects you from losses then the market goes down. You’ll often be told that even in those years when the market tanks, you’ll still get a guaranteed increase of 1%, 2%, or even 3%. Wow! What’s not to like about that?
As it turns out – plenty. IUL may be one of the worst – and most misleading – financial products ever invented. (And I’ll prove it to you.) But this is why the subscriber asked me…
Why would my money not be there in an IUL?”
I was just sent an illustration for an IUL policy from a company that is one of the biggest players in the market. It contains no less than 65 warnings, alerts and disclaimers – no doubt in response to recent lawsuits by policy owners who discovered the promise of “guarantees” were smoke and mirrors.
One of the scariest disclaimers on the policy illustration is, “At the minimum interest rates and maximum charges, and the premium and policy benefits specified in this illustration, this policy will lapse in year 26, unless you pay additional premium or lower your policy benefits.”
If you own an Indexed Universal Life policy or have been considering purchasing one, I strongly urge you to watch this video or read this exposé now and learn the 7 reasons to be wary of Indexed Universal Life.