News | 10.03.19
New York State Officials Open Probe on 403(b) Sales to Teachers
The New York Department of Financial Services has launched an investigation to determine whether life insurers and their agents are taking advantage of teachers to sell them potentially high-cost and inappropriate investments in 403(b) plans, say insiders. Officials are concerned about whether teachers are properly informed about the costs of the products and their advantages and disadvantages. One concern is that some insurers rely heavily on former teachers as salespeople, and school-district employees may be too trusting of such sales representatives. Nationwide, 403(b)plans held about $1 trillion in assets in 2017, the most recent year for which figures are available, according to data from ICI. Annuities, which can charge fees of 3 percent or so a year, account for a significant share of the assets in public school teachers' plans, which helps explain why fees tend to be higher than in 401(k) plans. The average 401(k) account has fees of less than 1 percent, according to data from BrightScope and ICI.
Read the full article on Wall Street Journal