More 403(b) Vendor Shenanigans & Trips...Those Amazing Trips

This past week I've come across several instances of what I consider improper marketing efforts by insurance agents for 403(b) vendors.

As best I can tell, this week it's LSW and Midland, two of the worst 403(b) vendors in the industry in my opinion.

I also found where LSW is having their Conference of Champions trip and have posted the details.

LSW Agent Violated District Rules?

The first issue is with an LSW representative, as reported to me:

The email was originally sent out to our principal (name redacted). In the email it states that he (the LSW insurance agent/salesperson) had:

"nominated our school for our 'sports equipment giveaway' program on numerous occasions in the past."

It goes on to state:

"As you know, we are (an) approved 403(b) advisors with the district as well as the TPA (third party administrator) and we conduct retirement updates at numerous schools functions including staff/professional development meetings."

The letter goes on to state that:

"we have 2 sets of sports equipment available to be donated in March that are being funded by one of our agents out of his own pockets with no corporate money involved."

So what's the problem? Several.

First, the rep is essentially bribing the school official with sports equipment in order to gain a quid pro quo of access to "staff/professional development meetings." This is unethical in my opinion. If you want to give the school equipment, just give it.

The bigger problem is that in this particular school district agents are prohibited from being on campus for any reason (other than if their child attends, of course). Yet the rep is attempting to gain access even though the rep new it was not allowed. I know the rep knew it wasn't allowed because the rep is listed as an LSW rep on the active agent list that LAUSD collects.

It gets worse. The agent represents that he is an "approved 403(b) advisor(s) with the district as well as the TPA". This is a misleading claim. The district doesn't approve agents and the Third Party Administrator doesn't either. The district simply makes all agents and brokers who sell products complete information so that they can track who is selling in the district and ensure they are following the rules. The list has not been vetted. You can read all the documents that LAUSD requires agents to sign here. LAUSD has not approved this salesperson in any fashion, simply required that they adhere to LAUSDs guideline if they wanted to sell in the district, to indicate otherwise seems quite dishonest to me.

To give you an idea of what the solicitation agreement entails, here are a few of the key points:


  1. Agent must sign the Rules of Solicitation Agreement and file with TSA Consulting Group, Inc., Plan Administrator, prior to working with employees of Los Angeles Unified School District.

  2. Any Agent working in the district must be listed as an agent with at least one of the companies on the authorized investment provider list.

  3. Agent is responsible for updating TSA Consulting Group Inc. of any changes in company/companies represented and any change in business contact information such as address, email and phone contact.

  4. No agent may solicit employees or distribute promotional materials for the purpose of obtaining contracts for tax‐sheltered annuities, 403(b) voluntary retirement savings or similar benefits on District property.

  5. Agents may not ask employees to utilize District facilities (fax machines/telephones) to arrange appointments or send materials related to 403(b) voluntary retirement accounts.

  6. Agents are not permitted to meet with employees on District property for any reason related to the soliciting or servicing of an employee 403(b) Tax‐Sheltered Annuity.

  7. Interference in any way with employees daily period of service will not be tolerated.

  8. Agents may not for any reason sign‐in to the ART System for, or on behalf of the employee, to process any
    transaction or make changes to Salary Reduction Agreement information. Accessing ART utilizing someone else’s credentials is considered fraudulent activity and is grounds for immediate termination.

The agent is listed with LAUSD which indicates he signed this agreement (note: I've not independently verified he signed the agreement, this is an assumption based on the process in place to get on the agent provider list). Notice Rules 4 - 7....the above e-mail seems to be looking to violate all of those rules. It's going to be hard to claim ignorance.

The second solicitation issue happened in the same city and same district and the rep involved is also listed several times on the districts agent provider list.

LSW/Midland Appointed Agent Represents As CalSTRS?

In this situation an agent who is appointed with LSW and Midland (and who has won awards apparently with both for selling their products) represents himself as being affiliated with CalSTRS, a common trick of insurance agents selling 403(b) products.

I don't know how the individual received the document below, but you can see that it asks questions related to the California State Teachers' Retirement System (CalSTRS) pension plan. But more importantly, the e-mail address literally starts with "calstrs". I've blocked out any identifying information.
LSW Advisor Resources by Scott Dauenhauer, CFP, MSFP, AIF on Scribd
This is another case of misleading solicitation. Even if the agents didn't mean to mislead, he used the name of CalSTRS in his e-mail address...that's a no-no. The agent brags on his website that "Since 2012 (name of agent) has reached the President’s and Platinum club levels with several nationally recognized Premier Retirement Planning and Insurance Carriers." If you are not aware, this is not a trait a consumer should look for in a trusted advisor - it simply means he sold enough of that company's products to achieve a certain level (which normally leads to trips similar to the ones below).

Bottomline - solicitation by reps of insurance companies that are bad for consumers continue to be a problem. Be careful out there.

Just so you understand what is driving these solicitations, I'm including below the trips that these types of agents might qualify for if they submit enough business to National Life Group/Life of the Southwest:
LSW 2017 by Scott Dauenhauer, CFP, MSFP, AIF on Scribd
LSW 2018 by Scott Dauenhauer, CFP, MSFP, AIF on Scribd

It's time this kind of stuff stopped.

Scott Dauenhauer, CFP, MPAS, AIF
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