I am very interested in purchasing a VA offered by Jefferson National
Life called "Monument Advisor". This product is very appealing to me
for these reasons:
1) You pay a flat fee for M&E expenses of $20.00 per month. This
is guaranteed to remain constant during the life of the contract.
2) They offer about 165+ (and growing) funds as investment
options. Most of these funds are with well-known, well-established
Obviously, this product is designed for someone like me who is just
interested in growing assets tax deferred and not interested in any
insurance features. After researching this product, the only possible
fly in the ointment that I can find is that the insurance company
itself (Jefferson National Life) has a B+ rating.
Should this concern me at all? My understanding is if the insurance
company should go belly-up, my funds will be safe because in VA
products they are held at the actual mutual fund institutions instead
of the insurance company. Am I correct on this or is there something
else that can bite me should something go amiss with the company? Your
opinions shall be greatly valued and appreciated.
I have to ask one question of you - by deferring the taxes, you turn
dividend and long term cap gain treatment into ordinary income. And run
the risk of this income putting you into the bizarre social security tax
bubble where an individual can pay a phantom 46.25% on net taxable
income of just $32K or so. I know that with such a low annual fee,
Jefferson National has no salesman about to put his kids through college
at your expense, that's a good thing, but I wonder what you feel the
benefit is. I've written some negative things about VAs, but still would
like to know if there is a specific scenario, i.e. pre-retirement age,
income, etc, and then post retirement details, which combine to form the
ideal candidate for whom the low cost VA is a clear benefit over post
It is important to note that I am NOT a "buy and hold" invetsor. Every
so often, I make changes to the portfolio which would trigger capital
gains taxes. That is why a VA works for me. I agree that for buy and
holders it may not make that much sense to go with a VA.
To the OP,
Are you maximizing 401k contribs, Roths, and IRAs if they are
available to you. Deferred annuities are one of the last stops (if not
the last) on the tax deferral train. How old are you?
Don't worry about the financial stability of the company until you are
sure its the right investment vehicle to begin with.
Most importantly, did you FULLY read the fine print on the Jefferson
National products? From the "monument advisor" page of their website:
* Jefferson National's Monument Advisor has a $20 flat insurance fee
on more than 97% of our underlying funds. Certain funds also have a
transaction fee ranging from $19.99 to $49.99 per transaction,
depending on the number of transactions per year. See the prospects
for details. Like other variable annuities, the customer pays fees of
the underlying funds selected (currently ranging from 0.23% - 2.72%;
except for Rydex VT Inverse Gov't Long Bond Fund which is currently
5.12%) plus the fees of any advisor hired. The range of underlying
fund fees reflect the minimum and maximum charges after contractual
waivers that have been committed to through at least May 1, 2008.
Yes I have maximized all other vehicles available to me. This money
is what is left over from that. It is important to note that I am NOT
a "buy and hold" invetsor. Every so often, I make changes to the
portfolio which would trigger capital gains taxes. That is why a VA
works for me. I agree that for buy and holders it may not make that
much sense to go with a VA.
If the 'every so often' is less than 1 year, and you believe you will
retire into a lower tax bracket, this VA may make sense for you. I don't
know how much switching they permit. There's much evidence that market
timing is a losing game, and that rebalancing in the 12-18 month range
is a better choice, but that's your decision and a different discussion.
On Aug 10, 10:33 am, snipped-for-privacy@Gmail.com wrote:
Good for you on the dedicated saving. You are already ahead of the
game. FWIW I am pro-VA, not anti. But as you clearly understand they
are only suitable for certain situations. Yours may well be one of
My concern for you was the fine print of THIS PARTICULAR ANNUITY.
According Jeff Nat, "Certain funds also have a transaction fee ranging
from $19.99 to $49.99 per transaction, depending on the number of
transactions per year." Even for buy and hold investors that makes me
nervous (auto rebalancing usually counts as transactions), but for a
trader that can be murder.
Jeff Nat goes on to state, "the customer pays fees of the underlying
funds selected (currently ranging from 0.23% - 2.72%... plus the fees
of any advisor hired)" Check out:
If you plan on trading in the sector specific funds (biotech, int'l,
health, tech, banking, etc) you are going to see expense ratios on the
upper end of that range.
This may be the best VA for you, but it may not. I am just advising
that you look at all the costs, not just the $20/mo.
Your points are well taken.
======================================= MODERATOR'S COMMENT:
Please trim the post to which you are responding. "Trim" means that except for
a FEW lines to add context, the previous post is deleted.
Disclosure, please? Are you in any way involved in selling
The NY Times printed an Op-Ed piece today on "bridge
maintenance." An engineer wrote it. In it, he commented:
"Recent technology advances include electronic sensors that
identify cracks and calculate the speed at which they are
spreading. (Disclosure: I'm an adviser to a company that
makes such a device.)"
That disclosure makes him more credible, not less, in my
mind, at least at first blush. For reputable publications,
such disclosures are customary, in the interests of
optimizing information dispersal to the public.
Yes I do, though not often (they're are often not suitable).
That's definitely one way of looking at it. Others will argue that I
sell them and I am therefore motivated to make people buy them even if
it's not in their best interest. I often feel it's lose-lose.
Back in 2006 you accused me of "generating a buzz" by recommending
ETFs during a asset allocation discussion so that I could sell more of
them (even though I have never given my name, location, etc.) So which
is it: generating a buzz or providing credibility?
Just my opinion, but I think you need to re-think this.
Deception or obfuscation is never well-received. E.g. people
finding out /after the fact/ that your line of work involves
the sale, to some extent of VAs will go over far less better
than simply being honest. Honesty sells. It's a win-win,
unless one's goals are short-term deception and a short-term
win, I guess.
Fact is salespeople of products often do have useful
information that the layperson does not have. They want to
sell it, they need to know it, hopefully cold. So, sure, the
salesperson may be biased out of interest to just make a
sale. S/he may have important info, too, to share with a
potential buyer. The best salespeople, in any line of work I
know, realize that word of mouth goes far, and that if their
customers are always happy with what they buy, then they
will get more customers. The first way to keep them happy is
to ensure they know, as well as possible (granted that can
be nebulous) before purchase, what they are getting.
Does this sound bite really do justice to our exchange? I
doubt it. I expect more likely I queried you, and you took
the query as an accusation. Because in fact I don't have all
the facts about what people do here, so it's important to
keep an open mind about the truth, rather than just accuse.
(Of course, if one reads queries as accusations, that's the
reader's fault. Just answer the query and move on, as you
did at the top here.) Email in private, if you wish.
All I told him was to make sure he covered all his bases before
jumping in (as a matter of fact I said it three times). I never said
buy it, I never said don't buy it.
He could have asked "should I have my prostate removed" and I still
would have said, "make sure you learn all the pros and cons first".
Being a doctor doesn't make that advice any more or less applicable.
There is a difference between deception and omission of non-relevant
facts (hint: the former implies malice and that's not a light
I actually took your words back then as an accusation (unfounded at
that): "Re selling stuff: It's about generating buzz (and IMO not a
few urban legends within that buzz) as much as plugging
one's specific service."
It's true, Will, human nature is such that people do not
like to be reminded in any form of their ethical
And yet, in reputable publications, it's such common
practice to disclose possible conflicts of interest that one
would think others would contemplate and figure out why
disclosures are done, and start the practice themselves.
I'm not sure that what you say is true, Elle. Particularly in this
case. All kastnna said was "FWIW I am pro-VA, not anti." But the tone
of his posts were anti-VA for this situation. Why should that require
disclosure? Particularly since he did not attempt to sell an
alternative, nor attempt to "generate buzz" about some other product.
When *you* suggest mutual funds, you do not disclose your ownership (or
lack therof) of those funds, yet that may have ethical ramifications.
In the example you gave, the engineer's remarks could have been
construed as "generating buzz", hence the disclosure. Kastnna did
neither of these things.
Disclosure: I have ethics.
Where have you been, Elle? kastna has stated many times, in many replies,
that he is in the financial planning industry, that he sells a variety of
products to clients, that he has computer models that help him manage their
portfolios, etc. etc. (or as you would say, blah, blah, blah). He has
neither obfuscated nor deceived.
And by the way, from another thread, it's kit and kaboodle, not kitten
kaboodle. See: http://www.worldwidewords.org/qa/qa-who2.htm
Huh, isn't that interesting. Funny, but the author of the NY
Times Op-Ed article is a frequently published and well known
author, too. His interests in the product he mentioned are
amply accessbile on the net. Yet he disclosed yet again his
possible conflict of interest in this article. Imagine that.
The NY Times sure knows how to waste ink, I guess.
Thanks for the post-o correction. Maybe you'd like to become
the group's official Post-o Cop? That would be a great
You should do the math very carefully. With long term capital gains at 15%, a
variable annuity would have to be very cheap to make sense. If you are making
changes more frequently than an year, you might want to think through your
investment strategy. I've never thought about a VA as a trading vehicle.
Don't let the tax tail wag the investment dog.
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