The problem with the ING Opportunity Plus 403(b) plan
I recently did a story on the mutually beneficial relationships between unions and the retirement plans they endorse. The point of the article was that consumers should be aware that while unions generally exist to help their members, they also need money to survive. The donations they receive may encourage them to endorse an investment or insurance product which isn’t the vehicle best suited for performance, or the best deal in terms of cost and expenses. If somebody is pushing for their product to be sold, it’s most likely not the best product because really good deals seem to publicize themselves.
I believe the ING Opportunity Plus 403b plan is truly not in the best interests of most of the hundreds of thousands of people invested in it. The only reason this plan can fly with school districts in the first place is that 403b plans are funded primarily by employees in the plan. The school doesn’t match your contribution the way a 401k plan might. This lets the school off the hook in terms of all responsibilities besides the fiduciary duties involved with administering the plan. Further, it allows ING to make out like bandits by playing the roll of advocate rather than salesman. They should just come right out and explain that they are as profit-motivated as the next guy. They certainly demonstrate this by locking teachers up into variable annuity sub-accounts which are expensive and have complicated withdrawal fees.
I should point out that I like to give people the benefit of the doubt- I even tried to do this with ING by researching the Opportunity Plus program on ING’s website to see if maybe I was missing something. I wasn’t and I will continue to speak to teachers in the New York area about this since ING does not provide what I consider to be adequate disclosure about many aspects of their product. This morning I had my worst experience with ING to date. I called up the Opportunity Plus service center- the place where you direct questions about your investments and can make changes such as switching from one fund to another. I called because a client of mine wants to switch her assets out of the plan and into another product. I wanted to make sure she wouldn’t get hit with any withdrawal penalties for making this change. Naturally, they aren’t going to give me information about a clients’ account that isn’t on the telephone with me. However, consumers have the right to ask generic questions about a product and get a generic answer. The representative on the telephone wouldn’t answer my generic questions about “deferred sales charges” on the Opportunity Plus product. I wasn’t unfriendly or unreasonable, but I think she started to feel uncomfortable. She hung up the telephone abruptly when I started to push a bit more about these hidden fees. Never in my five years advising on 403b investments have I been hung up on by a customer service line. Not a good idea for ING considering they are involved with an investigation by Attorney General Eliot Spitzer for their too-friendly relationship with the teachers union.
I will continue giving seminars on proper ways to handle 403b investments in the future. It’s my hope to shed some light on complicated issues which are slowly draining retirement assets from people who can’t afford to be doing so. This is no secret to Congress and they are actively trying to reform situations like this from continuing in the future. If you or somebody you know works for an organization that has a 403b program, please encourage them to do research on what they are investing in and speak to a trusted advisor about how to maximize these benefits.
Questions? Comments? I'm all ears.
Russell Bailyn
rbailyn@gmail.com
