<$BlogRSDUrl$>

Thursday, December 16, 2004

First Command 
A lot of people have written in asking my take on the recent announcement that First Command is disgorging $12 million dollars to settle NASD charges of misleading advertising and inappropriate sales practices. Sorry I hadn't gotten to it earlier.

Longtime readers will remember that I went after First Command way back in February. The New York Times followed up in July, and included insurance scammers in their greatly expanded story, featuring some super leg work by Times reporter Diana Henriques.

First Command has abandoned its sales of contractual plans. Which is a good thing: They were a lousy product.

By their fruits ye shall know them.

Yeah, it's true that if you stick with the program for 15 years, that 50% load can, theoretically, be amortized down to 3.3%. But what First Command left out was that only 43% -- less than half -- of all program participants actually realized that amortization. The rest dropped out somewhere along the way.

The remainder, of course, were locked into the underperforming Fidelity Destiny and Destiny II funds, which continue to lag their peers over the last ten years. Destiny is still in the bottom quintile of its Morningstar large growth category over the last ten years, trailing the S & P 500 by an ASTOUNDING 5% annualized. Hell, that's a full sales load all by itself! Every year!

Destiny II, at least, seems to be holding its own. But ONLY if you don't adjust it for the sales load. Factor in the sales load, and it's a disaster.

All in all, it was a lousy deal for America's military families, compared to other investment opportunities easily available for a fraction of the cost.

That said, is this a great victory?

No.

Because while First Command's program was lousy, at least it got people saving SOMETHING, who otherwise may not have recieved any financial education.

Several million dollars of that disgorgement will go to investor education programs, presumeably targeting military families.

It's important we make the most of that money, because there are a lot of financial advisors who will shortly be leaving the military markets. It will be tough for them to make a good living without the availability of contractual plans.

It's not a time to gloat. Yes, First Command needed to be put down. But there were doubtlessly a lot of hardworking advisors trying their best who will have to readjust their livelihoods. And no reputable financial advisory firm is going to touch these guys, because they were so mistrained by First Command -- they're walking NASD fines waiting to happen.

Maybe some of them will join Prudential. Prudential's racked up so many fines over the years for fraud and unsuitability that no one would notice another 12 million dollars.

A word on the NASD process:

You don't get to go to court vs. your broker, unless it's part of a class action. Normally, investors are bound to go through mandatory arbitration courtesy of the NASD, thanks to the fine print in their contracts.

It's a much cheaper process, fortunately, and usually quicker.

Unfortunately, the NASD arbitration board members are industry insiders themselves, and it's often tough for investors to get a fair shake. The NASD has to get its bills paid somehow. And they are well aware who their constituency is: the broker dealers and advisory firms they regulate.

$12 million dollars is a drop in the bucket for a company like First Command. The guys at corporate would hardly blink at it. The guys who hurt is the junior reps in the field, who just had their business model taken out from under them.





Comments:
"No Charge Online Advertising Channels For Any Business"
 
You'll receive Valuable how-to Lessons, Millions and Millions of FREE Ads, and High in Demand Software Applications
 
Good info
 
Too good to be true? Not when you are looking for the best information on #LINK#! We have all your sports information needs plus over 120 of the nations top handicappers plays every game day! Thanks to Blogger for allowing us to post on his blog titled, this post. Free Trial for all new clients. Just click on the following secret word, to start winning today!
 
For free picks, free consensus (over 120 of the nations top plays in all sports every game day) and more on information about olympic sport book, visit this blog daily. Blogger must be thanked for providing a place to post relevant information and this blog titled, this post is great place to start!
 
If you are looking for the best information available about forum.com handicapping sports and other related subjects, this blog, this post is a great place to start. Blogger has been kind enough to set up a place where all can meet and learn about forum.com handicapping sports and while posting to help others. Thanks and good luck!
 
Hi,

My sister wanted to congratulate you on such a excellent blog you have...

She does not know how to type... and might waste an hour to create a decent post.

We both give you our best wishes, and hope that this excellent blog remains our favourite.

Good luck,
excellent blog
 
The nations top sports site would like to give you a FREE TRIAL of over 120 of the nation top handicappers with no obligation. Just click on this topic, free sports pick football for more information and please always refer to this blog for all your sports information and relevant posts. We wish to thank Blogger for creating a place for all enthsiasts to visit while searching for topics like free sports pick football. Remember to vist this blog daily - this post!
 
Hey,

Inspiring. This is something I'll come back to read over and over again.

Regards,
make extra online money
 
Homes Homes Homes The Purchase of a home will probably be the largest single investment you will ever make. Why do I need a new home inspection .... If you are thinking about selling or buying a home You will need a new home inspection ..

I found a great site for new home inspection. If you want to take a look go to http://hominspec.com.... Wow ..
 
For free picks, free consensus (over 120 of the nations top plays in all sports every game day) and more on information about donation free pick sports , visit this blog daily. Blogger must be thanked for providing a place to post relevant information and this blog titled, this post is great place to start!
 
Hello. I was blog surfing and your blog caught my eye. I have a cool site that may interest you. If your not interested, then I am sorry for bothering you. Go to free money.
 
I really like your style of writting, do you do this for a living. I am going to share this with my work friends and family. It would be great if you went by my personal blog and told me if it looks ok. augmentation advice
 
Top notch work on this weblog. I have just added you to my firm favourites and will most certainly check you out again. More than likely you will want to take a look at my site and let me know what you think. smoking cessation advice
 
I am going to add a link on my personal blog if you dont mind. Great Post. If you want to you could take a look at my weblog and let me know what you think. help stop smoking
 
Hello I like your site.
I was seaching the internet for sites then stoped here to take a look.

Cheers,
Gerg
day trading taxbracket
http://exclusive-information.net/

Regards,
Gerald E.
http://exclusive-information.net/
day trading taxbracket
 
Rad Webpage!

I want to file chapter bankruptcy in
http://exclusive-information.net/

Regards,
Gerald E.
http://exclusive-information.net/
I want to file chapter bankruptcy in
 
I have an old flag and I want to learn the best way to store it. I have been looking for info on the blogs and found your post. I enjoyed reading you info...Thanks...american flag
 

best investment Stock Investing - You Can Earn More Profit When Making Stock Decisions In Groups.
Do you want to generate extra dollars and new friends in the stock market? You Don't Have To Be An Expert Stock Broker To Get Started Today!

Are you alone when you make your stock decisions? Do you think you could benefit from using the minds of several interested stock market hobbyists all determined to make sure you have your money invested in the right shares? Stock Investing best investment

 
Post a Comment

This page is powered by Blogger. Isn't yours?

Site Meter

Prev | List | Random | Next
Powered by RingSurf!

Prev | List | Random | Next
Powered by RingSurf!