Interested in Trust type 401(k) funding product alternative to variabl

[Guest J. David Wright]

Our firm has been an independent TPA since 1976. We have been working with a major insurance company [will gladly disclose via direct email] as a third party administrator using their group separate account annuities as a 401(k) funding vehicle. With deteriorating public opinon of insurance products in general, the trend is towards more bells and whistles and is moving away from insurance based products. Many firms are developing trust based products investing directly in mutual funds and directed brokerage accounts as replacement products. The Directed Brokerage Account has created conflicts of interest with major brokerage firms who do not want their brokers selling the Directed Brokerage accounts. The insurance company recently asked its PPA's and Marketing people basically to lie to brokers of one of the major Broker dealers [will gladly disclose via direct email] or simply not mention that the Directed Brokerage Account is available. Other major brokerage firms [will gladly disclose via direct email] have declined to enter selling agreements with this insurance company to sell their Trust product because of perceived conflicts of interest arising from the Directed Brokerage Account. I am personally uncomfortable with such mandates.

Besides a high degree of discomfort and due to a difference of opinion relating to grandios production expectations, other newly imposed requirements, and the direct promotion and public endorsement by the Insurance Company of a competing TPA's in the same market we are in, topped by a conflict of interest in their replacement Trust product is an unacceptable replacement product.

Therefore, we are seeking to explore other alternatives for 401(k) plan fundng with other media than variable annuity products but short of running Trustmark type programs. According to the OTS, there have been something like 125 applications for Trust charters since 1997. I do not believe these institutions are spending huge amounts of money to establish Trust Companies, just to say they have a Trust Company.

Does anyone know of a broker/dealer, insurance company, or other financial institution that is using a trust type product to market 401(k) participant directed accounts that involve the use of an outside TPA?

If your firm is either selling or administering insurance based daily valued variable annuity products, and are having problems with the carrier of a contract nature or otherwise, I would be interested in hearing from you also to compare notes or problems and the possibility of resolution of conflicts. We may all be in the same boat sooner or later.

J. D. Wright

Benefit Investment Group, Inc.

[Guest Pete Swisher]

We do this--give me a call or email at pete.swisher@unifiedtrust.com.