VOX POPULI: Clueless Like Me? Educate Yourself to Protect Your Savings

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By IKU KIRIYAMA
(First published in
The Rafu Shimpo on October 28, 2010.)

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Nisei put faith in the basic honesty of people they deal with. That’s how they grew up with their Issei parents. You trusted authority figures: your doctor, your teacher. When you didn’t know something, you looked to those who had the expertise to guide you right.

We ask friends for referrals because it gives us more peace of mind to hire someone our friends highly recommend. We are uncomfortable (fearful?) with technology—things move so fast; something new pops up constantly. The 8-year-olds we marvel at are not necessarily smarter (well, maybe they are!); they’ve grown up with technology. Everything was manual for us; for me, the electric typewriter didn’t come into common existence until I was well into adulthood. We didn’t have a TV until I was a seventh grader. As I teacher, I cranked the handles of mimeograph and ditto machines. Later, computerized copiers were a challenge. Banking was simple, too; there were only two kinds of accounts: checking and savings. And you never worried about losing the money you put in. And financial terminology? There weren’t any.

When I walked into a local bank in 2007 to do my annual IRA contribution, I expected to do what I had done there for years: go to an open desk, write a check, and leave with the confirmation of my IRA CD renewal. It was simple. A CD that protected my IRA contribution.

Red flags didn’t go up because I trusted. The first red flag: instead of sitting at an open agent’s desk, I was told I had to wait for “someone.” I wasn’t told a “financial advisor,” just “someone.” The second red flag: I was escorted into a private office. The third really big red flag: the agent told me she could help me make more money with my IRA. I said, as I always said, at my age I wanted to protect my money; I wasn’t looking to make money. I was 2-1/2 years from taking the mandatory IRA distribution.

She told me this was still an IRA AND she even had put her mother and father in the same plan. Now, how’s that for TRUST.

When she assured me I would never lose a penny from this “new” IRA, I signed. I consider myself to be careful, very conservative financially,—and educated. After all, I was a teacher all my life. I taught language. Language is the comprehension of the meanings of words. But the language of legal and financial matters is incomprehensible. There went my so-called “education.”

She said it was “safe,” “guaranteed,” “protected,” and I had nothing to worry about. It sounded like my IRA CD. So, that’s the hard thing—when you THINK you understand what you’re being told and can’t recognize that you are being led into something else.

I showed my CPA the contract; he said it was totally unnecessary to take me out of the IRA CD when I was 2-1/2 years from distribution. And, he said there IS risk because investments are tied to the stock market.

A couple of weeks after signing that contract, I received a letter from the corporate office, notifying me that if I chose to change, I had 30 days, BUT it had to be to a like account. I suddenly saw a way to leave that bank and that person who had used me for her own benefit. I went to my primary bank and asked about moving that other account to this bank. Now, I don’t know if I could have moved it to my other regular IRA CD account (with this bank), but I believed that corporate letter saying I had to stay in the same kind of account (an investment account).

My primary bank financial agent did the contacts and paperwork to move the account over.

When I got the statement in 2008, it showed my balance had dropped nearly 50 percent! My heart stopped. So, I rushed to the agent and told him I wanted my “guaranteed principal” moved to the IRA CD. He looked at me, very puzzled. I told him he had said I could take out my money any time. That was when I found out that the “guaranteed principal” wasn’t accessible until I was 77 or 78!! I didn’t understand what an annuity was.

I spoke recently with my friends, Tosh Takahashi and JoAnn Suravech, who have made investments on their own for over 30 years and are savvy about financial terminology. I showed them everything and told them about my ignorance. They have helped me a lot.

The purpose of all the forums I’ve done since 2006 (under the forum title, “Death is a Sure Thing”) was to hopefully help others to learn by my mistakes. I decided I wanted to share the stress of the past three years dealing with this.

On Saturday, November 6, from 2 to 4 p.m., “Clueless Like Me? Educate Yourself to Protect Your Savings,” will be presented at the Gardena Valley Japanese Cultural Institute, 1964 W. 162nd Street, Gardena, the site sponsor. Tosh and JoAnn will sit with me as we follow a Q-A format to explain the language that could have saved me from the unnecessary frustration and tension I have experienced. We will “talk” and have frequent intervals of Q-A for you to ask questions pertaining to the points at hand.

This program is not for people who know what they are doing. Tosh and JoAnn are NOT financial advisors and will not give you “advice.” They are simply my friends who happen to know a lot for their own lives and are willing to define or explain the terminology that I wish I had understood. Then, hopefully you will go for consultations with your agents with more confidence.

A side note: JCI policy is not to have speakers “in the business” as it would imply JCI’s endorsement, and it is a good policy. Recently, I heard the true story about a financial planner who walked around a senior center where seniors were gathered. This person approached many and talked them into signing up for an investment with him. Here is the account as relayed to me by an adult daughter:

“They said that he attended the once-a-week senior lunches (at the senior center), so I would say the majority of the people there were Japanese. They said he didn’t do a presentation but just worked the room by sitting at different tables in the room. I don’t know how long he attended the luncheons.

He was a Japanese American, probably in his late 30’s or early 40’s. My father says that he was told he could get his money “any time” and that he would get a guaranteed interest every year. Well, they ended up putting their money into annuities that had surrender fees for 10 years (or thereabouts) after their initial investment! At their age, that would have meant that my father would be 96 years old before he could get his money without a surrender fee!!

And, unfortunately, the promised interest rates did not apply to all of the annuities so some earned a lot less.

I have no idea who initiated the class action suit, but the law firm was not local. So I have a feeling that this was part of a “scam” that was going on in other parts of the state. As far as the class action suit is concerned, there were a lot of papers that needed to be filled out and submitted in a timely manner, so my guess is that many people (at the senior center) didn’t understand the original letter that was sent to them.

The only person who profited from all this was the person who sold them the annuities because I think he earned quite a commission for himself.”

Reservations are required for the Nov. 6 forum at [email protected]; or (310) 326-0608. Please do not call JCI. A small donation is requested at the door to cover the costs.

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The opinions expressed in this column are not necessarily those of The Rafu Shimpo.

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