Brokers, Clients Speak Out On Finra Complaints Over IRA Rollovers

AT&T Ranking

Based in Dallas, the telecommunications company, with 246,000 workers, is one of the largest private employers in the U.S. AT&T’s 401(k) ranks among the best 15 percent of U.S. plans in terms of fees, according to BrightScope, a financial information company that rates retirement offerings. AT&T funds, which are available only to employees, charge expenses as low as .01 percent.

Typically, when employees retire or lose their jobs, they have the option of rolling over their 401(k)s or, in most cases, leaving them behind in the same low-cost investments. At AT&T, they often have another big decision. Along with their 401(k), they can take a pension -- a monthly fixed payment for life -- or an equivalent lump-sum payment that could amount to hundreds of thousands of dollars a year.

Business Opportunity

Sensing a business opportunity, broker Richard McCollam, a West Point graduate and former U.S. Army captain with who had worked for insurer MetLife Inc., began marketing to AT&T employees with 401(k) rollovers and lump-sum pension payments.

Starting in 1994, McCollam worked for Royal Alliance, part of AIG’s Advisor Group, one of the largest networks of independent brokers in the U.S., with about 6,000 representatives. While McCollam handled the back office, Kathleen Tarr, who joined him as a broker in 2002, prospected for clients.

“If you are like most AT&T retirees, you probably feel that you are drowning in information that may be confusing and frustrating,” according to marketing material saved by a former customer.

Tarr had an unusual background for a financial adviser. She has a Ph.D. from the University of California at Berkeley, where she studied invertebrate physiology. She taught briefly at UC- Irvine before quitting to raise three boys. She then went back to work as a private-school teacher and then in finance after her husband lost his job as a biochemist.

Chaplain’s Daughter

Like many at Royal Alliance, Tarr and McCollam worked out of their homes, in Contra Costa County, near San Francisco. Tarr, who had just turned 50 when she teamed up with McCollam, had an easy manner with soon-to-be retirees. The daughter of an Army chaplain and granddaughter of a Congregational minister and missionary, she would invite clients to hear her sing at a local Episcopal church, where she led the soprano section.

Tarr won referrals by word-of-mouth, meeting clients both at their homes and, by appointment, at AT&T offices across the San Francisco area.

Mark Siegel, an AT&T spokesman, said the company provides information about benefits, but doesn’t endorse specific financial advisers, which aren’t affiliated with the company.

Siegel said the company periodically sends alerts to employees, such as an email from last October, which warned: “You should research the individuals contacting you and their organizations before doing business with them.”