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How To Approach A 457(B) Plan Administrator?


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#1 fireman44

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Posted 16 July 2016 - 01:31 PM

Hello everyone. I live in New Jersey and I am a paid firefighter.  In my city we have the 457 (b) plan available to us.  

However the options are unfortunately AXA, VALIC and METLIFE.
I have a scheduled appointment with our personnel director who is the plan administrator for Monday.

I am going to ask if she would try to bring in vanguard or fidelity to be a sponsor in our plans. 

 

Now my question is how can I present the case to her for this.  I would like to be prepared. I have done research and I will tell her how the fees on the variable annuity's have excessive fees, such as the Mortality and expense charges. 

 

Does anyone have any links for websites that show how much fees you are actually paying for these variable annuity plans? 

What are some other things i should mention or point out to her in making my case for saying we need Vanguard in our city?

 

 



#2 tony

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Posted 17 July 2016 - 01:18 PM

Hi Fireman

 

I was hoping you would get responses from others this time around since we've communicated before but looks like I am all you've got at this time.

 

I think I would make the case that a non insurance option should be offered because insurance products are more expensive and not everyone wants an insurance product. Explain the layer of fees including surrender fees  which non annuity plans do not have. Also say most good plans offer at least one  low cost- non-insurance- non annuity mutual fund option. I would show the chart that shows that over time those annuity fees eat in to returns significantly . I would also direct the personnel director to this site. I am not sure you will be able to get Vanguard or Fidelity to sponsor your plan but you might be able to set up some type of brokerage or self-direct account that would allow you to link to any fund you want with mininimal additional fees. Aspire would work in this case.

 

Remind her that firemen in particular would benefit from a lower cost because you guys retire earlier than most other professions and could profit from the lower fees. The other thing is to show her what a good 457b plan looks like. Here is the one I am in which is with Blackrock which is impressive: http://www.varetirem...d-profiles.html

 

When you push a 457b change I would encourage them to Add Vanguard, Fidelity, TIAA, Aspire, or TRowePrice  or Blackrock products. You won't get them all added but any off them  would be better than what you now have by a mile. 

 

Also if your personnel person is not an in- the- know -finance  person you may have to speak on his/her level. Explain it on a 5th grade level. Also make sure she doesn't go to an insurance person for advice because they will only lead her back to annuities for obvious reasons.

 

 
Let us know how it goes. You are doing a great thing.
 
Tony


#3 fireman44

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Posted 19 July 2016 - 04:56 PM

Hello Tony once again!

Yes it does look like you are all I have Lol.  Thanks for the help once again!

 

So I had the meeting with the personnel director.

I explained to her about using annuities and the high fees for our 457b plans.

She understood all of that and agreed that there are better options out there. I showed her your list that you recommended. She is going to follow up with these companies. However she does not remain optimistic about bringing in one of these other vendors because of one specific reason.   None of them offer a rep that would come to the city to explain the plan or to sign people up.  Majority of the cops+firefighters are clueless about the high fees and retirement in general.  They love having these reps come in and help them pick investment options or to do the paperwork for payroll deductions.  

However I called Fidelity to give further information and they told me the board of education and the legal aid society in my society have Fidelity as a 457b option for themselves.



#4 tony

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Posted 19 July 2016 - 05:54 PM

 

 

 However she does not remain optimistic about bringing in one of these other vendors because of one specific reason.   None of them offer a rep that would come to the city to explain the plan or to sign people up.

 

Most folks are on vacation so thats why the activity is down. It will pick up soon enough.

 

 

Funny, when I started making noise in my school system that was their first response (see quote). The matter of it is you should not have to suffer because others want to be handheld by an advisor at great personal and often hidden cost. Plus you can be the messenger informing others of the better options.

 

It would not be that hard to add better choices. I would encourge you to tell those in charge that those that want reps can stick with their annuities. You should have equal rights to pursue a better choice and be your own advisor. The status quo is tough to shake but you can do it. Don't give up.

 

Fireman , I applaud you for the job you do. Show the same courage pursuing the change you wish to see in your retirement plan and it will happen.



#5 PFSLRIA

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Posted 14 September 2016 - 08:17 PM

Fireman, Although I reside in Palmdale CA, my firm is an Registered Investment Adviser in NJ, and we work with clients on a fee-only basis. Also, I am a retired civilian member of the NYPD, I am familiar with the 457 plans. I believe I have some suggestions and would gladly discuss over the phone. Please reply if interested and we can schedule a call at your convenience. 732-359-6178.