My girlfriend started working at a new school in a new state, and has access to a 403(b). I'm in the private sector, and familiar with 401(k) rules, but just starting to learn about options for educators. As far as I can tell, the only options she has are fairly fee heavy. She can choose to invest in some great Vanguard funds, but the vendor/provider charges a quarterly fee of $15, and a .9% fee for their "advisor services." This appears to be mandatory.
Some questions I have
- Is there really no way to avoid the .9% fee? The advisor's email stated "The lowest fee schedule that I have for self-directed plans is .90% per year mgmt fee (this is how I am compensated - the school does not pay me or provide a match)." Is this typical? Is there any language I am misunderstanding where she can opt of of the management fee?
- Can she select another vendor? I think the answer is no, this school has chosen a single vendor.
- Can she influence the school somehow to seek better options?
Operating under the assumption that the .9% fee can not be avoided, my assessment is that she should still contribute as much as she can to the 403(b) for the tax benefits, and then just roll it over into an IRA when she leaves this job.
Some additional details in case it matter:
- The vendor is Lincoln Investment Services, the only "plan type" listed on the sign up form is "RetirementSOLUTIONS PREMIER", which is a "mutual fund only advisory platform where advice is provided by your Advisor and Lincoln for an asset-based fee."
- the form also has check-boxes for pre-tax 403(b), roth 403(b), pre/post 457. I don't know if these are actually available to her or just listed on the form.
- The language in the agreement form for the services is as follows:
Advisor Services - Your Advisor offers non-discretionary investment advice and assists You in the construction of an investment portfolio based on Your fi nancialsituation, risk tolerance, investment objective(s), and any investment restrictions imposed by You. Transactions in your account will only beinitiated with your verbal or written instructions or authorization.