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mikew031

Security Benefit's Nea Directinvest Vs. Lincoln Investments Partic

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Good Afternoon,

 

First, I would like to thank everyone for the wealth of knowledge posted here. The amount of information presented on this website and forum with regards to 403b is second to none. As with many teachers, I too fell for the sales pitch of an AXA Equitable "Advisor" when I began my career 7 years ago. Until the beginning of last year, I was depositing a very small amount out of each paycheck into my AXA account. Through more research, I realized how much equity I was losing with my investments. I began looking into other options my school district offered and realized that there was only one viable option for my 403b, Security Benefit's NEA Direct Invest. A little background into the situation can be read here:

 

https://www.bogleheads.org/forum/viewtopic.php?t=179734

 

The beginning of this school year, i began depositing into my NEA Direct Invest account. Through Direct Invest, I'm fortunate enough to have access to Vanguard Admiral shares VTSAX and VTIAX. As of now, I have only been making relatively small deposits for fear of hidden fees. Has anyone definitively found out if there are any hidden fees associated with NEA DirectInvest other than expense ratios and the $35 yearly fee?

 

From reading this forum, I have gathered that Lincoln Investments now has a similar platform. Is this also a viable option? Opinions on which is better?

 

Thanks,

Mike

 

 

 

 

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Postby Teacher88 » Tue Feb 14, 2017 8:27 am

I started investing with Security Benefits DirectInvest plan a year ago. Other than the actual transfer of funds to them, I have had zero issues so far. The website is great, very user friendly. I cannot see where they are charging me any fees other than the ones clearly explained. If your only options are garbage like in my district I would not hesitate to invest with the NEA plan. Not sure why but the actual log in page to access your account is at w www.securityretirement.com w It took me a while to figure that out.

 

and

by corysold » Tue Feb 14, 2017 2:32 pm

Thanks for the update Teacher88. I've been meaning to post my experience but just kept forgetting.

But I concur with what you said. No hassles so far. No hidden fees. Very nice website. Easy to change/adjust/rebalance funds.

No complaints.

 

https://www.bogleheads.org/forum/viewtopic.php?f=2&t=180418&p=3238882#p3238882

In addition, the first of the recent NY Times series on 403b problems in the K-12 world mentioned the Security Benefit Direct Invest 403b although it didn’t actually name it. https://www.nytimes.com/2016/10/23/your-money/403-b-retirement-plans-fees-teachers.html?smid=tw-share&_r=0

In order to use Direct Invest, you need to have Security Benefit on your district's 403b provider list which was not the case initially. Is Lincoln Investment Group on the list? I see we've traded posts on the thread you posted above.

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From reading this forum, I have gathered that Lincoln Investments now has a similar platform. Is this also a viable option? Opinions on which is better?

 

Lincoln Investment Group (LIG) doesn't seem to want their Participant Directed Platform to be widely available. They apparently require that the application form be acquired from a regional office. It has a larger selection of Vanguard funds than does SB Direct Invest, but does charge $60/yr rather than $35/yr--not a significant difference in my opinion. A recent BH poster said LIG told him that PDP was not available in his MD school district. I certainly don't see any reason to change a 403b from SB Direct Invest to the LIG PDP plan. If LIG is on your district's 457 provider list, then I think the PDP is worth considering for a 457. If LIG is not on your district's 457 list, you could ask your HR office to add it.

 

 

 

 

 

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Krow36, Thank you for the insight. It is greatly appreciated. While I do have Lincoln Investments as one of my options, I think I will stick with Security Benefit. While I'm not thrilled investing with Security Benefit, it seems to be my best option at this current time.

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From reading this forum, I have gathered that Lincoln Investments now has a similar platform. Is this also a viable option? Opinions on which is better?

 

Lincoln Investment Group (LIG) doesn't seem to want their Participant Directed Platform to be widely available. They apparently require that the application form be acquired from a regional office. It has a larger selection of Vanguard funds than does SB Direct Invest, but does charge $60/yr rather than $35/yr--not a significant difference in my opinion. A recent BH poster said LIG told him that PDP was not available in his MD school district. I certainly don't see any reason to change a 403b from SB Direct Invest to the LIG PDP plan. If LIG is on your district's 457 provider list, then I think the PDP is worth considering for a 457. If LIG is not on your district's 457 list, you could ask your HR office to add it.

 

I signed up for Lincoln at the end of last year. My district added Security Benefit over the summer. I plan on switching from Lincoln’s PDP to DirectInvest. The $35 fee is waived in the Direct Invest plan when you exceed 50,000. As I understand it, I will only be paying the expense ratios on the funds I choose. I’m using:

Vanguard total stock

Vanguard total international

Vanguard intermediate term bond

I was putting 20% in Vanguard Total Bond when I was in the Lincoln plan but it’s not offered in the Direct Invest

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jebjebitz, that is a great portfolio. Those would have been my exact choices.

 

I just wanted to speak to the justified fear that financial institutions are trying to trick you out of your money. We opened a Security Benefit NEA DirectInvest account in April 2017. On 7/7/2017 we were charged an $8.75 fee. On 10/6/2017 we were charged another $8.75 fee. So they seem to be honestly upholding their promise of charging just $35/year.

 

Even though Security Benefit itself is an unethical company, we couldn't be happier with the plan.

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Lincoln Investment Group (LIG) doesn't seem to want their Participant Directed Platform to be widely available.

 

Companies fear smart people who understand the mechanics of investing, they would prefer to sell you high priced garbage if you let them. I am greatly encouraged by the participants on this board and the great advice they give. Why are not more people asking questions on this board???

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jebjebitz, that is a great portfolio. Those would have been my exact choices.

 

I just wanted to speak to the justified fear that financial institutions are trying to trick you out of your money. We opened a Security Benefit NEA DirectInvest account in April 2017. On 7/7/2017 we were charged an $8.75 fee. On 10/6/2017 we were charged another $8.75 fee. So they seem to be honestly upholding their promise of charging just $35/year.

 

Even though Security Benefit itself is an unethical company, we couldn't be happier with the plan.

Thank you Ed. I appreciate and value your opinion on this. I wasn’t sure if I could use the intermediate term bond fund the same way I was using total bond in my Lincoln PDP. I wanted to ask the members on this board about it but I was having password trouble. I started a thread about it on bogleheads and got some great advice which can be seen here:

https://www.bogleheads.org/forum/viewtopic.php?f=1&t=230187

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Lincoln Investment Group (LIG) doesn't seem to want their Participant Directed Platform to be widely available.

Companies fear smart people who understand the mechanics of investing, they would prefer to sell you high priced garbage if you let them. I am greatly encouraged by the participants on this board and the great advice they give. Why are not more people asking questions on this board???

I wish more of my colleagues would ask questions here. When I talk to them they are so certain that this is something they can’t understand. I feel if they were to just enter their info into the fee calculator on this site they might be motivated to at least call their rep and try to get answers about what they’re paying in fees. Although the problem with talking to some of these reps is the have a real knack for making you feel unqualified.

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Thanks.

 

I'd be 100% comfortable replacing total bond with intermediate bond. I'm not super knowledgeable about the nitty gritty details of bonds because they make up such a small part of my portfolio but my understanding is intermediate is slightly more risky. If that bothered someone, they could slightly reduce their stock allocation to compensate for the switch away from total bond...my intuition suggests such a change is unnecessary though.

 

Sales reps are great at what they do. They tap into your greed, fear, and submission to authority all at the same time. When I have to talk to a particularly slick rep they can sometimes activate those primal parts of my brain and trigger that nervous feeling in my stomach. Luckily my logic, knowledge, and experience being repeatedly exploíted is too strong to be overcome, but I totally understand how they overwhelm people. It is a science.

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Hello,

i am new to this forum and have been talking with my rep about transferring my money to the the Nea Valuebuilder directinvest.  The expense ratios are extremely low for all funds and the yearly custodial fee and up front sales charge appear to be zero. Unlike my previous option 3 fund which had a 1% custodial fee per year. They are trying to move me to a option 1 fund with a 4% up front sales charge on new investment money and a .35% yearly custodial fee on the total fund balance. Is having an “advisor” worth that much? These “advisors” didn’t even tell me to rollover to option 1 when the fees became greater in my current option 3 fund.  I had to do that on my own.  I am certain that the directinvest is the way to go.  More info to come.

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Hey Jrhorns,

I may not clearly understand what you've said, but the first red flag is that you're talking to a rep. As a general rule you should never trust a rep. I assume the rep you're talking to is from Security Benefit, in my experience their reps have an awful mixture of ignorance and exploìtative tendencies.

Security Benefit's NEA DirectInvest does not require a rep. I have a page that describes how we enrolled in Direct Invest, some of it is specific to OCPS (FL), but you'll probably find it useful. The fees for Direct Invest are a $35/year fee (waived when you hit 50k balance) and the rock bottom expense ratios of the funds (which I believe include a 0.01% 12b-1 fee).

Under no circumstances should you ever pay a sales charge (aka, a load) and paying more than roughly 0.16% via an expense ratio is also unnecessary. In my view, paying 0.35% for the pleasure of having an account is absurd because (assuming 6% returns and 3% inflation) it consumes 11.67% of real profits after 1 year and 14.96% of real profits after 30 years.

In my view, advisors wouldn't be worth it if they were free and they're very far from free and you're right, Direct Invest is the way to go. I’ll leave you with my favorite quote on investing from William Bernstein, “act as if every broker, insurance salesman, mutual fund salesman and financial adviser you encounter is a hardened criminal.”

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I’m a little confused too Jrhorns. Who is this rep? Where is your money being held now? I have to second what EdLaFave said. Do not get involved with a rep. The only one who will make out is the rep. My “rep” did nothing for me for years, I just didn’t have any other options. Direct Invest won’t let you have a rep, I believe, and again, you don’t need one. Read JebJebitz’s post. Those are good funds, except I can’t comment on the bond portion. Your only decision is asset allocation. What percentage of stocks to bonds do you want? If you are not comfortable with that, come back here and ask and I can provide you with a link that would help you with that. The rep will try and make you feel like you can’t do this alone. You can. One thing to be aware of. If your money is already currently in a variable annuity, there is likely a surrender charge. Please come back with more info. People here would love to help you out. 

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I currently have the Nea Valuebuilder option 3 it’s an old fund from 2002 that can be researched but no longer available for new customers and it was my only good option at the time.  Now that I have $150,000 in the account and $1,500 going to security benefits every year In custodial fees I have decided to rollover my money into something else without any surrender charges.  I am thinking that Nea direct invest is my best option as I love Vanguard funds and their low expense ratios, high returns and excellent Morningstar ratings.  The other directinvest fund options are good as well even the troweprice target date fund has lower fees and nearly the same yearly gains as the target date funds in my current plan.  The rep is the financial advisor that works with my particular Nea Valuebuilder account and I’m not knocking him by any means. The historical returns have been much better in my current funds than the directinvest fund and the number of funds available are alot better, but I have 10 more years of teaching and its time to let that increasing custodial fee go to work for me. I have been making my own fund changes for the past 5 years anyway.  So the doityouself option should be fine for me. But if the directinvest funds perform 1% less next year than the my current account then the yearly custodial fee really was a wash ... am I right?

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