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radase

Aspire?

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I received clarification from our third party administrator, OMNI, that Aspire will be offered to us and not Fidelity directly (which is what we were originally told).  Within Aspire, we'll have hundreds of options to select from including Fidelity, Vanguard, etc. 

Omni provided me with their fees:

Fees charged to participants by Aspire:

  • Annual Account Maintenance fee - $40
  • Custodian and Administration Fee – 0.15% of the value of the Account
  • These fees will be assessed on a monthly billing cycle and will be assessed, pro rata from the assets in the Account.

Therefore, our new choices will be TIAA, Security Benefits (NEA Direct Invest) and Aspire.  This is a major improvement  from what is currently available: AXA, Ameriprise and Lincoln Investments.  

Any feedback on Aspire would be greatly appreciated.

 

 

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  • Security Benefit's NEA DirectInvest allows you to build a fully diversified portfolio for roughly 0.07% and a yearly fee of $35, which is waived when your balance hits $50,000.
  • ASPire allows you to build a fully diversified portfolio for roughly 0.21% and a yearly fee of $40, which I don't think is ever waived.
  • TIAA allows you to build a fully diversified portfolio for roughly 0.63% and no yearly fee.

I documented both NEA DirectInvest and ASPire on this page, I specifically documented NEA DirectInvest on this page, and I documented TIAA on this page.

The numbers speak for themselves. NEA DirectInvest is your best option, ASPire isn't as great but isn't egregiously expensive, and TIAA is very expensive relative to the other 2 options.

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Hi Radase,

We did a podcast on Aspire: http://teachandretirerich.libsyn.com/episode-11-mark-luckinbill-of-aspire-financial-services-0

NEA has notoriously taken advantage of teachers over the years http://403bwise.com/wisecracks/entry/30. In fact they were sued for this: http://www.nytimes.com/2007/07/17/business/17suit.html They do now have a lower cost option but until they cease their high fee arrangement via Security Benefit I would avoid them if possible.

I think you are better off looking at Fidelity or Vanguard via Aspire. TIAA has been in the news for some very poor business practices. I have written about this http://403bwise.com/wisecracks/entry/315 and we just released a podcast about it http://teachandretirerich.libsyn.com/episode-54-tiaa-troubles. I happily use their fixed annuity account as you will read. 

Good to see you have some improved choices. - Dan 

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It is a happy day when our immediate personal interests align with the best way to affect collective, long term, positive change and that's the opportunity we have with Security Benefit's NEA DirectInvest.

Whatever sins NEA and Security Benefit have committed and whatever blowback was generated (and few people would attack such behavior with more scorn than I have and continue to), the end result was the creation of an objectively elite, arguably the best, 403(b) plan. For obvious reasons it is in the interest of the individual to take advantage of such a great product, but it is also in the collective interest to reward companies for turning around and delivering a superior product.

If we don't reward companies for (eventually) doing the right thing then public pressure becomes an entirely useless tool for reform, it is a self-destructive proposition. If we don't support the best product then we destroy the alleged benefit of the free market because the best product will end up losing.

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Dan and Scott did an April, 2016 podcast #26, where they suggest that NEA started Direct Invest because of a discussion with Dan and Scott. (starts at minute 22.) You could say that 403bwise is directly responsible for Direct Invest.http://hwcdn.libsyn.com/p/5/8/e/58e99ec31b570c53/2016_26_ntsa_nea_blues.m4ac_id=11743849&destination_id=384439&expiration=1512763375&hwt=3cc3d176e1628e26b04e20d141dffcb3

Dan now says Direct Invest should not be used because that would “reward” SB. Does making use of SB’s Direct Invest financially benefit SB significantly? I don’t think so. Does it increase their ability to take advantage of their usual K-12 prey? I don’t see how because Direct Invest is internet based, not rep based. The low Admiral class ER fees go to Vanguard with the exception of the 12(b)1 fee of 0.01%. The administration fee of $25 per year is very low compared to other vendors (and is waived for accounts over 50k). 

Who is actually paying for such a low cost plan? NEA must be using some of the over 2M per year they receive from SB for the use of the NEA name on their expensive Valuebuilder products. The cost of running Direct Invest is supported indirectly by the many teachers paying very high cost of the other SB 403b plans with NEA attached titles. I say that using some of the >2M/year to support Direct Invest is a good use of those funds.

I agree with Ed that if a 403b plan is very low-cost and has a small but adequate number of Vanguard Admiral class funds, we should consider it a good plan and worth using (and recommending).
 

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I'd certainly consider using NEA Direct, but it would never be my first choice. It's certainly not the best 403(b) in the U.S. and part of the reason the product exists is to create a pool of potential NEA Valuebuilder clients, so participants need to be careful when using the product that they are not bait and switched. Security Benefit has no intention of doing what is right for participants. They are not interested in a Fiduciary Standard and their reps are not fiduciaries. This is simply an opportunity for people stuck with really bad providers to find a release valve and a decent one at that, no reason not to use it and benefit from it...as long as one understand who is behind it and to always be wary.

I'd consider TIAA for Real Estate and Fixed Income (TIAA Traditional if the liquid version). As for ASPire, they are a good option if you are looking for more open architecture and need more asset classes to choose from.


ScottyD

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Scotty

Over the years, you, Dan and I have talked to many professionals with Valic, Fidelity, Vanguard's 403b department (Dan and I had a personal conversation with Jack Bogle, who is the quintessential professional who understands how horrific the public k12 403(b) is), even a DC lobbyist for the insurance industry, Brian Graff had the courage to give a presentation of his industry's view of the 403b world to our committee (about his laughable "Project Transparency"). Our committee rejected his so-called project, and he walked out of our meeting in a huff! But guess what? In the following weeks, NEA agreed with Mr. Graff's professional organization and his unenforceable transparency project. (His presentation to our committee was recorded here: https://www.bing.com//search?q=LAUSD+Brian+graff&view=detail&mid=5DD6AB58EEC295E0D1335DD6AB58EEC295E0D133&FORM=VIRE). He is the 100% opposite of Mr. Bogle as Mr. Graff sees nothing wrong with the current 403b. He bragged about NEA agreement about project transparency on his organization's website. Scott, you wrote all about that experience on your blog. A great piece. 

None of the unions would dare engage in a conversation with us 403(b) reformers, which is understandable, but neither has Security Benefit. I don't believe SB has ever talked to you or Dan. And for good reason SB will NEVER talk publically about their view: SB sits on one of the most lucrative gold mines found: helpless NEA members forever, as long as the NEA 3.5 million members never find out the real deal, and those in their horrific 403b, how they are getting screwed and not knowing it. SB sends NEA $2+ million every year. 

This is what I think about everytime the low-cost direct invest discussion comes up. Its the principle of the thing that concerns me. This is my imagination as I have talked to so many of our colleagues for 20 years about how they think about personal finance. So many are totally clueless and have no chance with some of the savviest product salespeople on the planet. There are so many very clever and petty obstacles to getting to the low-cost product (that's what my free pdf book is all about, Fighting Powerful Interests). If a new teacher trips-up, just a little, trying to enroll in direct invest and they "accidentally" talk to a SB adviser, all bets are off, they will most likely be talked into the expensive 403b product. 

I wonder how many teachers were lucky enough to successfully enroll in direct invest. I just wonder how few there are....

Steve

 

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I am in the process of transferring my AXA accounts to Aspire. My experience so far has been very positive. There are thousands of options to choose from in Aspire. I liked that if you liked Vanguard, you could go that direction, if you liked Fidelity, they were they there as well. There was also Schwab. When I opened it, I did not have the $10,000 minimum but I was able to pick admiral shares. I don't want to get into the argument of SB self-direct, but when I looked into it, I did not see a lot of fund options. That was some time ago, so it may have changed. 

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1 hour ago, LibraryLady said:

if you liked Vanguard...if you liked Fidelity...I did not see a lot of fund options. That was some time ago, so it may have changed. 

You only need one to three funds and there is really no value in buying from multiple fund families. An index fund is a commodity, it doesn’t really matter who you buy it from if the expense ratio is low. 

Your post didn’t explicitly say what you’d do with all of the options available to you, but using a set of options beyond the minimal subset you need is a great way for investors to sabotage themselves.

Simplicity is King. Don’t do something, just stand there!

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I am a firm believer in the 3 or 4 fund portfolio. What I meant is that some people prefer Fidelity Investments, some Vanguard, some Schwab. You could create your own 3 or 4 fund portfolio using your preferred company.

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Radase,

It has been a while since I posted here. I am wondering how it came to be in your district that OMNI was able to include Aspire as an approved vendor?

That has been an arduous project for many and forgive me if you already explained that here. For reasons stated above, I would stick to Aspire because there is no smoke and mirrors or bait and switch. I made that switch from AXA and have only regretted we didn't win that battle years earlier.

Did you have a hand in bringing in Aspire?

 

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