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OCPS (FL) Reforms Retirement Plans, Adds Vanguard and Fidelity

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We achieved a pretty big partial victory in that Vanguard (403b) and Fidelity (403b and 457b) will be available to OCPS (FL) employees beginning in August of 2018! Still lots of work to do, eliminating unethical vendors is a huge goal, but this is a great start.

I wrote about it here.

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That’s fantastic Ed! Congratulations!! You’re wife’s colleagues owe you big, but we know most won’t take advantage of the low cost vendors. Fidelity is a big improvement on the PlanMember 457. I’m looking forward to further chapters.

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Wow! Great job Ed and to your wife.

This is where the discussion and the ACTION must go--reform the corrupted 403(b) and offer genuine investments, such as Fidelity and Vanguard. 

Steve

 

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On 7/5/2018 at 4:50 PM, krow36 said:

That’s fantastic Ed! Congratulations!! You’re wife’s colleagues owe you big, but we know most won’t take advantage of the low cost vendors. Fidelity is a big improvement on the PlanMember 457. I’m looking forward to further chapters.

Yeah, for selfish reasons I loved getting Fidelity on the 457b list. My wife is already maxing the 403b and now she’ll have an elite 457b option when she is ready to start investing more.

It is hard for me to know how significant this partial victory is. I wish I had access to the stats to see how many people ultimately sign up. If I’m being negative, I’m fearful the existence of these excellent options will allow the district to point to them as a reason to stop future reform because “more choice is better”. So if people don’t take advantage of these new plans, their existence may hurt more than help.

OCPS (Fl) only implements changes once every five years. So it seems I’ll have some time off, but I may try to reform neighboring districts in the mean time. Who knows, maybe it’ll even benefit me directly if my wife winds up switching districts at some point. 

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Remarkable Ed! Congratulations! Perhaps your wife's new 457 will take preference over her 403b. Do you think it's replicable in other states?

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5 hours ago, Rtngolf said:

So Ed any tips to offer on how you pulled this off?

I’m going to think about this. It might result in a new blog post on my site. Either way, I will post about it here. 

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2 hours ago, MoeMoney said:

Remarkable Ed! Congratulations! Perhaps your wife's new 457 will take preference over her 403b. Do you think it's replicable in other states?

Fidelity and Security Benefit’s NEA DirectInvest are so similar that my wife and I couldn’t put ourselves through the pain of switching. Although it was tempting to begin considering that until I remembered the pain of originally enrolling 😀

I absolutely think what I did is replicable in other states. Perhaps I am naive, but I think the problem is primarily ignorance on the part of districts. I think sharing knowledge can easily get new vendors added. Now removing unethical vendors may be trickier because there may be relationships (financial or otherwise) that might get burned up in removing vendors.

I still flirt with the notion of a state legislator solving this problem for every district. Or somebody like Rubio pushing for the TSP plan for all...although you’d need somebody other than Rubio to make it happen. Still, the district by district approach can work...it is just more fragmented and piecemeal. 

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I wouldn’t switch but consider new plan. 

I read your website. It’s phenomenal. I also have one that I started to compile my frustration and to offer insight, support and guidance. I am going to call our assembly woman and request reforms. Do you think your pushback from OCPS was born from ignorance or something else and who was the somebody else (what stakeholder or position) you referred to who intervened and made that call? 

How inspiring!

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Thanks for your nice words. You should leave a link to your site.

Long story short on the pushback, I think the biggest obstacles were:

  1. Ignorance, pure and simple. People just don't know this stuff.
  2. Fear of legal liability so they trust the unethical third party plan administrator, in our case TSA Consulting Group.
  3. The desire to not add more work to their stack. After all, the 403b/457b plans are set and I don't think anybody complains about them!
  4. There may or may not have been corruption and relationships between decision makers and unethical vendors.

More specifically here are a few of my thoughts:

  1. I'm just some random person. Nobody knew me in the slightest and I wasn't even an OCPS employee. So I think most folks probably began from a place of distrust and could have easily dismissed me without any pressure to address the concerns of an "outsider."
  2. Everybody is probably super busy with their core responsibilities and if they aren't, they still prefer not to do "extra" work. These forces push people to leave well enough alone.
  3. There was ignorance from start to finish, but the folks at OCPS Retirement Services were surprisingly ignorant (not meant as a pejorative). So there was a hurdle to educate them and even then, I got the sense that they didn't feel comfortable taking action on a topic they know little about.
  4. I was disappointed in the union. Although I eventually spoke with them, they'd regularly ignore my repeated communications and they never informed me of what they did with the information I gave them. I got the sense that they weren't well organized and that this issue was rather unimportant to them. The union plainly had a relationship with Security Benefit.
  5. Most school board members ignored my emails and the handful that didn't expressed either no interest in helping or declared that they couldn't help because this wasn't a "policy" issue (I disagree). Luckily, I repeatedly spoke at school board meetings and on a couple occasions the chairman, Bill Sublette, expressed a personal interest in investing and found the fees to be extremely unfair. My politics are quite progressive and he is a Republican politician. Although he didn't push to address the bad actors (I'm guessing because he believes choice, even bad choices, are inherently beneficial or because the work/cost to do so would have been too much) he told me he'd get Vanguard and Fidelity on the list. I'm guessing Bill Sublette is the primary/only reason I was successful. It was absolutely unexpected and quite pleasant to get that support from "across the aisle."
  6. By far the worst actor was the TPA, TSA Consulting Group, and in particular their Executive VP Steve Banks. The folks at OCPS Retirement Services insisted on including him on one of our calls and he vaguely threatened me with some kind of legal liability and gave all of these reasons why Vanguard and Fidelity are bad and all of the others are good. I got the sense that he/TSACG put a legal fear of god into OCPS Retirement Services and due to their ignorance they basically just followed whatever TSACG/Steve said. If Bill Sublette was our hero then TSACG/Steve were our clear villains.
  7. I can be a bulldog with the deficit of tact that you'd expect from an engineer. I'm sure that hurt my cause from time to time because this work is about relationship building and getting people to like and trust in you.

...ultimately the person who intervened on my behalf to get me into the NEA DirectInvest plan was an employee of an unethical vendor. First they tried to pitch me and they quickly recognized that I knew what I was talking about and even admitted that they basically invest with the same philosophy I espouse. After that they volunteered to help me. I don't fully understand why. Maybe they wanted to do the "right" thing and help. Maybe they wanted me to be taken care of so I wouldn't stir up any more trouble? Maybe both? I don't know.

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That's a clear summary. I can imagine confusion as to why you were doing this, on behalf of OCPS employees and you are not one. It sounds like there are many employees.

On Long Island, there are about 133 individual school districts, each with their own slate of vendors. There is no single entity. My district has about 250 eligible participants but we are among the smallest on LI. There would need to be action taken in each individual school district and buy-in from the same players times 133. I have appealed to one, but still, there are very few listeners taking charge of their own 403b/457's and the 2 self-direct options now available to them.

Thanks for your efforts and for summarizing. Yes, we'll probably be reading your new blog post shortly, now that you wrote it here.

Believe it or not, I've struggled with revealing my identity vs. anonymity on my 403b website but don't think it matters at this point, and it will propel me forward. I'll be adding it and sharing it here shortly. 

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Ed, Funny story about TSA consultants

TSA consultants is our TPA for the 403b.

Because our advisory committee focuses on the lower cost 457b plan, TSA Consultants sent one of the legal counsel to our committee meeting and began lecturing us about the IRS requires plan sponsors (our district) to bring "meaningful notice" to the 403b plan. Meaning more publicity and attention to the 403b. This guy threated us that if we don't bring meaningful notice, "The IRS could shut down the 403b plan!" We said "That would be GREAT! Shut it down!"

We never heard from TSA Consultants legal counsel ever since. These people have scared districts legal counsel for decades with this utter bull. The IRS requires one notice a year for the 403b plan and our district was in complete compliance. But TSA consults thought they could scare us into doing more. Their tactic BACKFIRED! It's a new world, the investment world has changed and the thinking about plans and how they are managed has changed dramatically, and best of all, more and more nonprofessionals are serving on advisory committees. 

Steve

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To all readers!

I urge any employee working at any profession to ask how their 401k, 403b, 457b plans are decided and managed. Sometimes there is an advisory committee. Join it and you will learn all there is about how the game is played. When employees themselves are on the committee, surprise, surprise, the costs get lower, and the investing gets simpler, and annuities begin disappearing. It's funny how it works that way. 

My free PDF book Fighting Powerful Interests shows how we went from an expensive 403b plan to an Award winning 457b plan in the 2nd largest school district in the country. Besides my story,  I have all of my correspondence to school board members, union leaders, the President, ERISA, financial and educational magazines, and Fidelity and Vanguard. 

 

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