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EdLaFave

Omni's Preferred Provider Program --- Vanguard/Fidelity?

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I'm not terribly familiar with Omni as a Third Party Administrator (TPA), but they have something called the Preferred Provider Program, which does NOT have Vanguard and Fidelity.

If a district uses Omni as their TPA, will Omni only allow the district to use the vendors on that list? Can a district demand Vanguard or Fidelity be made available to them?

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My understanding is that those providers can be added for "free".  I don't think those are the only ones that can be added although I'm not sure.   The problem is there is no official procedure to get a vendor added.  I once heard on the phone from HR that if I got ten more people then I can add another vendor.   Instead, went to anonymous people online to learn about SB direct invest.

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1 hour ago, Bashdash said:

Instead, went to anonymous people online to learn about SB direct invest.

Ha, this is so true.  I learned about Lincoln Investments Participant Directed Platform From Bogleheads.  

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My understanding is that OMNI ‘s P3 program includes only venders who will pay their fee. I think it might be about $20 per account? VG or Fido can be used if the district or the union or the investor pays the fee. Sometimes Fido may agree, but never VG.

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Could the district or the TPA structure it so the fee comes from each individual who is enrolled? I ask because I want to know if an argument can be made to the district that this won’t hurt them financially, it’ll just help the employees.

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Ed, have you read Scott Dauenhauer’s WILD WEST? He (“Scottyd” here on the 403bwise forum) discusses TPAs and their possible conflicts of interest. He suggests that TPA fees that are paid by the employee are the least likely to have a conflict interest. He also discusses the pros and cons of an employee TPA fee payed either pre or post tax. His book is aimed at professional advisors but there’s lots of good info for those of us amateurs trying to help out in the 403b world.

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Ed,

It is my understanding that most districts use a TPA to avoid the necessary tracking, expense, and responsibility for maintaining accounts. They choose their TPA to take care of all of it and defer all questions to them. They don't really care if adding Vanguard or Fidelity or XYZ will save members money or if they do, not enough to stop using the TPA. When I inquired to OMNI how I can get on their board to establish criteria for getting vendors added to the Preferred Vendor list, they ignored my question. To date, I don't have a good answer from OMNI. 

Appeals to districts to add lower cost vendors go unheard and the answer has been "our TPA handles all questions. They have the last word." And they mean that or else they wouldn't hire them to run the administration of the 403b/457 plans in the first place. The IRS regulations and record keeping push them into using TPA's in my geographic region. It is much more cost effective.

At best, the TPA has a self-direct option (the lowest cost option on OMNI's list) that any district can easily request to have added to that district's lineup via their TPA. 

But that doesn't mean it's the same in FL or anywhere else. Keep asking the good questions and persevering. 

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Moe, my experience paints a more optimistic scenario than perhaps your post does.

In my experience, the biggest driver behind our district's bad decisions was ignorance and inertia. When they were given proper information and a bit of prodding, they improved. I do believe the Third Party Administrators are corrupt and I found the union to be useless. However, I found the district to be a standard slow moving bureaucracy that has clear flaws but isn't operating with bad intentions.

1 hour ago, MoeMoney said:

districts use a TPA to avoid the necessary tracking, expense, and responsibility for maintaining accounts. They choose their TPA to take care of all of it and defer all questions to them. They don't really care if adding Vanguard or Fidelity or XYZ will save members money

True, but districts will respond to employee requests and pressure.

1 hour ago, MoeMoney said:

...or if they do, not enough to stop using the TPA

I suppose that is one of my central questions. Would a district need to abandon Omni (or any TPA) if they refused? It sounds like Omni can't refuse, which matches my experience in dealing with TSA Consulting Group.

Of course the other central question is, if Omni relents and adds Vanguard/Fidelity, but the district or union doesn't want to pay it, can the individual investor pay it. It sounds like Krow says they can.

1 hour ago, MoeMoney said:

Appeals to districts to add lower cost vendors go unheard and the answer has been "our TPA handles all questions. They have the last word."

That has not been my experience and my intuition tells me that anybody who has said that is either being lazy and/or is ignorant.

I was literally the only person calling for reform and I wasn't even a district employee and I "won".

I had TSA Consulting Group on the phone with the folks at the district and the VP of something or another at TSA Consulting Group acknowledged that they had to do whatever the district told them to do and while they may provide information, they do not make decisions.

...it sounds like you're talking from personal experience, I'd be interested to hear your experience in a bit more detail (my apologies if I've forgotten it from an earlier post).

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On 8/31/2018 at 1:15 PM, krow36 said:

Ed, have you read Scott Dauenhauer’s WILD WEST? He (“Scottyd” here on the 403bwise forum) discusses TPAs and their possible conflicts of interest. He suggests that TPA fees that are paid by the employee are the least likely to have a conflict interest. He also discusses the pros and cons of an employee TPA fee payed either pre or post tax. His book is aimed at professional advisors but there’s lots of good info for those of us amateurs trying to help out in the 403b world.

I haven't. Thanks for your responses.

I'll add it to my queue, but unless I get more involved it might sit there for quite a long while 🙂

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On 8/30/2018 at 5:59 PM, Bashdash said:

I once heard on the phone from HR that if I got ten more people then I can add another vendor.   Instead, went to anonymous people online to learn about SB direct invest.

I'm not surprised to hear that, which is part of the reason I say the only reason this continues is because employees allow it.

I believe I would have quietly done the same thing as you, but they made it so painful and they behaved so "poorly" that it drove me to go much further than I ever really wanted to go.

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