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Hi. New to academia and have been putting the max into my 403b and 457b options. Since I had so little time to go over the benefits information before starting the new job, I had a fee-only financial planner review everything (it was over 1 foot high). They suggested Valic for my 403b and Pebsco for my 457b (the only vendor who offered the 457b at the time), and TIAA-CREF for my employer contributions to my retirement (Optional Retirement Account). A year later and now Valic, TIAA-CREF, ING, and American Century all offer the 457b. Last Fall, to simplify things and follow the financial planner's advice (she liked Valic better than Pebsco), I signed up for the Valic 457b. Reading the morningstar discussions and these discussions, I spent several hours yesterday trying to get a handle on the fees I have been paying. Although the Valic representative said he didn't know when I asked him, the performance results before and after taking into account management fees suggest that the fees range from 4-10 percentage points out of the total return. Can this be? TIAA-CREF appears to have luke warm returns but low expenses. There are a few Vanguard, Fidelity and T. Rowe Price choices with Pebsco and Valic but now I am worrying about the fees. The Pebsco website only provides the usual prospectus and fee for specific funds, but, does not say anything about additional management etc. fees. Open season is just once a year (Fall) so advice on what I should do at this juncture would be great.

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Guest Daniel Clark

You need to know exactly what all fees are prior to making any decision. If the product reps do not know what their fees are, then simply avoid that product. My guess is they know the fees but they'd rather not discuss them. because they are likely unreasonably high.


A professional advisor (fee-only or otherwise) should be expected to provide you with a clear & simple (and concise) documentation of fees. This is one important element in your decision-making.


Generally, the products you are examining will have a number of fees that require careful scrutiny, at a minimum the following:


1. Contract Charges. These are contracts charged by the issuing company (VALIC, Pebsco, ING, etc.) There may be several contract charges, you need to read the contract to dig these out.


2. Investment Fees & Expenses. These are charges that are related to the specific investment choices you have available to you.


My advice to you is to do nothing further until you are 100% absolutely clear on the fees involved with all of the alternative available for your retirement savings. I would also advise you to make sure you know what you current fee structure is.


As you are paying for advice from a fee-only advisor (which I'd also scrutinize very carefully to make sure that is actually the case) you should pay no commissions or loads on any investment products.


As a result your investment & contract expenses should be well less than 1% per year if not even lower to around .25%. If you cannot get to these fee levels, then your organization's offerings need to be modified accordingly.


Good Luck & Cheers!



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Guest Joel



Surely you have a union. You should present your case to one of their pension and retirement garus. Find out from this "union" about their investment education offerings. If there is none have them start one. Go to your benefits office and do the same. You never should have been put in such an untenable position that you felt your only way out was to hire a financial planner who evidently did not serve you well.




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