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JudyS

Easy Question Re: Agreement Form

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I applaud Vanguard because their position is completely consistent with doing what is in the best interest of ALL their mutual fund shareholders. Their refusal to attempt to be all things to all people is a key ingredient of how they are able to deliver unique investment offerings to investors. Let's face it, the SD 403B market is really messed up (read: costly to serve) - particularly when there are multiple vendors and weak 403b Plan governance structures.

 

I do not agree with the position that Vanguard is in the wrong. ScottyD - tell us why you think they should agree to all the ISA's? I'd really like to understand - is there some obligation I am not aware of? SD's who want Vanguard Mutual Funds can readily make that happen. 403b participants need to wake up and realize that the primary implication of the new regs is to move the decision on vendors and investment fund options to the SD's.

 

If the teachers (such as Ft6 & the other "smart" ones) that want Vanguard or Fidelity Mutual Funds or a Vendor are so upset about the loss of low cost & index alternatives from V & F, then it is time to get active and influence YOUR EMPLOYER who is responsible for the SD Plan & its structure.

 

Cheers,

 

DC

 

 

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Intruder,

The truth hurts. I am going to pull all of my money out of VG and stick it under my mattress. Even though it pains me that VG does not want to deal with SDs, VG is a great investment company and will remain a great company for a long time. Dealing with SD policy is a different issue, thats what Scotty is talking about. Don't even try to equate the two as you are implying in your question. Why would a great company such as VG want to deal with SD personnel who are the most rigid, ignorant and arrogant people ever to walk this earth? Why? VG has too much class to deal with petty issues. If you think VG should be torn from limb to limb, think about the people we educators have to deal with everyday. You have no idea.

Have a great weekend,

Steve

 

 

Steve:

 

Where do you get the idea that I implied anything that you alluded to me in your response? I only asked if anyone was interested in responding to the issues Scotty raised. I dont care about the culture of SD adminstration and politics which is why I would never work in the type of environment that you describe.

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I applaud Vanguard because their position is completely consistent with doing what is in the best interest of ALL their mutual fund shareholders. Their refusal to attempt to be all things to all people is a key ingredient of how they are able to deliver unique investment offerings to investors. Let's face it, the SD 403B market is really messed up (read: costly to serve) - particularly when there are multiple vendors and weak 403b Plan governance structures.

 

I do not agree with the position that Vanguard is in the wrong. ScottyD - tell us why you think they should agree to all the ISA's? I'd really like to understand - is there some obligation I am not aware of? SD's who want Vanguard Mutual Funds can readily make that happen. 403b participants need to wake up and realize that the primary implication of the new regs is to move the decision on vendors and investment fund options to the SD's.

 

If the teachers (such as Ft6 & the other "smart" ones) that want Vanguard or Fidelity Mutual Funds or a Vendor are so upset about the loss of low cost & index alternatives from V & F, then it is time to get active and influence YOUR EMPLOYER who is responsible for the SD Plan & its structure.

 

Cheers,

 

DC

 

 

While I will let Scotty respond to your question could you please tell me where in the regs is it implied that SD make decisions on selecting investments. How do the regs require selection of vendors by SDs in those states that require that SD accept all vendors? Why cant the a SD hire a TPA who will then select the vendors? As has been discussed numerious times on this site there is a lack of any state laws that place fiduciary responsibiliy on SD who maintain 403b plans.

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Intruder,

 

Where do you get the idea that I implied anything that you alluded to me in your response?

 

Because its you.

 

I only asked if anyone was interested in responding to the issues Scotty raised. I dont care about the culture of SD adminstration and politics which is why I would never work in the type of environment that you describe.

But I care because your statement fits VG position pecfectly ("I would never work in the type of environment that you describe"), I have read the lunatic RFPs that procurement departments issue and I have been on a select committee to hire potential financial consultants, the demands, the secrecy (some legitimate), its not a document that a class act would respond to. Its a document that reflects unrealastic demands that no genuine business partner would enter into. Lastly, the business philosophies are totally different, VG clients are shareholders of the company their best interests are important, SD's teachers a mere pawns to be used to fit a puzzle with little or no respect. SDs expect to treat all contractors the same as their teachers.

 

I have begged and pleaded with VG to come to one of our 457b advisory meetings to talk about their 3 index funds in our selection. I have written a letter to the CEO about this with no response. I am sure when I mentioned LAUSD, they said forget it! I am disappointed about this but I also understand their position.

 

I am not making this up. The former head of the western region of TIAA CREF told me of the differences between working with Pepperdine University a private colleage and working with just about any SD. The difference between the two with having a plain ordinary meeting to do anything was staggering.

Oh yes, my union trashed TIAA CREF and me for nagging them about getting a simple approval status.

 

Why in heavens name would VG enter into any business deal with public schools?

I would think this would justify your political opinion between public and private. Yes?

What is your solution to this problem?

 

Have a great mother's day,

Steve

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I applaud Vanguard because their position is completely consistent with doing what is in the best interest of ALL their mutual fund shareholders. Their refusal to attempt to be all things to all people is a key ingredient of how they are able to deliver unique investment offerings to investors. Let's face it, the SD 403B market is really messed up (read: costly to serve) - particularly when there are multiple vendors and weak 403b Plan governance structures.

 

I do not agree with the position that Vanguard is in the wrong. ScottyD - tell us why you think they should agree to all the ISA's? I'd really like to understand - is there some obligation I am not aware of? SD's who want Vanguard Mutual Funds can readily make that happen. 403b participants need to wake up and realize that the primary implication of the new regs is to move the decision on vendors and investment fund options to the SD's.

 

If the teachers (such as Ft6 & the other "smart" ones) that want Vanguard or Fidelity Mutual Funds or a Vendor are so upset about the loss of low cost & index alternatives from V & F, then it is time to get active and influence YOUR EMPLOYER who is responsible for the SD Plan & its structure.

 

Cheers,

 

DC

 

 

Hi Danc,

 

I'll have to review my posts, perhaps I misspoke. I never said that Vanguard has an obligation. I expressed disappointment that Vanguard has chosen to not play ball like we would expect of a 403(b) Vendor. My expectations for 403(b) vendors is that they'd respect the districts plan, meaning that a district must protect themselves, not the vendor and by allowing the vendor to run the district plan by using the vendor documents......that is not right. I am disappointed that Vanguard hasn't given this more thought, if they had they wouldn't make such as a statement that they would have to sign 13,000 different agreements - they won't. In all likelihood a majority of districts will have TPA's (at least those that stay multi-vendor) and thus there will be far fewer ISA's to sign and review. They've had the staff to review different Hold Harmless agreements for up to 13,000 districts for years.....

 

My problem with Vanguard is that I think they've basically exited the 403(b) business in a muti-vendor environment but won't say so publicly, so they hide behind the ISA. What I've stated is that I understand their obligation to shareholders (heck, this includes tons of my clients) and that if the current 403(b) structure doesn't earn enough money, they should create a new or provide another avenue - they haven't done so.

 

I don't believe they have an obligation, but I was hoping for more and am disappointed, as are many on this board.

 

My comments about Vanguard are not out of dislike for Vanguard, they are out of a love for Vanguard. I truly want them to be in this 403(b) market.

 

I hope that clarifies my position, if I've said something to the contrary, I mis-spoke and apologize (of course what could you expect from a person who is just an industry hack).

 

ScottyD

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All,

With all of the focus on VG, where is TIAA CREF on this issue?

 

Also remember TC was very aggressive a few years ago trying to get into the K12 market and now have pulled back their operations significantly. I know for a fact what happened to them here at LAUSD and my pathetic union a few years ago, but things have changed and so has my union leadership.

 

Does anybody know how TC is responding to the new regs?

Steve

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Steve,

 

From my understanding TIAA is still not interested in k-12 unless they have an opportunity to build legit economies of scale (MCPS for example). Of course, this would make one wonder why they didn't bid on Florida...but they did bid on the CalSTRS 403(b) and won that bid (note: I acted as consultant on that RFP and continue to advise CalSTRS on Pension2, the name of the new program). TIAA is committed to sign ISA's in California k-14 districts via Pension2. TIAA was also part of the SPARK committee on data sharing standards and has stated that they will be SPARK compliant.

 

As of right now, Pension2 is working on signing dozens of ISA's that will cover hundreds of districts with a goal of being in as many districts as possible.

 

ScottyD

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Scotty,

TC did bid for the LAUSD 457 TPA, but decided not to pursue the bid because of the petty demands that I have alluded to in my other post to Intruder.

Steve

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Steve,

 

From my understanding TIAA is still not interested in k-12 unless they have an opportunity to build legit economies of scale (MCPS for example). Of course, this would make one wonder why they didn't bid on Florida...but they did bid on the CalSTRS 403(b) and won that bid (note: I acted as consultant on that RFP and continue to advise CalSTRS on Pension2, the name of the new program). TIAA is committed to sign ISA's in California k-14 districts via Pension2. TIAA was also part of the SPARK committee on data sharing standards and has stated that they will be SPARK compliant.

 

As of right now, Pension2 is working on signing dozens of ISA's that will cover hundreds of districts with a goal of being in as many districts as possible.

 

ScottyD

 

 

After T/C lost its tax exempt status in 1996 it decided to enter the public employee market and sell 403b annuities to SD in the belief that its brand would provide a ready market of new customers for all of its financial products which would make the publice employee business profitable.

 

However it under estimated the marketing costs that are necessary to maintain a presence in the one on one selling required in the SD market and overestimated the number of customers who would be able to contribute to discretionary 403b plans due to the low comp levels for SD employees. It has reduced its presence in the k-12 market as part of a general restructuring of its operations and is looking to be more of an asset gatherer instead of a plan administrator.

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Intruder - if you want to go off in another direction - feel free to start a new thread.

 

DC

 

 

There already is a thread on whether there is employer fiducary liability for selecting investments in non ERISA plans. I inquired to see if you had any basis for your opinion that the 403b regs impose a requirement on the employer to select investments.

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