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Also this arrangement might make even more sense as more and more companies stop matching employee contributions. If there is no match then why does the employer even need to be in the mix? Certainly they are not helping the employee by offering high fee/poor choices.

 

Again Its our own responsibility to be smart investors. Hand holding is expensive . And, you don't always get what you pay for as we are all finding out.

 

 

 

Tony

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How do you think you're still going to be able to contribute to Vanguard? Any new news?

 

My district chose a TPA (TDS) that includes Vanguard as a choice. I followed this up with two conversations with TDS employees, and they assured me that the transition will be seamless. I will not have to change anything; the contributions to Vanguard will continue as usual.

 

Now, that is what they said. I'm not going to be surprised if it doesn't work out that way.

 

 

 

Contact info for them? We need all the ammo we can get.

 

http://www.taxdeferredservices.com/new/tdsadvisors/

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You can still get Vanguard in this district for $35 a year. Vanguard charges a $15 custodial fee per fund used. If you use more than two funds the new Vanguard option in Naperville 203 is less cost than going direct to Vanguard. Homework needs to be done! Naperville is in the Land Of Lincoln!

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NY state offers a great 457 plan but not all school districts participate , even though they can.

 

My district's 457 plan is run by ... Surprise! Security Benefit! Just look at the fine print on the wonderful Security Benefit SFR (is that short for Sure !@#$ing Reamed?):

 

Account Charges – Account Charges Options 1, 2, 12, 13, 14, 30, 31, 32, 33 and 34: Asset

Based Account Fee: 1.00%. Options 3, 4, 5, 15, 16, 17 and 35: Asset Based Account Fee:

0.85%. Options 6, 7, 18, 19, 20 and 36: Asset Based Account Fee: 0.75%. Options 8, 9, 21, 22,

and 23: Asset Based Account Fee: 0.65%. Options 10, 11, 24, 25 and 26: Asset Based Account

Fee: 0.50%. Options 27, 28 and 29: Asset Based Account Fee: 0.35%. Administration fees of $0

to $40 may apply.

 

Perfectly clear, isn't it?

 

This, of course, is above and beyond the normal expense ratios.

 

And this is what my association endorses. I suspect that the district would not mind at all if it changed providers. In fact, the district's business manager told me as much. It is the association that is holding things back.

 

I assume your talking about the NEA 403b plan. It's not offered to me, but on their website, link from NEA benifits it mentions a new "no cost" self directed 403b invested in mutual funds. see:

https://nea.securitybenefit.com/neavaluebui...elfdirected.htm

Is that a crock of xxxx?

 

 

To all,

Why are we as citizens of the United States who are saving for our own futures be subjected to all this? Seriously what can we do? How can the IRS, inept school systems, and insurance companies hold us hostage?

 

 

Tony

 

It probably won't do any good, but I've written to my congressman. I urge all interested teachers to do the same & complain.

 

 

 

 

 

 

How do you think you're still going to be able to contribute to Vanguard? Any new news?

 

My district chose a TPA (TDS) that includes Vanguard as a choice. I followed this up with two conversations with TDS employees, and they assured me that the transition will be seamless. I will not have to change anything; the contributions to Vanguard will continue as usual.

 

Now, that is what they said. I'm not going to be surprised if it doesn't work out that way.

 

 

 

Contact info for them? We need all the ammo we can get.

 

http://www.taxdeferredservices.com/new/tdsadvisors/

 

In my S.D. where Vanguard is no longer offered to me(eff. 2009), one of the choices is Lincoln Investments. They can also get me Vanguard through them. BUT, THEY CHARGE AN ANNUAL FEE OF 9/10 OF 1%(######.009) on the total ammount invested. That's done quarterly, every year! I'm told that they sell those funds aa "A" shares(higher expenses to boot). Read the fine print before you invest.

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NY state offers a great 457 plan but not all school districts participate , even though they can.

 

My district's 457 plan is run by ... Surprise! Security Benefit! Just look at the fine print on the wonderful Security Benefit SFR (is that short for Sure !@#$ing Reamed?):

 

Account Charges – Account Charges Options 1, 2, 12, 13, 14, 30, 31, 32, 33 and 34: Asset

Based Account Fee: 1.00%. Options 3, 4, 5, 15, 16, 17 and 35: Asset Based Account Fee:

0.85%. Options 6, 7, 18, 19, 20 and 36: Asset Based Account Fee: 0.75%. Options 8, 9, 21, 22,

and 23: Asset Based Account Fee: 0.65%. Options 10, 11, 24, 25 and 26: Asset Based Account

Fee: 0.50%. Options 27, 28 and 29: Asset Based Account Fee: 0.35%. Administration fees of $0

to $40 may apply.

 

Perfectly clear, isn't it?

 

This, of course, is above and beyond the normal expense ratios.

 

And this is what my association endorses. I suspect that the district would not mind at all if it changed providers. In fact, the district's business manager told me as much. It is the association that is holding things back.

 

I assume your talking about the NEA 403b plan. It's not offered to me, but on their website, link from NEA benifits it mentions a new "no cost" self directed 403b invested in mutual funds. see:

https://nea.securitybenefit.com/neavaluebui...elfdirected.htm

Is that a crock of xxxx?

 

 

To all,

Why are we as citizens of the United States who are saving for our own futures be subjected to all this? Seriously what can we do? How can the IRS, inept school systems, and insurance companies hold us hostage?

 

 

Tony

 

It probably won't do any good, but I've written to my congressman. I urge all interested teachers to do the same & complain.

 

 

 

 

 

 

How do you think you're still going to be able to contribute to Vanguard? Any new news?

 

My district chose a TPA (TDS) that includes Vanguard as a choice. I followed this up with two conversations with TDS employees, and they assured me that the transition will be seamless. I will not have to change anything; the contributions to Vanguard will continue as usual.

 

Now, that is what they said. I'm not going to be surprised if it doesn't work out that way.

 

 

 

Contact info for them? We need all the ammo we can get.

 

http://www.taxdeferredservices.com/new/tdsadvisors/

 

In my S.D. where Vanguard is no longer offered to me(eff. 2009), one of the choices is Lincoln Investments. They can also get me Vanguard through them. BUT, THEY CHARGE AN ANNUAL FEE OF 9/10 OF 1%(######.009) on the total ammount invested. That's done quarterly, every year! I'm told that they sell those funds aa "A" shares(higher expenses to boot). Read the fine print before you invest.

 

You can get it without the .90%. You need to ask! Do some homework!

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NY state offers a great 457 plan but not all school districts participate , even though they can.

 

My district's 457 plan is run by ... Surprise! Security Benefit! Just look at the fine print on the wonderful Security Benefit SFR (is that short for Sure !@#$ing Reamed?):

 

Account Charges – Account Charges Options 1, 2, 12, 13, 14, 30, 31, 32, 33 and 34: Asset

Based Account Fee: 1.00%. Options 3, 4, 5, 15, 16, 17 and 35: Asset Based Account Fee:

0.85%. Options 6, 7, 18, 19, 20 and 36: Asset Based Account Fee: 0.75%. Options 8, 9, 21, 22,

and 23: Asset Based Account Fee: 0.65%. Options 10, 11, 24, 25 and 26: Asset Based Account

Fee: 0.50%. Options 27, 28 and 29: Asset Based Account Fee: 0.35%. Administration fees of $0

to $40 may apply.

 

Perfectly clear, isn't it?

 

This, of course, is above and beyond the normal expense ratios.

 

And this is what my association endorses. I suspect that the district would not mind at all if it changed providers. In fact, the district's business manager told me as much. It is the association that is holding things back.

 

I assume your talking about the NEA 403b plan. It's not offered to me, but on their website, link from NEA benifits it mentions a new "no cost" self directed 403b invested in mutual funds. see:

https://nea.securitybenefit.com/neavaluebui...elfdirected.htm

Is that a crock of xxxx?

 

 

To all,

Why are we as citizens of the United States who are saving for our own futures be subjected to all this? Seriously what can we do? How can the IRS, inept school systems, and insurance companies hold us hostage?

 

 

Tony

 

It probably won't do any good, but I've written to my congressman. I urge all interested teachers to do the same & complain.

 

 

 

 

 

 

How do you think you're still going to be able to contribute to Vanguard? Any new news?

 

My district chose a TPA (TDS) that includes Vanguard as a choice. I followed this up with two conversations with TDS employees, and they assured me that the transition will be seamless. I will not have to change anything; the contributions to Vanguard will continue as usual.

 

Now, that is what they said. I'm not going to be surprised if it doesn't work out that way.

 

 

 

Contact info for them? We need all the ammo we can get.

 

http://www.taxdeferredservices.com/new/tdsadvisors/

 

In my S.D. where Vanguard is no longer offered to me(eff. 2009), one of the choices is Lincoln Investments. They can also get me Vanguard through them. BUT, THEY CHARGE AN ANNUAL FEE OF 9/10 OF 1%(######.009) on the total ammount invested. That's done quarterly, every year! I'm told that they sell those funds aa "A" shares(higher expenses to boot). Read the fine print before you invest.

 

You can get it without the .90%. You need to ask! Do some homework!

 

Do you have to ask Lincoln to drop their fees? My S.D. won't offer Vanguard directly anymore eff.'09.

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CLJ17 --

HOW can one access Vanguard through Lincoln without the additional expense of .90? What precisely must a participant do?

 

Thanks.

 

JudyS

 

 

Judy,

 

We offer two options with Vanguard. The first is an option where there is only a $35 custodial fee per year and you are limited to being just in Vanguard funds. There is no investment advice provided and you have to view your Vanguard funds on our website. The rep for your district will not bother you or contact you after you have enrolled. The second method on our platform is our fee based account that does charge .9% per year and a $35 annual custodial platform. People can continue to use Vanguard here but now are not stuck in a box and can use 52 other, mutual fund families all with no sales loads and full liquidity at all times. I can't tell you how many Vanguard and Fidelity participants have gone this direction after seeing the magnitude of this platform. We run a portfolio analysis on their current portfolio and do a custom portfolio with reducing beta (risk) and increasing alpha (return) using 53 mutual fund families as well as some Vanguard funds. Please remember that not one mutual fund family out there has the best performing fund in each investment class. People have been decimated by the market and now see they may need some help. Then there are those who still want to do it on their own and we provide them with that option as well. We now have Janus funds on our fee based platform. The thing that we look at the most is alpha and beta. The risk you take for the return you get is what is most crucial. We like to help people reduce beta and increase alpha net of fees! I mean if you think about the low fees you pay with no help and you lose 40% of your value where is the benefit of the low fees? The majority of Vanguard participants we have seen use only one or two funds with no diversification. Happy New Year!

 

 

 

 

 

 

NY state offers a great 457 plan but not all school districts participate , even though they can.

 

My district's 457 plan is run by ... Surprise! Security Benefit! Just look at the fine print on the wonderful Security Benefit SFR (is that short for Sure !@#$ing Reamed?):

 

Account Charges – Account Charges Options 1, 2, 12, 13, 14, 30, 31, 32, 33 and 34: Asset

Based Account Fee: 1.00%. Options 3, 4, 5, 15, 16, 17 and 35: Asset Based Account Fee:

0.85%. Options 6, 7, 18, 19, 20 and 36: Asset Based Account Fee: 0.75%. Options 8, 9, 21, 22,

and 23: Asset Based Account Fee: 0.65%. Options 10, 11, 24, 25 and 26: Asset Based Account

Fee: 0.50%. Options 27, 28 and 29: Asset Based Account Fee: 0.35%. Administration fees of $0

to $40 may apply.

 

Perfectly clear, isn't it?

 

This, of course, is above and beyond the normal expense ratios.

 

And this is what my association endorses. I suspect that the district would not mind at all if it changed providers. In fact, the district's business manager told me as much. It is the association that is holding things back.

 

I assume your talking about the NEA 403b plan. It's not offered to me, but on their website, link from NEA benifits it mentions a new "no cost" self directed 403b invested in mutual funds. see:

https://nea.securitybenefit.com/neavaluebui...elfdirected.htm

Is that a crock of xxxx?

 

 

To all,

Why are we as citizens of the United States who are saving for our own futures be subjected to all this? Seriously what can we do? How can the IRS, inept school systems, and insurance companies hold us hostage?

 

 

Tony

 

It probably won't do any good, but I've written to my congressman. I urge all interested teachers to do the same & complain.

 

 

 

 

 

 

How do you think you're still going to be able to contribute to Vanguard? Any new news?

 

My district chose a TPA (TDS) that includes Vanguard as a choice. I followed this up with two conversations with TDS employees, and they assured me that the transition will be seamless. I will not have to change anything; the contributions to Vanguard will continue as usual.

 

Now, that is what they said. I'm not going to be surprised if it doesn't work out that way.

 

 

 

Contact info for them? We need all the ammo we can get.

 

http://www.taxdeferredservices.com/new/tdsadvisors/

 

In my S.D. where Vanguard is no longer offered to me(eff. 2009), one of the choices is Lincoln Investments. They can also get me Vanguard through them. BUT, THEY CHARGE AN ANNUAL FEE OF 9/10 OF 1%(######.009) on the total ammount invested. That's done quarterly, every year! I'm told that they sell those funds aa "A" shares(higher expenses to boot). Read the fine print before you invest.

 

You can get it without the .90%. You need to ask! Do some homework!

 

Do you have to ask Lincoln to drop their fees? My S.D. won't offer Vanguard directly anymore eff.'09.

 

Please see my response to Judy above. Let me know where your district is (city and state) and I will help. I am in charge of Illinois and Wisconsin but can find out who can help you in your state. Vanguard does not have A shares by the way. They only have the one share class and it is the same share class on our platform. Happy New Year!

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I've been following the vendors provided by Omni Financialin New York and now it appears that Vanguard and T Rowe Price have signed agreements and are offered in some school districts. Tim

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The risk you take for the return you get is what is most crucial. We like to help people reduce beta and increase alpha net of fees! I mean if you think about the low fees you pay with no help and you lose 40% of your value where is the benefit of the low fees?

 

 

CLJ,

The benefit of low fees is that you will have more money in your account in the long term. With a long term horizen, the 40% drop is not a big deal. People don't understand that retirement investing is a long term plan apparently many professionals understand this but don't appreciate it.

Study after study show that high fees can eat up to 40% of your nest egg over a life time of investing. This graph shows a 23% difference. Thats a pretty good benefit of low costs!!!!!!!!!

Lowing risk with low cost funds is the most crucial. Performance occurs when the economy grows over long periods of time.

 

Steve

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The thing that we look at the most is alpha and beta. The risk you take for the return you get is what is most crucial. We like to help people reduce beta and increase alpha net of fees!

It would be wonderful if salespeople could do this for clients, but I haven't seen any evidence that this can be done on a consistent basis.

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We offer two options with Vanguard. The first is an option where there is only a $35 custodial fee per year and you are limited to being just in Vanguard funds. There is no investment advice provided and you have to view your Vanguard funds on our website. The rep for your district will not bother you or contact you after you have enrolled. The second method on our platform is our fee based account that does charge .9% per year and a $35 annual custodial platform. People can continue to use Vanguard here but now are not stuck in a box and can use 52 other, mutual fund families all with no sales loads and full liquidity at all times. I can't tell you how many Vanguard and Fidelity participants have gone this direction after seeing the magnitude of this platform. We run a portfolio analysis on their current portfolio and do a custom portfolio with reducing beta (risk) and increasing alpha (return) using 53 mutual fund families as well as some Vanguard funds. Please remember that not one mutual fund family out there has the best performing fund in each investment class. People have been decimated by the market and now see they may need some help. Then there are those who still want to do it on their own and we provide them with that option as well. We now have Janus funds on our fee based platform. The thing that we look at the most is alpha and beta. The risk you take for the return you get is what is most crucial. We like to help people reduce beta and increase alpha net of fees! I mean if you think about the low fees you pay with no help and you lose 40% of your value where is the benefit of the low fees? The majority of Vanguard participants we have seen use only one or two funds with no diversification. Happy New Year!

 

 

I disagree with the premise that "not receiving help" cancels out the benefit of low fees. Especially this year. Everyone lost money (and a lot of it) this year - help or not. My wife got "help" from an ING rep, and her ING portfolio is down more than her Vanguard S&P 500 fund. She had previously received "help" from an American rep, and he advised that she should put her money in the Growth Fund of America (only). How is that any different that someone putting all their money in the S&P 500? The vast majority of research specifically shows that receiveing "help" - ie. being charged more money, leads to inferior returns over long periods of time.

 

Yes, asset allocation is critical. However, it is kind of misleading to insinuate that it is necessary to "provide" all sorts of higher fee fund families in order to get "diversification." You are certainly right to say that someone who puts all their marbles in the vanguard s&p 500 index is potentially playing with fire. However, no more so (and likely less) than someone who has all their money in Growth Fund of America. The TWO most crucial factors in long term investing success, and the ONLY two with broad, sweeping, academic support are low cost and asset allocation. Low cost index funds in the S&P, total Bond fund, International index and perhaps a money market acct. can provide virtually every ounce of diversification a person needs. All can be had for virtually no fee, and can be constructed to fit a person's situation.

 

Furthermore, if you lack the confidence/knowledge, you could simply invest in a Vanguard target date fund appropriate to your risk tolerace/age and do virtually the same. Or, simply use age -10 as the percent of bonds in portfolio. Either of these two SIMPLE options, at .2% fees will (with almost 100% certainty) out pace any similar portfolio constructed of higher fee funds over the course of 30 years.

 

The problem with "providing" people with this "diversification" is that it has been PROVEN over and over and over, that NO ONE can consistently pick FUTURE winners. In fact, a relatively consistent sign of a future loser, is being a past winner. Also, virtually NO funds can outpace the avg. market return consistently. Those VERY few that do cannot be identified in advance. So, people providing advice about which high priced funds to invest in over the course of a 30 year period are wrong, and they are wrong 99% of the time over the long haul. So, as of now, it has yet to be shown that getting "help" is of any help at all. In fact, getting "help" is more likely to lead to lower returns, not higher.

 

Even 1% difference in fees can lead to 10's of thousands of dollars - even 100+ thousand - in lost returns. That is an awful lot of money to pay someone for a service that has been academically PROVEN to not work.

 

People who sell fund advice are the same as car salesman. They are selling a product (and it is not advice) in order to make money. If I walk into a ford dealership and tell them that I need a car that gets the best possible gas mileage, has a tremendous warranty and has great resale value, they are not going to suggest I look at a toyota or a honda. They are going to sell me a ford, simple as that. That is not selling good advice, that is selling a product for a profit and commission.

 

People do not need access to 50 mutual fund families at a cost of $50,000 in fees over the course of a lifetime. What they need is someone to sit down with them for $75 for an hour, 1 time a year and help them look at the asset allocation they have in their .2% fee index funds and see if any changes should be made. But, that does not result in hefty long-term commissions, and, as is human nature, people would rather lose $10,000 in fees that they never see, than hand over a $100 dollar bill from their wallet.

 

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The thing that we look at the most is alpha and beta. The risk you take for the return you get is what is most crucial. We like to help people reduce beta and increase alpha net of fees!

 

It would be wonderful if salespeople could do this for clients, but I haven't seen any evidence that this can be done on a consistent basis.

 

 

Wouldn't it be wonderful? What we try to do is to make sure that our clients are in a portfolio that matches their risk tolerance. I cannot tell you how many times I have seen a competitors clients account that is in 100% equity funds when our risk analysis says they are a moderately conservative investor. What we do in our industry is service it is not truly selling a product and then disappear. Unfortunately too many times this occurs. The most important aspect of what we do is to take care of our clients. If a representative is not communicating with their clients at least once a year to review then that person should find someone different. People’s circumstances change especially educators! In most instances their incomes change every year. There are life changes that occur that affect someone’s financial circumstances and these need to be addressed. While most of the posters in this forum are dedicated to knowing about investing their money the rest of the folks out there are not and those are the folks we need to take care of. I give all of you a lot of credit for taking the time and effort to look out for your investments.

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We offer two options with Vanguard. The first is an option where there is only a $35 custodial fee per year and you are limited to being just in Vanguard funds. There is no investment advice provided and you have to view your Vanguard funds on our website. The rep for your district will not bother you or contact you after you have enrolled. The second method on our platform is our fee based account that does charge .9% per year and a $35 annual custodial platform. People can continue to use Vanguard here but now are not stuck in a box and can use 52 other, mutual fund families all with no sales loads and full liquidity at all times. I can't tell you how many Vanguard and Fidelity participants have gone this direction after seeing the magnitude of this platform. We run a portfolio analysis on their current portfolio and do a custom portfolio with reducing beta (risk) and increasing alpha (return) using 53 mutual fund families as well as some Vanguard funds. Please remember that not one mutual fund family out there has the best performing fund in each investment class. People have been decimated by the market and now see they may need some help. Then there are those who still want to do it on their own and we provide them with that option as well. We now have Janus funds on our fee based platform. The thing that we look at the most is alpha and beta. The risk you take for the return you get is what is most crucial. We like to help people reduce beta and increase alpha net of fees! I mean if you think about the low fees you pay with no help and you lose 40% of your value where is the benefit of the low fees? The majority of Vanguard participants we have seen use only one or two funds with no diversification. Happy New Year!

 

 

 

I disagree with the premise that "not receiving help" cancels out the benefit of low fees. Especially this year. Everyone lost money (and a lot of it) this year - help or not. My wife got "help" from an ING rep, and her ING portfolio is down more than her Vanguard S&P 500 fund. She had previously received "help" from an American rep, and he advised that she should put her money in the Growth Fund of America (only). How is that any different that someone putting all their money in the S&P 500? The vast majority of research specifically shows that receiveing "help" - ie. being charged more money, leads to inferior returns over long periods of time.

 

Yes, asset allocation is critical. However, it is kind of misleading to insinuate that it is necessary to "provide" all sorts of higher fee fund families in order to get "diversification." You are certainly right to say that someone who puts all their marbles in the vanguard s&p 500 index is potentially playing with fire. However, no more so (and likely less) than someone who has all their money in Growth Fund of America. The TWO most crucial factors in long term investing success, and the ONLY two with broad, sweeping, academic support are low cost and asset allocation. Low cost index funds in the S&P, total Bond fund, International index and perhaps a money market acct. can provide virtually every ounce of diversification a person needs. All can be had for virtually no fee, and can be constructed to fit a person's situation.

 

Furthermore, if you lack the confidence/knowledge, you could simply invest in a Vanguard target date fund appropriate to your risk tolerace/age and do virtually the same. Or, simply use age -10 as the percent of bonds in portfolio. Either of these two SIMPLE options, at .2% fees will (with almost 100% certainty) out pace any similar portfolio constructed of higher fee funds over the course of 30 years.

 

The problem with "providing" people with this "diversification" is that it has been PROVEN over and over and over, that NO ONE can consistently pick FUTURE winners. In fact, a relatively consistent sign of a future loser, is being a past winner. Also, virtually NO funds can outpace the avg. market return consistently. Those VERY few that do cannot be identified in advance. So, people providing advice about which high priced funds to invest in over the course of a 30 year period are wrong, and they are wrong 99% of the time over the long haul. So, as of now, it has yet to be shown that getting "help" is of any help at all. In fact, getting "help" is more likely to lead to lower returns, not higher.

 

Even 1% difference in fees can lead to 10's of thousands of dollars - even 100+ thousand - in lost returns. That is an awful lot of money to pay someone for a service that has been academically PROVEN to not work.

 

People who sell fund advice are the same as car salesman. They are selling a product (and it is not advice) in order to make money. If I walk into a ford dealership and tell them that I need a car that gets the best possible gas mileage, has a tremendous warranty and has great resale value, they are not going to suggest I look at a toyota or a honda. They are going to sell me a ford, simple as that. That is not selling good advice, that is selling a product for a profit and commission.

 

People do not need access to 50 mutual fund families at a cost of $50,000 in fees over the course of a lifetime. What they need is someone to sit down with them for $75 for an hour, 1 time a year and help them look at the asset allocation they have in their .2% fee index funds and see if any changes should be made. But, that does not result in hefty long-term commissions, and, as is human nature, people would rather lose $10,000 in fees that they never see, than hand over a $100 dollar bill from their wallet.

 

Kev

 

Seeing that you compare us to car salesman there is no way I am going to convince you of anything with that perspective. I appreciate the insult! But in the big picture most of the people need someone to help them. If everyone were like you then there would be no financial representatives out there. While I respect the many on here who are actively doing there thing the reality is that the majority of people have no desire, time or background to do it.

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We offer two options with Vanguard. The first is an option where there is only a $35 custodial fee per year and you are limited to being just in Vanguard funds. There is no investment advice provided and you have to view your Vanguard funds on our website. The rep for your district will not bother you or contact you after you have enrolled. The second method on our platform is our fee based account that does charge .9% per year and a $35 annual custodial platform. People can continue to use Vanguard here but now are not stuck in a box and can use 52 other, mutual fund families all with no sales loads and full liquidity at all times. I can't tell you how many Vanguard and Fidelity participants have gone this direction after seeing the magnitude of this platform. We run a portfolio analysis on their current portfolio and do a custom portfolio with reducing beta (risk) and increasing alpha (return) using 53 mutual fund families as well as some Vanguard funds. Please remember that not one mutual fund family out there has the best performing fund in each investment class. People have been decimated by the market and now see they may need some help. Then there are those who still want to do it on their own and we provide them with that option as well. We now have Janus funds on our fee based platform. The thing that we look at the most is alpha and beta. The risk you take for the return you get is what is most crucial. We like to help people reduce beta and increase alpha net of fees! I mean if you think about the low fees you pay with no help and you lose 40% of your value where is the benefit of the low fees? The majority of Vanguard participants we have seen use only one or two funds with no diversification. Happy New Year!

 

 

 

I disagree with the premise that "not receiving help" cancels out the benefit of low fees. Especially this year. Everyone lost money (and a lot of it) this year - help or not. My wife got "help" from an ING rep, and her ING portfolio is down more than her Vanguard S&P 500 fund. She had previously received "help" from an American rep, and he advised that she should put her money in the Growth Fund of America (only). How is that any different that someone putting all their money in the S&P 500? The vast majority of research specifically shows that receiveing "help" - ie. being charged more money, leads to inferior returns over long periods of time.

 

Yes, asset allocation is critical. However, it is kind of misleading to insinuate that it is necessary to "provide" all sorts of higher fee fund families in order to get "diversification." You are certainly right to say that someone who puts all their marbles in the vanguard s&p 500 index is potentially playing with fire. However, no more so (and likely less) than someone who has all their money in Growth Fund of America. The TWO most crucial factors in long term investing success, and the ONLY two with broad, sweeping, academic support are low cost and asset allocation. Low cost index funds in the S&P, total Bond fund, International index and perhaps a money market acct. can provide virtually every ounce of diversification a person needs. All can be had for virtually no fee, and can be constructed to fit a person's situation.

 

Furthermore, if you lack the confidence/knowledge, you could simply invest in a Vanguard target date fund appropriate to your risk tolerace/age and do virtually the same. Or, simply use age -10 as the percent of bonds in portfolio. Either of these two SIMPLE options, at .2% fees will (with almost 100% certainty) out pace any similar portfolio constructed of higher fee funds over the course of 30 years.

 

The problem with "providing" people with this "diversification" is that it has been PROVEN over and over and over, that NO ONE can consistently pick FUTURE winners. In fact, a relatively consistent sign of a future loser, is being a past winner. Also, virtually NO funds can outpace the avg. market return consistently. Those VERY few that do cannot be identified in advance. So, people providing advice about which high priced funds to invest in over the course of a 30 year period are wrong, and they are wrong 99% of the time over the long haul. So, as of now, it has yet to be shown that getting "help" is of any help at all. In fact, getting "help" is more likely to lead to lower returns, not higher.

 

Even 1% difference in fees can lead to 10's of thousands of dollars - even 100+ thousand - in lost returns. That is an awful lot of money to pay someone for a service that has been academically PROVEN to not work.

 

People who sell fund advice are the same as car salesman. They are selling a product (and it is not advice) in order to make money. If I walk into a ford dealership and tell them that I need a car that gets the best possible gas mileage, has a tremendous warranty and has great resale value, they are not going to suggest I look at a toyota or a honda. They are going to sell me a ford, simple as that. That is not selling good advice, that is selling a product for a profit and commission.

 

People do not need access to 50 mutual fund families at a cost of $50,000 in fees over the course of a lifetime. What they need is someone to sit down with them for $75 for an hour, 1 time a year and help them look at the asset allocation they have in their .2% fee index funds and see if any changes should be made. But, that does not result in hefty long-term commissions, and, as is human nature, people would rather lose $10,000 in fees that they never see, than hand over a $100 dollar bill from their wallet.

 

Kev

 

Seeing that you compare us to car salesman there is no way I am going to convince you of anything with that perspective. I appreciate the insult! But in the big picture most of the people need someone to help them. If everyone were like you then there would be no financial representatives out there. While I respect the many on here who are actively doing there thing the reality is that the majority of people have no desire, time or background to do it.

 

 

 

CLJ...we are looking for low cost options to use the ROTH 403b option, which Vanguard does not offer even if the school district does offer the traditional 403b arrangement. We are very comfortable with making our own decisions on diversification. Since you're in the business, any suggestions concerning a ROTH option would be appreciated. Lincoln and several other firms with fees are other options offered by the district. Thank you.

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