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Brian222Golf

403b Asp - Open Fund Platform - Is This A Good Idea?

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My district is looking at adding 403b ASP as a vendor - You can buy almost any mutual fund ( Vanguard, T. Rowe Price, and Fidelity) for a $40 per year charge per participant plus a .1% fee. Seems like a great deal.

 

Any thoughts.

 

Thanks

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You have access to good fund companies but 1% a year fee on top of the expense ratio makes me wonder if it is a good deal. Even with a low .20 expense ratio on the fund if there is a 1% fee that puts your cost at

1.20% a year in costs. Higher than I would pay.

 

 

Or did you mean your fee is one tenth of one percent?

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It is .1% not 1%.

 

Well that beats the crap out of all of the annuity options out there. It takes a little time to build the account so the $40 becomes irrelevant but the overall cost seems reasonable.

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Brian

 

Wow !that is a good deal. Almost too good to be true. Have you checked to make sure that thats really it in term of fees?

 

 

Tony

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Almost too good to be true. Have you checked to make sure that thats really it in term of fees?

 

 

It seems this is the fee for the new layer (403b ASP) only, NOT the total fees.

That is, $40/year plus 0.1% on top of the (perhaps) 1% fee of the mutual fund. If you have $4,000 in your 403B then that $40 is also 1%, so you need 2.1% yield each year just to maintain your balance (not to mention beating inflation.)

 

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kipb7,

 

The mutual fund portion certainly won't be 1% if you are talking Vanguard, T. Rowe, or Fidelity. Lets say a participant chooses a Vanguard target date fund (0.21 percent in fees). Adding 0.1 makes this 0.31 percent in fees + $40. Hard to see how that is not a pretty good way to go if you don't have direct access to Vanguard.

 

Dan Otter

 

note: 403(b) ASP is an advertiser this site but we only accept sponsorship from firms we believe offer value to this market.

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Is 403basp also an advisor driven product? Meaning that most school employees will be sold the 403basp platform including the advisor's fee?

 

Vanguard funds .21%

403basp .10% + $40.00 per year

Advisor 1.00% (?)

 

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Here's more info...

 

Recognizing the diverse investment needs of your participants, we offer access to thousands of no-load, no-transaction fee funds available through our 403(b) FundSourceSM program. Plan Sponsors may elect to customize the 403(b) FundSourceSM program for their Plan by limiting the fund availability options at their discretion or by working with a "governing" investment advisor to develop fund benchmark criteria that will limit the fund options. At anytime you may request to add (or delete) funds to your Plan based on availability at the at the 403(b) FundSource SM custodian.

 

Many participants may already have a relationship with a financial advisor to assist them with the management of their retirement account. If a participant elects to use the 403(b) FundSourceSM program they may maintain that relationship by appointing their financial advisor as an Authorized Agent to their account and approve any advisory fees/commissions associated with the Authorized Agent's services.

 

Freedom to choose - Participants are accustomed to having the freedom to work with a wide range of investments and investment service providers. The new regulations shouldn't take that freedom away - and with 403b ASP you don't have to.

 

403b ASP's built in mutual fund investment program 403(b) FundSource SM can give your participants' access to thousands of brand name mutual funds to build their retirement investment portfolio.

 

Participants can also appoint an independent authorized agent to their account to assist them with constructing an investment portfolio based on their particular needs or overall financial plan.

 

Furthermore, the platform will support any additional approved investment service providers via the (b)ridgeSM program.

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Help me understand:

 

Is this to say that if our district is already contracted with OMNI as TPA, then we can push to have them add 403b ASP as a vendor but not replace OMNI as TPA. Accurate?

 

If so, how do you suggest we go about having them added?

 

Thank you.

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My School district also has 430basp. the information I recieved was that it was 10 basis point (.1%) per quarter. God I hope I am wrong

 

Rich

 

Ps their web site stinks You can't find any info about fees

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First let me say thank you for the interest with 403b ASP. I'm one of the founders of the company and developed our 403b offering. I wanted to jump in and clarify some of the dialogue regarding 403b ASP.

 

Regarding Fees:

We charge an annuall account fee of $40 per year -- we will apply $20 of this amount to offset any TPA/Common Remitter fees.

 

We charge an annual custodial fee of 10 basis points (bps). For the record 10 bps equal 1 cent for every dollar. You may see this expressed as 0.10% or .10% -- to get the correct figure you need to enter 0.0010% on a calculator. (To be sure we do not charge 1.00% on any account -- we are NOT an annutiy product)

 

For example if you had the account is outline below the fees would be as follows:

 

$5,000 Vanguard Growth & Income - VQNPX

$5,000 Vanguard Dividend Appreciation - VDAIX

----------------------------------

$10,000 Total account value

----------------------------------

$10.00 Custodial Fee -- 10 bps (0.0010%)

$40.00 Account Fee

----------------------------------

$50.00 Total 403b ASP Fee

 

Please note there is no account fee applied by Vanguard – the fund expense ratio still applies -- which is always applicable regardless of vendor selection; mutual fund or annutiy product.

 

Rtngolf: Thank you for your comment regarding our site. I will have a fee section added to our website to provide a clearer picture -- and too clarify the 10 bps is an annual fee not quarterly -- it is charged at 0.25% (0.0025) per quarter). The $40 account fee is charged at $10 per quarter.

 

We are an open free agent platform that allows a participant to appoint a financial advisor to their account regardless of the firm they work with and we charge nothing for this service. The advisors compensation can be a RIA fee (agreed to by the participant and the advisor) or they can be compensated by 12b1 fees paid by the fund companies which are built-in to the fund expense ratio.

 

Yes I think we offer a very good deal... maybe too good. We have a very simply belief. "Help participants accummulate a better retirement benefit". Do I make money doing this? Yes. I do not make a lot of moeny off any single account, however, I do not loose money on any single account. Our goal is that participants when they become aware of a low cost mutual fund offering that provides all of the features without the cost we will capture a lot of accounts.

 

Thanks for letting me chime in.

 

 

 

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First let me say thank you for the interest with 403b ASP. I'm one of the founders of the company and developed our 403b offering. I wanted to jump in and clarify some of the dialogue regarding 403b ASP.

 

Regarding Fees:

We charge an annuall account fee of $40 per year -- we will apply $20 of this amount to offset any TPA/Common Remitter fees.

 

Thanks for letting me chime in.

 

James,

First... Thanks for your "horse's mouth" response.

 

That $20 offset -- how do you pay that? To the employee's 403bASP account? To the TSA? (In my case, that is CPI, who charges ME $30, to cover the district's behind, as far as compliance.)

 

It sure makes a good deal sound even better, to someone who lost a direct link to low-fee Vanguard funds. I did some quick calculations, and see that it is the equivalent of paying 3 or 4 Vanguard $15 annual per-fund fees, and will be recommending this option to my fellow employees who were Vanguard and Fidelity investors before the Great IRS Snafu of 1-1-09!

 

Gordon

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First let me say thank you for the interest with 403b ASP. I'm one of the founders of the company and developed our 403b offering. I wanted to jump in and clarify some of the dialogue regarding 403b ASP.

 

Regarding Fees:

We charge an annuall account fee of $40 per year -- we will apply $20 of this amount to offset any TPA/Common Remitter fees.

 

Thanks for letting me chime in.

 

James,

First... Thanks for your "horse's mouth" response.

 

That $20 offset -- how do you pay that? To the employee's 403bASP account? To the TSA? (In my case, that is CPI, who charges ME $30, to cover the district's behind, as far as compliance.)

 

It sure makes a good deal sound even better, to someone who lost a direct link to low-fee Vanguard funds. I did some quick calculations, and see that it is the equivalent of paying 3 or 4 Vanguard $15 annual per-fund fees, and will be recommending this option to my fellow employees who were Vanguard and Fidelity investors before the Great IRS Snafu of 1-1-09!

 

Gordon

 

 

The fee offset depends on the TPA. In some circumstances we reduce our fee to $20 and the TPA fee is then applied. In others we charged the $40 and remit the $20 to the TPA and they charge nothing if that amount covers thier fee and/or the difference of the remianing TPA fee is charged. In the end the net effect is the same.

 

In your case the all in cost with the CPI fee would be $50 and 10 bps.

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