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

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Scotty the gripe is not with 403asp but with the middle man whoever that may be. But with the new regs. It is what it is and someone else has their hand in our pocket.

 

Rich

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If 403bAsp is not a TPA, then your company is another level of administration? At LAUSD, we only have the TPA with the 457 plan.

403bASP does look pretty good, and its fees are low. But if it is not a TPA, then we have yet another level of players:

 

- 403bASP

- A TPA

- A school district

- A mutual fund company

 

Doesn't this seem ridiculous?

 

no more ridiculous than the players involved in a a 401k plan who include:

 

the employer

 

the trustee holding the plan assets in a trust

 

the fund companies in which the plan assets are invested

 

the TPA

 

consultants and advisors to the plan who make sure the plan is administered in accordance with all of the applicable rules, including:

 

accountants who prepare annual reports to be filed with government,

 

lawyers who make sure that the plan complies with all regulations and laws,

 

communications specialists who prepare all disclosure required under the above laws

 

investment advisors who review fund performance and advise the fiducaries and

 

the fiducaries.

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no more ridiculous than the players involved in a a 401k plan who include:

the employer

the trustee holding the plan assets in a trust

the fund companies in which the plan assets are invested

the TPA

consultants and advisors to the plan who make sure the plan is administered in accordance with all of the applicable rules, including:

accountants who prepare annual reports to be filed with government,

lawyers who make sure that the plan complies with all regulations and laws,

communications specialists who prepare all disclosure required under the above laws

investment advisors who review fund performance and advise the fiducaries and

the fiducaries.

Intruder,

 

You are making my point. Merely because 401k plans involve lots of middlemen does not mean that 403b plans should do the same.

 

I am arguing for simplicity, which could be achieved by having some sort of federal savings plan in which a person could invest up to a certain amount of money with the company of his choice. Ditch IRAs, 401k, 403b, 457, and all of the other alphabet soup.

 

I know that this was proposed by the Bush administration and that it did not fly. I am quite familiar with the barriers to achieving it, but I favor it nonetheless.

 

 

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Admin posted:

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

I agree with Dan, and I have been recommending that my fellow teachers take a good look at 403bASP and our state 457 plan as probably their best options.

 

Just one caveat to add: If you are now unable to put funds directly into Vanguard, but have a healthy balance with Vanguard already, the .10% is $1 per $1000 of your balance. You would want to do the calculations and see if it makes sense to transfer your current holdings or just leave them with Vanguard and pay dual fees. For a $100,000 account, you would pay 403bASP an added $100 each year, or you could leave it with Vanguard and pay $45-$60 for three or four funds, as an example.

 

That presupposes that your orphaned Vanguard account can even be transferred. I have not looked into that enough to know how or if it works. My personal plan is to just leave my current balance with Vanguard and reduce the number of funds to save on the costs. In my opinion, a fairly small balance is probably best put into or left in just one balanced fund, such as STAR fund or one of the Target Retirement funds.

 

You also need to look at the fund list at 403bASP, or fill out their form (with both the ticker and the fund name), to see which Vanguard funds they actually carry. It is not a complete set of funds, by any means. So if you have a favorite fund that they do not carry, you'd want to leave that money with Vanguard and invest future monies in the Vanguard funds that are actually available to you now through 403bASP.

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.

 

 

 

 

 

quote name='JamesOlson403bASP' date='Jan 2 2009, 07:45 PM' post='24068']

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.

 

 

 

James, Only problem I as an advisor am having is talking to anyone at ASP to get a couple of questions answered regarding required forms. I keep calling and punching in on phone as advisor and all I have gotten for two days is a recording telling me ASP has such a high volume of traffic. No way to leave a message.

 

Then when I send an email, I am on my second day waiting for a reply. Hope this is not normal for you.

 

BPG

 

 

I know our service levels have been strained in the last few weeks. We have added 15 new staff members and reworked our phone system. It is not the norm for us and I hope to have things normalize soon.

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James,

You might make your point more clearer by comparing what 403basp offers to what LAUSD offers in our 457b plan.

Below is the list of funds with all expenses. The column at the right is what the participant pays. The .15% is what the TPA charges.

 

Fund Name, Exp Ratio, Revenue Sharing, TPA fee, TOTAL FEEs to participant

American Europacific R4, 0.83%, 0.35%, 0.15%, 0.98%

Vanguard Dev Market Index, 0.29%, 0%, 0.15%, 0.44%

American Growth Fund R4, 0.68%, 0.35%, 0.15%, 0.83%

Dreyfus S & P 500 Index, 0.50%, 0.40%, 0.15%, 0.65%

Davis NY Venture A, 0.89%, 0.25%, 0.15%, 1.04%

Vanguard Growth & Income, 0.40%, 0%, 0.15%, 0.55%

Turner Mid Cap Growth, 1.20%, 0.40%, 0.15%, 1.35%

Janus Mid Cap Value (inv), 0.92%, 0.25%, 0.15%, 1.07%

Vanguard Extended Market, 0.25%, 0%, 0.15%, 0.40%

TRP Income (ADV), 0.89%, 0.35%, 0.15%, 1.04%

TRP 2010 (ADV), 0.93%, 0.35%, 0.15%, 1.08%

TRP 2020 (ADV), 1.01%, 0.35%, 0.15%, 1.16%

TRP 2030 (ADV), 1.05%, 0.35%, 0.15%, 1.20%

TRP 2040 (ADV), 1.05%, 0.35%, 0.15%, 1.20%

Dreyfus Bond Market Index Inv, 0.40%, 0.35%, 0.15% 0.55%

PIMCO Total Return Admin, 0.68%, 0.25%, 0.15%, 0.83%

Dreyfus Cash Management, 0.30%, 0.10%, 0.15%, 0.40%

 

If your company were hired by LAUSD, what would your company actually do for us that the TPA is not already doing, and how much more would expenses would you add on to the above mix, fund by fund?

These are Legitimate and fair questions since many of the folks asking about 403basp already have a TPA.

(Note to readers: revenue sharing costs are imbedded, aka "hidden", in the expense ratio and the reason why the total costs appear less than expected).

Have a good day,

Steve

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are there any districts being represented on this thread who have been able to Get 403bASP onboard as a provider with there district after having losed no-load mutual fund proovider(s) such as Fidelity or Vanguard? What exactly did this process involve, was the ISA signing or Plan Documents an issue? Are you satisfied with 403bASP to Date?

 

THANKS>

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My district lost Fidelity and Vanguard and T. Rowe Price. Our new approved list has a local Edward Jones rep who is offering a connection to 403bASP's Fund Source. He signed the plan documents prepared by CPI, as our TPA.

 

I asked him how he was paid, if he was just going to add yet one more layer of fees between me and my chosen funds. He says, no, he gets paid by [revenue sharing?] his company getting about 50% of the listed expense fee for the fund, and then him personally getting 40% of that. (The fund he mentioned had an expense ratio of .93, I believe. Not at all sure that he would be recommending a Vanguard index fund at .19!) So, anyway, it sounds like it would cost me the same as going directly with 403bASP, as explained elsewhere in this thread.

 

I am still investigating whether 403bASP itself is actually on the approved list, or if it just his connection. I am not sure if he is offering the full package of 20000+ funds that I got from 403bASP's Rick Moser, who was very, very helpful after I contacted info@403bASP.com with some specific questions about fees and funds availability. I got that address from their website https://www.403bplan.info/ It is a good place to get the big picture.

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My district lost Fidelity and Vanguard and T. Rowe Price. Our new approved list has a local Edward Jones rep who is offering a connection to 403bASP's Fund Source. He signed the plan documents prepared by CPI, as our TPA.

 

I asked him how he was paid, if he was just going to add yet one more layer of fees between me and my chosen funds. He says, no, he gets paid by [revenue sharing?] his company getting about 50% of the listed expense fee for the fund, and then him personally getting 40% of that. (The fund he mentioned had an expense ratio of .93, I believe. Not at all sure that he would be recommending a Vanguard index fund at .19!) So, anyway, it sounds like it would cost me the same as going directly with 403bASP, as explained elsewhere in this thread.

 

I am still investigating whether 403bASP itself is actually on the approved list, or if it just his connection. I am not sure if he is offering the full package of 20000+ funds that I got from 403bASP's Rick Moser, who was very, very helpful after I contacted info@403bASP.com with some specific questions about fees and funds availability. I got that address from their website https://www.403bplan.info/ It is a good place to get the big picture.

 

 

Your ed jones rep is not going to get you any vanguard(no compensation) that you are looking for. They will mostly be American Funds r-3 shares and franklin templeton shares of expense ratios between 70-90 bps. If ASP is already a vendor in the district I would push for them to open up all funds so you can have all no-load choices you can imagine.

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Your ed jones rep is not going to get you any vanguard(no compensation) that you are looking for. They will mostly be American Funds r-3 shares and franklin templeton shares of expense ratios between 70-90 bps. If ASP is already a vendor in the district I would push for them to open up all funds so you can have all no-load choices you can imagine.

 

 

As a matter of fact, those were indeed the two fund families that he mentioned the other day. The paperwork lists about twenty funds he wants to sell, then says that the client can add up to 5 more funds. Not sure what the possibilities are for those other funds. If it is the full 403b Fund Source list, there are some, but not all, Vanguard funds available.

 

I am still investigating whether the straight 403b ASP Fund Source is an approved vendor for my district. Or if the plan (with my district's name) as listed on their website is there only because it is an orphaned account.

 

 

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Your ed jones rep is not going to get you any vanguard(no compensation) that you are looking for. They will mostly be American Funds r-3 shares and franklin templeton shares of expense ratios between 70-90 bps. If ASP is already a vendor in the district I would push for them to open up all funds so you can have all no-load choices you can imagine.

 

 

As a matter of fact, those were indeed the two fund families that he mentioned the other day. The paperwork lists about twenty funds he wants to sell, then says that the client can add up to 5 more funds. Not sure what the possibilities are for those other funds. If it is the full 403b Fund Source list, there are some, but not all, Vanguard funds available.

 

I am still investigating whether the straight 403b ASP Fund Source is an approved vendor for my district. Or if the plan (with my district's name) as listed on their website is there only because it is an orphaned account.

 

 

Elgordo,

 

Some districts have only "approved" the 45 plus 5 list offered by the ed jones agent. If your district is using 403basp already I would talk to someone in your business office to get all of ASP's offerings available. If you pm me and let me know what district you are in I might be able to help.

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GOOD NEWS!

 

 

Some districts have only "approved" the 45 plus 5 list offered by the ed jones agent. If your district is using 403basp already I would talk to someone in your business office to get all of ASP's offerings available. If you pm me and let me know what district you are in I might be able to help.

 

 

Red,

Thanks for the offer.

GOOD NEWS! I emailed customer service at 403b ASP and they quickly replied that, yes, they still are an approved vendor for my district.

AND In a separate response to my Investment Choices inquiry, they verified that they do carry every one of the Vanguard funds that I now invest in, or am considering investing in.

Now I just need to decide if I want to hold my nose and pay CPA (the TPA) $30 a year to do the district's dirty work, while providing no answers and no service to the employees! For the time being, I will be continuing to put my former 403 money into the state 457 plan, instead.

But I will pass along the information about 403b ASP Fund Source to my fellow employees, as is it appears to have the ONLY low fee 403b funds available to them now.

Gordon

 

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James,

You might make your point more clearer by comparing what 403basp offers to what LAUSD offers in our 457b plan.

Below is the list of funds with all expenses. The column at the right is what the participant pays. The .15% is what the TPA charges.

 

Fund Name, Exp Ratio, Revenue Sharing, TPA fee, TOTAL FEEs to participant

American Europacific R4, 0.83%, 0.35%, 0.15%, 0.98%

Vanguard Dev Market Index, 0.29%, 0%, 0.15%, 0.44%

American Growth Fund R4, 0.68%, 0.35%, 0.15%, 0.83%

Dreyfus S & P 500 Index, 0.50%, 0.40%, 0.15%, 0.65%

Davis NY Venture A, 0.89%, 0.25%, 0.15%, 1.04%

Vanguard Growth & Income, 0.40%, 0%, 0.15%, 0.55%

Turner Mid Cap Growth, 1.20%, 0.40%, 0.15%, 1.35%

Janus Mid Cap Value (inv), 0.92%, 0.25%, 0.15%, 1.07%

Vanguard Extended Market, 0.25%, 0%, 0.15%, 0.40%

TRP Income (ADV), 0.89%, 0.35%, 0.15%, 1.04%

TRP 2010 (ADV), 0.93%, 0.35%, 0.15%, 1.08%

TRP 2020 (ADV), 1.01%, 0.35%, 0.15%, 1.16%

TRP 2030 (ADV), 1.05%, 0.35%, 0.15%, 1.20%

TRP 2040 (ADV), 1.05%, 0.35%, 0.15%, 1.20%

Dreyfus Bond Market Index Inv, 0.40%, 0.35%, 0.15% 0.55%

PIMCO Total Return Admin, 0.68%, 0.25%, 0.15%, 0.83%

Dreyfus Cash Management, 0.30%, 0.10%, 0.15%, 0.40%

 

If your company were hired by LAUSD, what would your company actually do for us that the TPA is not already doing, and how much more would expenses would you add on to the above mix, fund by fund?

These are Legitimate and fair questions since many of the folks asking about 403basp already have a TPA.

(Note to readers: revenue sharing costs are imbedded, aka "hidden", in the expense ratio and the reason why the total costs appear less than expected).

Have a good day,

Steve

 

 

Hi James,

Its been awhile, guess you are not prepared to respond yet or will not respond. I think it would be helpful to try and respond to how us consumers see the situation. I think it would help your business too.

Steve

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James,

You might make your point more clearer by comparing what 403basp offers to what LAUSD offers in our 457b plan.

Below is the list of funds with all expenses. The column at the right is what the participant pays. The .15% is what the TPA charges.

 

Fund Name, Exp Ratio, Revenue Sharing, TPA fee, TOTAL FEEs to participant

American Europacific R4, 0.83%, 0.35%, 0.15%, 0.98%

Vanguard Dev Market Index, 0.29%, 0%, 0.15%, 0.44%

American Growth Fund R4, 0.68%, 0.35%, 0.15%, 0.83%

Dreyfus S & P 500 Index, 0.50%, 0.40%, 0.15%, 0.65%

Davis NY Venture A, 0.89%, 0.25%, 0.15%, 1.04%

Vanguard Growth & Income, 0.40%, 0%, 0.15%, 0.55%

Turner Mid Cap Growth, 1.20%, 0.40%, 0.15%, 1.35%

Janus Mid Cap Value (inv), 0.92%, 0.25%, 0.15%, 1.07%

Vanguard Extended Market, 0.25%, 0%, 0.15%, 0.40%

TRP Income (ADV), 0.89%, 0.35%, 0.15%, 1.04%

TRP 2010 (ADV), 0.93%, 0.35%, 0.15%, 1.08%

TRP 2020 (ADV), 1.01%, 0.35%, 0.15%, 1.16%

TRP 2030 (ADV), 1.05%, 0.35%, 0.15%, 1.20%

TRP 2040 (ADV), 1.05%, 0.35%, 0.15%, 1.20%

Dreyfus Bond Market Index Inv, 0.40%, 0.35%, 0.15% 0.55%

PIMCO Total Return Admin, 0.68%, 0.25%, 0.15%, 0.83%

Dreyfus Cash Management, 0.30%, 0.10%, 0.15%, 0.40%

 

Hi James,

Its been awhile, guess you are not prepared to respond yet or will not respond. I think it would be helpful to try and respond to how us consumers see the situation. I think it would help your business too.

Steve

 

 

Steve,

 

I'd like to chime in here with a word about revenue sharing fees. Wow, it is amazing how large a chunk of the overall expenses go to revenue sharing. For example, more than 1/3 of the total cost of American Europacific is revenue sharing, nearly 2/3 of the Dreyfus S&P 500 index goes to revenue sharing, and nearly 2/3 of the Dreyfus Bond Market Index fund is revenue sharing. Thank you for bring this to everyone's attention. These hidden fees really add up.

 

Could you also explain to the forum how these fees work, i.e., who pays who, how, and why.

 

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