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

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Steve,

You will be pleased to know that through 403b ASP, participants have access to Vanguard, TR Price, Fidelity, and TIAA-CREF funds, as well as the retirement (R-class, no-load) shares of most other funds companies. Also, if noted on the election page correctly, loaded funds can be elected as load-waived, with the exception of American and Principal Funds. The only limitations we have are when a fund is closed, has a minimum investment amount, or otherwise unavailable to our custodian. Again, we do not limit access to either available funds or investment firms, but an employer may do so if they choose. For instance, some employers only allow American Funds to be an investment choice, but to be sure, we only honor those choices, we do not make them. If these funds are unavailable through 403b ASP to ft6, it is because either the advisor cannot offer them, or the employer has restricted them. In the former case, he can certainly self-direct, in the latter case he would need to take the issue up with his employer.

Daryle

 

 

Daryle,

I also thank you for your response and it looks reasonable when you said: "This is why we have no problem offering no-load funds with low expenses." I was assuming that many VG index funds were available to those educators who were wanted them. When I reread you response there was not mention of VG, Fidelity, TR Price and TIAA CREF. You obviously know we not only adore those companies but we worship them on this site. Apparently its no problem offering no load funds with low expenses and yet now, ft6 says that they are not available.

Sorry but my head is spinning! But don't worry, the 403b system affects me that way.

Nevertheless, can you clarify.

Steve

 

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ft6,

 

Fidelity Spartan funds would be mostly unavailable, but for reasons unrelated to 403b ASP, for example:

-SPARTAN EXTENDED MKT INDEX FUND - $100mm min. purchase

-SPARTAN INT'L INDEX FUND - $100mm min. purchase

-SPARTAN SHORT TERM TRES BD INDX- $100mm min. purchase

-SPARTAN US EQ INX FD ADV SH CL- $100K min. initial purchase

-SPARTAN TOTAL MKT INDX FD ADV SH- $100mm min. purchase

-SPARTAN LONG TERM TRSRY BD INDX- $100mm min. purchase

These funds would certainly be desirable because of their micro expense ratios, but those are due to their extremely prohibitive investment minimums.

 

Daryle

 

 

 

Posted by ft6

Daryle thanks for taking the time to respond. I would like to suggest to add Index Funds to your list of 40 funds and a variety of Vanguard, Fidelity, T Rowe Price or other funds from No Load Fund Families. It would be nice to see all of Vanguards Index funds along with Fidelity's Spartan Funds. These are quality funds that should be at the core of an investors portfolio. In addition, 403b ASP should suggest to the school districts that in addition to having the names of brokers from Edward Jones or ING next to 403b ASP, they ought to also add a "SELF DIRECT" option so that teachers can be made aware that they need not use a broker and avoid the additional costs of the 12B-1 fees. Let me reiterate the fact that no Index funds are on the list of 40, not good in my opinion because of the advantages they have over active funds. I hope 403bASP will take some of these points into consideration for the benefit of the teachers.

 

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Steve,

You will be pleased to know that through 403b ASP, participants have access to Vanguard, TR Price, Fidelity, and TIAA-CREF funds, as well as the retirement (R-class, no-load) shares of most other funds companies. Also, if noted on the election page correctly, loaded funds can be elected as load-waived, with the exception of American and Principal Funds. The only limitations we have are when a fund is closed, has a minimum investment amount, or otherwise unavailable to our custodian. Again, we do not limit access to either available funds or investment firms, but an employer may do so if they choose. For instance, some employers only allow American Funds to be an investment choice, but to be sure, we only honor those choices, we do not make them. If these funds are unavailable through 403b ASP to ft6, it is because either the advisor cannot offer them, or the employer has restricted them. In the former case, he can certainly self-direct, in the latter case he would need to take the issue up with his employer.

Daryle

 

 

Daryle,

I also thank you for your response and it looks reasonable when you said: "This is why we have no problem offering no-load funds with low expenses." I was assuming that many VG index funds were available to those educators who were wanted them. When I reread you response there was not mention of VG, Fidelity, TR Price and TIAA CREF. You obviously know we not only adore those companies but we worship them on this site. Apparently its no problem offering no load funds with low expenses and yet now, ft6 says that they are not available.

Sorry but my head is spinning! But don't worry, the 403b system affects me that way.

Nevertheless, can you clarify.

Steve

 

 

Daryle,

If I can suggest to you and 403basp, you need to be a little clearer on how you explain what you company can and can't do. We have teachers coming here all the time and are totally frustrated that they cannot get Vanguard or they had vanguard under the old system and now its been removed, indexes and all. As ft6 said, index funds are not available.

 

You need to be clear on every detail or you and 403basp will be called on this. I know very little about 403basp, but there are influencial people who like your low fees and its a possible answer to the results of the new regs. Perhaps some of us are being a little too picky, but I am learning from bits and pieces about how your company gets paid. All of this should have been settled months ago.

 

We encourage people to have their core portfoio in index funds first, money that they will count on when they need it in the future. So now we find out that they are not available, what you are offering is low cost managed funds through VG or fidelity. Perhaps its a minor difference to 403basp, but its a big deal to educators and other public sector workers who want index funds for strategic purposes and low costs.

 

I am sorry but your response to ft6 is not an answer about why fidelity sparten funds are not available. You are talking about the institutional rates. But having said that, what about Vanguards index funds?

 

Steve

 

 

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Steve I think my former post might have been misconstrued, let me clarify. When I mentioned that 403b ASP should consider offering Index Funds, I was speaking about adding them to the Mutual Funds they display on their web site under "Fund Source, Select Mutual Fund List"....

 

The mutual funds currently on this list are those that an astute cost conscious investor like those on this board, would view as the typical loaded high expense offerings from families like Hartford, Federated, Alliance, Franklin and Oppenheimer.

 

I know that the loads are waived but again, at first glance one might not realize this and discount this vendor as another high cost mutual fund offering and not even take a closer look. However, if an investor saw funds from the no-load companies like Vanguard, Fidelity, T.Rowe Price etc etc, added to "Fund Source, Select Mutual Fund List" on 403b ASP website, this would help 403b ASP stand out from the other vendors who in my wife's district are ALL either annuity 403(b)'s or loaded funds, I kid you not! I am sure this is the case natiowide, what a travesty, but I digress.

 

403(b) ASP does offer Vanguard Funds, including Index Funds like Daryle stated, I verified this. Fortunately my wife's school district did not limit it's participants to any fund family, thank god! So in my wife's case, she chose option #2 which is the Self Direct Option. I listed on her enrollment form what mutual funds they are to invest her money in and in our case they are all Vanguard Index Funds, which 403bASP's custodian has access to.

 

Option #1 is where you deal with your local broker, in her case Edward Jones or ING and that broker will select the mutual funds for you. These will be mutual fund selections from the families like Federated, American, Franklin, Oppenheimer, Putnam, and even though the load is waived, there are no index fund options, the expense ratios are higher and they have 12b-1 fees to compensate the broker. This like Daryle said is no fault of 403b ASP. If the school district allows participant to Self Direct and do not restrict them to certain fund familes, the participants can like us, invest in Vanguard Index funds or the other no-load fund companies.

 

All I was trying to say in an earlier post is that 403(b) ASP should add the True No Load Companies to their Mutual Fund Select list so that at first glance more teachers will realize that this company is unlike the others. Sorry for any confusion this may have caused.

 

 

 

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Steve,

You are correct, I first believed that all Spartan funds had those high minimums, but they all do not, and those without minimums are definitely available through us. Also, we certainly provide access to the Vanguard Index Funds.

We are currently in the process of creating a fund search/filter feature on our site to find out exactly which funds are available through 403b ASP. We understand how valuable this feature will be, so we are working toward getting it out as soon as possible. This would answer a great deal of questions as to what can be elected by participants.

 

Also, regarding how our company is compensated has been on our FAQ pages for nearly the entire year. It is also on our enrollment form directly above the participant's signature line.

 

Daryle

 

 

 

Daryle,

If I can suggest to you and 403basp, you need to be a little clearer on how you explain what you company can and can't do. We have teachers coming here all the time and are totally frustrated that they cannot get Vanguard or they had vanguard under the old system and now its been removed, indexes and all. As ft6 said, index funds are not available.

 

You need to be clear on every detail or you and 403basp will be called on this. I know very little about 403basp, but there are influencial people who like your low fees and its a possible answer to the results of the new regs. Perhaps some of us are being a little too picky, but I am learning from bits and pieces about how your company gets paid. All of this should have been settled months ago.

 

We encourage people to have their core portfoio in index funds first, money that they will count on when they need it in the future. So now we find out that they are not available, what you are offering is low cost managed funds through VG or fidelity. Perhaps its a minor difference to 403basp, but its a big deal to educators and other public sector workers who want index funds for strategic purposes and low costs.

 

I am sorry but your response to ft6 is not an answer about why fidelity sparten funds are not available. You are talking about the institutional rates. But having said that, what about Vanguards index funds?

 

Steve

 

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