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gadfly

Aig Valic

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Hi,

 

Our District is looking at them as a potential 403b provider. Has anyone on this board had positive or negative or neutral experiences with them?

 

Thanks!

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I have no experience with them, though I have colleagues who have had mixed experience. They seem to be among the more expensive options available...I'd make sure the district does a fair degree of homework in terms of what the extra money is buying.

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I currently have my 403 through them and am reasonably happy. I have a nice variety of funds to choose from, even some index funds.

 

OTOH, my employer pays all fees, and yes, this was a factor in my choice. (Were this not the case, I probably would've looked more closely at other options.)

 

Also, my account rep is very motivated, and I think she *earns* what she gets paid, and this was also a factor in my choice. When she retires, if her replacement isn't as customer oriented, I will then consider all of my options.

 

 

 

 

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Tartymae,

 

What are the fees that your employer pays? Please express them as an expense ratio? i.e. 1.50 percent. Also, what industry are you employed in? I ask because it is really rare for an er to pay the expense ratio.

 

Peace,

Joel L. Frank

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Hey Joel,

 

I work for a university.

 

When I was doing my prelims, I asked what the costs would be, saying, "It costs me $25/yr to have my Roth IRA through sharebuilder on top the expense ratios of any funds I invest in. What does it cost to have a 403?"

 

My account rep explained that as long as I worked for the university, I would not be charged any account fees or account expenses by AIG, that the university paid those as an incentive to get people to save for retirement, since they did not provide any sort of match.

 

It's been a while since I asked what the exact amount is, but my guess is that it was somewhere within 1-1.5%.

 

I've checked my statements and I can see that my returns reflect the fact that this is true. The U is paying AIG's expense ratio.

 

---

 

I know that AIG-Valic is not liked by a lot of people on this board, and I know that there are reasons for this, and I say to anybody as with any investment firm, tread carefully.

 

OTOH, where I work I have choices about which company I have a 403 with.

 

Guess which company's representitive returned my phone calls and emails promptly and answered my questions quickly and clearly?

 

(When I say I'm thinking about setting up a 403 plan, don't get back to me 2 weeks later or let me know that you'll be on campus next month.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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In addition to a 403(b) do you also have a university funded pension plan? Is it a Defined Benefit or Defined Contribution? In addition to paying the 403(b) expense ratio what else does your er do for you? Do they provide impartial investment education/advice/seminars or do they leave it up to the investment providers? Which no-load firms are available?

 

Joel

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Mae,

 

The university pays them is a typical sales ploy. Check your returns against the returns of the equivalent funds. They're not taken out directly b/c they don't want you to know how much you're paying. They're just like the e.r., they're deducted before returns are posted. Read your plan documents looking for works like management fees, mortality and expense, anything that has fees. None of these are included in the expense ratio of the funds, they're all extra.

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In addition to a 403(b) do you also have a university funded pension plan?>>

 

Yes. Defined Benefit.

 

The U does have its own retirement seminiars 3-4 times a year.

 

Notmathchallenged: Read your plan documents looking for works like management fees, mortality and expense, anything that has fees.>>>

 

Have looked at my plan documents (took the contract home and read it carefully before signing) and checked my retuns against the returns of the equvalent funds. My returns match. I am not being charged these fees so long as I'm employed by the U, and the contract explicitly states this.

 

Rare, but it happens. :)

 

---

 

Everybody, I appreciate your concern :), but I didn't blindly jump at AIG-Valic. I got a deal that made them no worse than anybody else.

 

In my case the combo of No Fees + Good Account Rep = I'll choose this company.

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I would like to make sure we understand your situation. Do you purchase AIG/valic at no-load? The load, M & E fee, 12-b1 fees and contingent deferred sales charges that you would otherwise be resposible for are paid for by your er. How does your er keep track of the fees they pay on your behalf? Does AIG/Valic bill the er directly for the fees? Just what are the mechanics? I am trying to understand how it works. Can you exit AIG/Valic on a no load basis at anytime?

 

If you have a no-load offering wouldn't the er get a better bang for the buck if they contributed a match equal to the fees they pay to Valic? Plus your account value would be enhanced.

 

Joel

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Tartymae has replied to my latest post by email. I paste it here for all to view.

 

Joel

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

Joel,

 

I haven't done that much investigation of how AIG is paid by the U. I've looked at my account and all I can say is it's not coming out of my pocket. Thats where my caring begins and ends.

 

Would the U get a better deal by matching whatever it is AIG charges / what they pay in their deal? I don't know. Possibly.

 

IIRC, AIG is paid on a fixed basis. My rep mentioned something about this as I was comparing my copy of the contract (which I had annotated) to the document I was about to sign.

 

If that is true, given the rate at which people don't save for retirement, my guess is that AIG is getting a better deal by accepting a fixed annual payment from the U. Seriously, the U does a very good job of having the PERS people come to campus, and the campus info emails keep us updated about seminars and when people from the various companies will be on campus and, I've been to some of those meetings and ... crickets chirping.

 

I mean, I could go pull the University budget and start tracking down the mechanics of this, but at the moment I've got other priorties -- I'm gathering my paperwork to go back for a MS.

 

My 403 plan is not the cornerstone of my retirement plans. I've got my pension, my roth IRA, and real estate.

 

 

 

 

 

 

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I worked for AIG VALIC for a number of years and I have never heard of a group (i.e. a university) pay for the fees. When you recieve a statement from AIG it NEVER tell you what the fees are......as someone wrote, check the performance of the funds compared to the performance in your sub-accounts... you will find a difference.... as good as your rep. is, she is recieving a LARGE comm. check on the business she writes... The university is not paying her bills.... you and the rest of her clients are... AIG VALIC is a good company, they do have a nice product, but its only one good product... how can they offer unbiased advise with only one product ?

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