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Checklist For Choosing A 403(B) Vendor

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Goal: to compile a simple checklist for any teacher to ask of their potential (or current) 403(b) vendor. Please feel free to comment or add to this list:

 

1) Do participants have the option to self-direct? (This option is available with Vanguard, Aspire, Fidelity, TIAA?)

 

2) What is your "professional" opinion on Vanguard, TIAA or Fidelity?

 

3. Do you have your retirement savings in the company you are trying to sell to me?

 

4) Do you offer investment options that include low-cost (fees less than 0.3%) no-load mutual funds spread among a broad range of asset classes and include Target Date Retirement Funds? (403(b)ill of Rights; 403bwise.com)

 

5) Are you willing to sign a Fiduciary Pledge, putting your client’s interests above your own? 403(b)wise Advisor Fiduciary Pledge. (403(b)ill of Rights; 403bwise.com)

 

6) Can you supply me with a clear breakdown of all fees?

 

7) Are there any M&E charges? Why would I want that feature in my 403(b)? If so, how does that charge effect the long-term performance? Can you show me a comparison of performance with and without the M&E charge?

 

8) Do you offer funds with no-loads?

 

9)Do your offerings on the 403bcompare.com website apply to my district? If not, which ones do NOT apply to my district?

 

10) What are the exit charges, operating costs, maintenance fees, surrender penalties or any other costs not mentioned here?

 

11) Are there any 12b-1 marketing fees? How do those fees benefit me? How do they affect the long-term performance?

 

12) My district offers me a 457(b) option in addition to a 403(b) option. Assuming I can afford to contribute to only one, why would I choose a 403(b) over a 457(b) account?

 

(Compiled in part from http://latebloomerwealth.com and 403bwise.com)

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krow,

Does this language ask the same?

Do your offerings on the 403bcompare.com website apply to my district? If not, which ones do NOT apply to my district?

 

How about:

Do your offerings on the 403bcompare.com website apply to my district, and are they complete for my district? Which ones apply?

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No you didn't miss it- I took your suggestion and inserted it! I was checking with you to see if I changed the meaning of your question.

Thank you!

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I like your version. I guess we've left open the problem that the vendor may offer plans that are not included in their submission to 403bcompare. That could be because the plan is not available in CA but is in other states?

 

An interesting case is that of Security Benefit not including the NEA Direct Invest 403b on their 403bcompare site. This is their only 403b plan that anyone should consider. Your 1) on "offering self-direct" covers this I guess.

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