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krow36

Ca T P A Sponsors A 403B Plan, Not On 403Bcompare?

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A Third Party Administrator called Fringe Benefits Consortium (FBC) works with districts in San Diego and nearby counties. The list of providers includes Fidelity, CalSTRS Pension 2 and CTA Ret. Svg. Plan. http://fbcretire.com/about.htm However the FBC website features their own 403b plan run by Empower, a subsidiary of Great West Life and Annuity Insurance Co. The Empower 403b offers 10 Vanguard funds and 44 other actively managed funds. Empower has moderate fees: 0.16% added to each offered fund’s ER and an $18/yr compliance fee per account that applies to all the providers on the list.

What’s puzzling is that Empower is not listed in the 403bcompare.com website. Doesn’t CA law say that a school district cannot send a salary contribution to a 403b vendor unless that plan is registered and explained on the 403bcompare website? How is it legal for the district’s TPA to push an unregistered plan? The Empower 403b plan features an optional advisor plan that starts at 0.45%. https://dcprovider.com/PDF/SanDiego/AM93564_FBC_Program_Highlights_2017_FINAL.pdf

Another puzzle is that Vanguard is omitted from the TPA’s list of vendors, although it is listed as available on 403bcompare.com. Poster socalteacher has confirmed with the TPA office that Vanguard is on the provider list (in their computer) but not on their website??

It looks like the TPA FBC has a financial relationship with the insurance company that results in the featuring/favoring of the Empower 403b plan over lower cost options such as Fidelity, Vanguard, CalSTRS Pension2 and CTA plans. What is the reason that FBC has omitted Vanguard from their website’s provider list? I wonder if the whole FBC setup is organized to get teachers to use Empower and their more expensive managed mutual funds? Their funds’ ERs run from about 0.3% to 0.7% although their target retirement funds are all about 1.7%.

https://docs.retirementpartner.com/ioag/98771-01_IOAG.pdf

Empower charges only $25/yr for an advisor and 0.45% for a manager to run the account.

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I 100% agree with you that the FBC website is fishy at best. It just is not upfront and very easy to use if you are an individual wanting to take care of everything yourself. Case in point, I do not know any other educators who have set up their own 403b.

 

Empower Retirement is actually listed on 403bcompare. It does only list one investment option. I have a feeling 403bcompare is going to take some time to get things straightened out with the new website. They confirmed with me that Vanguard is not offered and told me to look at the FBC provider list. They said this was their mistake. I called National Benefit Services to double check.

 

FBC does force the teachers it represents to only use Empowers Roth403b and 457 plans. I do not think that is in any way meeting the purpose of the FBC which states, "Basically they wanted to create a plan that would benefit school employees, not the financial services industry."

 

On an aside, here is a link you may find amusing. I can not say how much of this is truth or not and it is somewhat outdated. However, it is still interesting. SD Union Trib link.

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Those links indicate FBC has had a very checkered past! I scanned some of Scott Dauenhauer's blogs on FBC from 2009 and 2010. He's been fighting for a better 403b for a very long time! http://teachersadvocate.blogspot.com Thank you Scott!

 

I guess FBC has improved since 2009, but still has a way to go to get rid of the conflict of interest.

 

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