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bjackson

Meeting with Superintendent of Business on 403B Improvement

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I know there have been many similar discussions, but our union president and I are meeting with the Supt. of Business Services next Tuesday and I wanted any input/advice on some specific things I hope to accomplish.  Note, the Supt. seems to understand our plight, which is very helpful as the former had the "if teachers are stupid enough to do this, it is all their fault and I'm not changing anything" attitude.  Below is a list of hopeful outcomes (some may be included in bargaining, which starts in January)..

1.  Annuity Timeshare Salesmen "Agents":  We would like them banned from solicitation in all buildings.  

2.  Vetting Plans:  The district leadership and union, or possibly another outside organization, will create a transparency sheet detailing all fees related to investment products to be shared with all employees.  We will also explore getting better providers like Vanguard (currently Fidelity is the only decent option) and possibly RIAs with ethics (this is really difficult as summarized in my post from a couple weeks ago about my journey to become this person).

3.  Dissemination of Information:  The district and union will have a town hall meeting detailing the issues with 403Bs, particularly the impact high fees and overselling of poor investment products like annuities (A ton of additional information as well..if this is granted I will share my staff presentation with the board:).  A session will also be included in new teacher orientation every year.

Please share any helpful information from others that have done this or what I may be missing.  Thanks!

 

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I don’t think your hopeful suggestions are hopeful enough. I don’t believe in negotiating with myself. This is where I’d start:

1. Fidelity is the only approved vendor.

2. The Fidelity plan only offers target date index funds and the three fund portfolio.

3. Employees are automatically enrolled into a target date fund based on their age and they default a percentage of their pay into the plan.

Then the negotiation moves from there. I certainly wouldn’t start by conceding the approval of exploítative plans in the hopes of stopping agents from being on campus.

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2 hours ago, EdLaFave said:

. Employees are automatically enrolled into a target date fund based on their age and they default a percentage of their pay into the plan.

 

I would really push this for the average employee. They are usually too  lazy  to learn about retirement issues and that's why annuity salesman get their way so often with them. So, maybe, if you start them off automatically in a decent plan then MAYBE they will be  too lazy to change it over to something worse. Also this move  is kind of an endorsement by the district that its O.K to invest there.

 

4 hours ago, bjackson said:

A session will also be included in new teacher orientation every year.

This may or may not make a difference. Much depends on the employee's  financial acumen. I would instead hold  multiple in-services on financial literacy and investing for retirement . Certainly these would have to be done without the help of the insurance industry. . There is power in numbers so the more employees you can get to make some noise the better the chances of instituting real change. This  will require that the employees having some real financial understanding. 

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28 minutes ago, tony said:

So, maybe, if you start them off automatically in a decent plan then MAYBE they will be  too lazy to change it over to something worse.

Let me go further than Tony has. There is no guess work here. We have the data. This is a proven winner.

Google it and see or start with what Vanguard has to say on the issue:

https://institutional.vanguard.com/iam/pdf/CIRAE.pdf

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I also want to add one more thing. The best solutions are the ones that don’t require ongoing effort and resources to maintain and enforce.

That’s why eliminating exploítative vendors and starting auto enrollment is an absolute winner. Set it and forget it, if you will. 

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13 hours ago, EdLaFave said:

1. Fidelity is the only approved vendor.

2. The Fidelity plan only offers target date index funds and the three fund portfolio.

3. Employees are automatically enrolled into a target date fund based on their age and they default a percentage of their pay into the plan.

I’ve had a chance to see statements for my family members’ 401ks.  They’re all invested in something that follows steps 1 through 3 above.  Without thinking they’re set up in something that I had to research myself.  This is what people want.

Unfortunately, I have doubts about this being set up in the 403b setting.  It would require the business administrator to choose the sole provider.  Is this possible?  No doubt it’s ideal but can it be done legally?

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Thank you for the feedback and I love the idea of moving new hires to Target Date Funds. I know this is common in private company 401Ks and hope it is just as easy in 403Bs. On to the million dollar question...what is the best route to move current employees out of their Axa and other insurance company annuities?  Also, is it possible to eliminate Axa as an option when employees are already enrolled?  

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You can absolutely eliminate a vendor from the approved list. It has happened in many places.

I’m not sure exactly how it happens. Are people forced to rollover their plan to a currently approved vendor? Are they allowed to keep the account but no longer contribute to it? Are they allowed to keep and contribute to the account, but no new accounts can be opened?

Maybe the specifics are negotiated on a case by case basis, maybe each vendor has a policy, or maybe the school district has a policy. Let us know what you find.

Be prepared to counter the argument that removing a bad vendor will be disruptive to employees and is thus a “bad” thing to do. 

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We've had some vendors that have been removed.  The people that already had accounts there could keep them, but no new participants were allowed.  

 

 

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