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MChandler

Comparing Admin vs Asset Fees

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Hi everyone,

I'm starting a new job and having difficulty selecting a 403b company. I have narrowed it down to two options.

1) Valic: It has a straight average fee of 0.71 plus an asset fee of 0.18. The total average participant fee is 0.89 (as a percentage of assets). This plan includes funds FXAIX, (.02 ER), FSPSX (.05 ER), and DBMIX (.40ER) that I think will create a good three-fund portfolio of index funds. The target date funds are 0.97 ER.

2) Lincoln: It has a straight average fee of 0.86 with no other fees. The total average participant fee is 0.86 (as a percentage of assets). This plan includes funds with much higher ER. For example, NEIAX (.45 ER), and no index bond or international funds (they are actively managed). The target date funds are 0.85 ER.

My question is: Does the additional asset fee from Valic compensate for having lower expense ratios on my prospective fund choices?

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No, I don't think it makes much difference. 5 bps difference is not a big deal. Bottom line is that the fees are high.

Valic:  .91%

Lincoln total fee:   .86%

I would go with a diversification plan offered by Valic and the three fund portfolio of index funds. 

 

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You’re going to want to define terms. What is a straight average fee? Why do I care what the average participant fee is?

Based on your post, I can’t tell, with any confidence, what you’d be paying at both vendors.

Lincoln offers a cheap PDP plan in select areas.

It is a good idea to list all available vendors because we might know something that you don’t.

have you considered a 457b? Some states sponsor good plans even if your vendor list is bad. 

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