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FITeacher

South Orange Maplewood Providers

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Looking at the providers for my district and wanted to get the perspective of the community and what products might be most advantagous for me to invest in.

Here they are:

Ameriprise

AXA Equitable

Great American

MetLife

Valic

Any information on these? Or the products they provide that would be good to look into?I did a little hunting around on the suggested comparing tool but wanted to get a peoples perspective.

Thanks Everyone!

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Yes, your choices are bad!!  Actually they stink. Shame on your school system for falling prey to the insurance industry. Have you considered trying to get better choices on board? Vanguard or Fidelity  directly would be optimal but Aspire would be an easy one to add.  Aspire could link you to better funds. As Bash Dash recommends check out if you have a state 457b plan in your state available to teachers.

Please report back.

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I agree with Bash Dash that you should check out a possible low-cost state 457 plan, and with Tony that your school district is severely deficient in offering a vendor that provides a low-cost non-annuity based 403b custodial account. Getting Fidelity, Vanguard or Aspire added to the vendor list would be the ideal solution. However it might take a while, probably months, possibly years?

VALIC has changed its name to AIG Retirement Services. It’s been an AIG company for decades. I believe that VALIC is the only vendor on that list that offers a mutual fund based custodial account 403b rather than an annuity based 403b, at least in California.https://www.403bcompare.com/vendors/1117#/productlist

It’s called VALIC Group Mutual Fund Product and has a Mgt/Wrap fee of 0%-1.0%. I think this fee varies by school district and is partly based on the district size and number of VALIC customers. It has several Vanguard and other index funds that could be considered:

BNY Mellon S&P 500 Index, ER=0.5%

Vanguard Extended Market Index Investor, ER=0.19%

BNY Mellon Bond Market Index Inv, ER= 0.4%

Vanguard Developed Markets Index Inv, ER=0.16%

Obviously the amount of the Mgt/Wrap fee for your district will be critical as to whether this “Product” is worth considering. And it’s possible it’s not offered by VALIC in your district, or they may offer a different non-annuity “product” (or only annuity products). Variable annuities usually have expense ratios and other fees between 2% and 3%, which makes them .

Are you contributing $6000 per year to an IRA, either traditional or Roth? If not, I would do that before contributing to a 403b or 457 account. The reason is that with an IRA, you choose your provider, and with Vanguard, Fidelity or Schwab you can have very low fees, ERs around 0.03% or even less.

If you are maxing your IRA every year, then contributing to a low-cost 403b or 457 in addition is a great idea.

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26 minutes ago, krow36 said:

Obviously the amount of the Mgt/Wrap fee for your district will be critical as to whether this “Product” is worth considering.

Krow is quite good at minute/specific  fee details. I personally  don't like to blow any insurance companies horn but Krow is right about Valic. It does possibly offer that  mentioned low fee  somewhat palatable option if it's available to you. But I would still worry you would get roped into other higher fee investments by a Valic  advisor besides other fees .

Please try and bring better options to your school district. It can be done and much has been written here how to go about it.

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4 hours ago, FITeacher said:

We are in NJ.

Hi FITeacher,

I’m in NJ as well, Nutley.  Definitely see if you can get Vanguard or Fidelity as mentioned above but, you may have more luck adding Security Benefit or Lincoln Investment.  They are both terrible companies like the one’s on your list but, both companies offer great Self-Directed platforms with low cost funds.  You would not use the Rep from these companies, those guys would just push expensive annuities on you.

I say you might have more luck adding these companies because (and please someone fact check me and correct me if I’m wrong) they will pay the Third Party Fees instead of your district while Vanguard and Fidelity won’t.  

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Jebjebitz

I'm not familiar with New Jersey but the problem I have with adding Security Benefit or Lincoln Investment to his current vendor list

2 hours ago, jebjebitz said:

hey are both terrible companies like the one’s on your list but, both companies offer great Self-Directed platforms with low cost funds.  You would not use the Rep from these companies, those guys would just push expensive annuities on you.

 

Jebjebitz

Those are great  additional suggestions . I'm not familiar with New Jersey but the problem I have with adding Security Benefit or Lincoln Investment to his current vendor list  is that many teachers wouldn't know how to navigate them  to their benefit and so you are just adding more substandard  confusing array of choices and more inappropriate sales people contact.

 The fact that you know how to navigate these companies to self direct into a good outcome is great but overall Security benefit and I assume Lincoln also sell lots of bad high cost products. 

I still don't fully understand why School Systems can't limit their choices  to a few and do the due diligence to get the right  403b choices to their teachers.  

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FITeacher, if either Security Benefit or Lincoln Investment were already on your district's vendor list, they would provide you with two excellent, very low-cost choices. However, if you were successful in adding one or both to the list, those reps would then try to sign up your colleagues to expensive annuity based 403b plans. In effect, those expensive plans support the low-cost self-directed plans. In other words, you are only getting an excellent low-cost plan because it's being payed for by your colleagues.

I think it's completely logical and ethical for jebjebitz and many others to use either of those vendors when they are already on the vendor list. I personally would feel guilty if I were responsible for adding them to the vendor list. I think jebjebitz is correct that the Third Party Administrator's fee (maybe $20-$30 per year per employee?) may be a factor in a district adding a vendor to their list. We have frequently seen districts willing to pay the fee and add a new vendor, maybe because it really isn't a lot of money. If the district realizes that there are no low-cost vendors on their list, they may feel vulnerable, even though many teachers have chosen high-cost annuity 403b plans.

I think Fidelity is more likely to be willing to pay the fee than is Vanguard. However, with Aspire, the employee pays the TPA fee out of Aspire's $40 per year admin fee. There is no valid reason for a district to refuse to add Aspire to their 403b and 457 vendor lists. 

So please try to get Fidelity and/or Vanguard added to the list, and if there's a problem with paying the TPA, try for Aspire. Remember "the squeaky hinge gets the oil". Also remember, a low-cost, index mutual fund based 403b and 457 is really a choice that all public school employees deserve. If you don't have that choice, you are being ripped off!

 

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11 minutes ago, krow36 said:

So please try to get Fidelity and/or Vanguard added to the list, and if there's a problem with paying the TPA, try for Aspire.

I agree!!  Aspire is my top choice to add some diversity/alternatives to his current choices but again only with self -directing. I am concerned however to see Aspire  services being offered by Edward Jones in some districts.  With this arrangement bait and switch into bad options can and probably does occur. You have to be savvy these days  to navigate the financial landscape . It's sneaky !!

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11 hours ago, krow36 said:

However, if you were successful in adding one or both to the list, those reps would then try to sign up your colleagues to expensive annuity based 403b plans. In effect, those expensive plans support the low-cost self-directed plans. In other words, you are only getting an excellent low-cost plan because it's being payed for by your colleagues.

 

Good point.  These two horrible vendors happened to be on our vendor list and I was only made aware of the self-directed options after visiting this site and Bogleheads.  I know more than a few colleagues who have signed up for the Security Benefit Guaranteed Lifetime Benefit annuity garbage after hearing the Rep claim they are the only company sponsored by the NEA (the DirectInvest option is sponsored not Security Benefit).

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Jebjebitz’s comment made me curious to see how many of Security Benefit’s 403b plans use the NEA label as an endorsement. I checked the SB website:  https://securitybenefit.com/performance

To my surprise, the only plan with “NEA” in its title is now  NEA Valuebuilder® DirectInvest 403(b)7 !??

There are no current variable annuity plans (or custodial 403(b)7 plans) with the NEA Valuebuilder label, although they are all listed under “Legacy products, No longer available for issue”.

This certainly looks like the arrangement between SB and NEA has changed and that the SB  payment of millions annually to NEA for the use of the NEA “endorsement” will be tapering off. While there are still many teachers with NEA Valuebuilder annuities, that number should decrease as no new accounts are made. It’s great that the Direct Invest option is still there.  As the payment was/is based on the number of NEA accounts, the legacy accounts probably continue to pay for the cost of NEA Direct Invest.

Looking at the 403bcompare website, the NEA Valuebuilder annuity and custodial plans are “discontinued”. https://www.403bcompare.com/vendors/1022#/productlist

I still think it would be a mistake to work to get SB added to a district’s vendor list. All of SB’s current 403b products, both annuities and custodial plans remain too expensive.

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Hi Everyone,

Thank you so much for all the incredible feedback. I want to be able to digest it all and come back with a few more well thought out questions, but the one that sticks out right away is "How do it get my district to pick up Vanguard/Fidelity/Aspire providers?" This is not something I have experience in and I feel like my in district resources are limited. I am also not tenured yet so I am hesitant to make waves. Continue throwing out that good advice and I will be back soon with more pointed questions for all the quality information put out there for my question!

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On 10/5/2019 at 10:42 AM, krow36 said:

Jebjebitz’s comment made me curious to see how many of Security Benefit’s 403b plans use the NEA label as an endorsement. I checked the SB website:  https://securitybenefit.com/performance

To my surprise, the only plan with “NEA” in its title is now  NEA Valuebuilder® DirectInvest 403(b)7 !??

There are no current variable annuity plans (or custodial 403(b)7 plans) with the NEA Valuebuilder label, although they are all listed under “Legacy products, No longer available for issue”.

This certainly looks like the arrangement between SB and NEA has changed and that the SB  payment of millions annually to NEA for the use of the NEA “endorsement” will be tapering off. While there are still many teachers with NEA Valuebuilder annuities, that number should decrease as no new accounts are made. It’s great that the Direct Invest option is still there.  As the payment was/is based on the number of NEA accounts, the legacy accounts probably continue to pay for the cost of NEA Direct Invest.

Looking at the 403bcompare website, the NEA Valuebuilder annuity and custodial plans are “discontinued”. https://www.403bcompare.com/vendors/1022#/productlist

I still think it would be a mistake to work to get SB added to a district’s vendor list. All of SB’s current 403b products, both annuities and custodial plans remain too expensive.

I am sure NEA and Security Benefits discussed this at length. Both read the news, and they both know that their secrecy will be blown wide open soon and that the 403(b) world is changing. While we will never know the behind closed door discussions (because they live in the 20th-century secrecy about 403b), both organizations know that teachers don't go to websites and sign up for a 403b. Security Benefit lucrative sales force will always be in full force and will decide which products they will sell to the teachers. I seriously doubt that the millions that are pilfered from the teachers will decrease. 

The ONLY reason why NEA created Direct Invest is a reaction to their lawsuit. NEA escaped a huge legal bullet, and they know very well that it ain't over yet because as I said the 403(b) world is changing, and that 4 million teachers cannot be the only ones left unprotected in employer or union-sponsored 403(b) tax-deferred retirement plans. 

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