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Kieran

Aspire 403(b), BUT set up through an Equitable rep

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Dear 403bwise Community,

New first year teacher here.

I just signed up for an Aspire 403(b) plan! Which is great! BUT, I just now noticed it was done through an Equitable rep. Will my 403(b) plan still be okay since it is with Aspire? Or am I in trouble because it was set up through an Equitable rep?

Should I plan an escape strategy next open enrollment period to get away from Equitable?

Thank you for everything!

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Kieran, welcome to the forum! When you filled out the Aspire application form, in the space where it asked for agent info, did you write "self-directed"? If not, you will probably be charged a fee, I think it's 0.6%. You can confirm that with the agent. You don't need the agent if you know what investment company and what funds you want to use, which we can help you with if you want. If I were you, I would call up Aspire and tell them you want to self direct. It's possible that your district requires that you have an agent, although I hope not. 

What other vendors are on your district's 403b vendor list? Does you district offer a 457b plan and if so what are the vendors? What state are you in? Many states have a low-cost state run 457 plan that is available to school district employees.

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Hi Krow36!

Thank you for the helpful and speedy response!

I just looked back at my form that I completed a couple weeks ago, and dang, there was a box that either I checked saying I wanted to appoint a Financial Professional or it was checked for me. Either way, my bad for not being more vigilant.

The good news is that I have only made one contribution so far ($200/pay period or $400/month). The bad news is that I will likely have to wait until the next open enrollment period to make changes to my plan (I think I heard around the beginning of 2021 would be the next open enrollment period). 

Other 403(b) options in my district are: American Century Investors, Ameriprise Financial Services, AXA/Equitable (no thanks), First Investors Funds, Franklin Templeton Investments, Global Atlantic, Pacific Life, Thrivent Financial for Lutherans, VOYA, and Waddell & Reed.

It might be worth noting that I was able to locate Vanguard as an option for my school district when I went to the Vanguard Vendor Search Tool (screens attached), but at the beginning of the year, Human Resources sent out that 403(b) vendor list and Vanguard was not listed 🤷‍♂️  . I absolutely LOVE Vanguard and have been building up a nice Roth IRA in my professional career before I entered teaching.

I am teaching in Illinois, and we do have 457 options at my school district. I do plan on getting involved with a 457, but wanted to ease into investment game first with a 403(b). 

Thank you again so so so much!

Vanguard WWSD200 403b.png

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OK, I was afraid that the rep had filled out the form for you. Paying the 0.6% "advisor" fee for a few months (or even a few years) doesn't mean it is a disaster. Added to Aspire's 0.15% fee, the total fee of 0.75% is certainly not ideal, but I think that even with the added 0.6% fee, it is almost certain that Aspire is the lowest cost vendor on your district's 403b vendor list. And the only one that offers low-cost index funds. If you contribute $400/mo or $4800/yr, the 0.6% fee will only cost you an extra $28.80/yr. Hopefully you can change to the self-directed Aspire plan in January. You probably know that with Aspire, you can use all the Vanguard Admiral class mutual funds. 

As far as I know, IL does not offer a low-cost state-run 457 plan to school district employees.  

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A lot of school districts have lost Vanguard as a 403b vendor. There are probably several reasons for that, but Vanguard has changed their 403b program and a number of school districts have recently added Vanguard back on to their vendor list. I suggest you join the 403bwise Facebook Group. Scott and Dan, who run the Group, are in contact with Vanguard and might be able to help you get Vanguard added to your district's 403b list. There's a sticky on this forum that will give you the link.  

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Thank you again @krow36 & @MNGopher !!!! Sorry for the delay in getting back to you and thanking you for your time. I have been exceptionally busy on my first year "teacher grind"! But I am so glad I find the work rewarding and invigorating, even if it ends up being a grueling 12 hr day! Love it!

My plan of action will be to:

1) Try to switch to Vanguard at the next open enrollment period if it is an option by January 2021

2) If I cannot switch directly to Vanguard, I will continue with Aspire and obviously drop the "financial professional" (skipping the 0.6% fee) from my Aspire 403(b) 

3) Once the "financial professional" is cut out, I will ensure I am investing in the Vanguard Admiral funds via Aspire (because right now my portfolio is what was suggested by the Equitable rep - screens attached of his recommendations)

Screen Shot 2020-10-17 at 8.46.20 AM.png

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Kieran,

FYI, 

Mutual Funds with the designation "R" is another sneaky way (though perfectly legal) of hiding fees. The fees usually come via higher expense ratios, thus draining your returns; over the years this small fee will provide diminished results. Bob

 

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Thank you so much @shirley / Bob (looks like you signed off as Bob?)!   :)))

This is perfectly clear to me... I will DEFINITELY be making serious changes in January 2021. I am glad that at that point, it will only be 3 months worth of contributions, and not several years or several decades. 

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