Author Topic: Help in preparation for 401K meeting  (Read 2205 times)

rivendale

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Help in preparation for 401K meeting
« on: October 11, 2018, 10:56:48 PM »
I need some help. I have been making my way through the blog and comments, and recommended reading list. I have learned so much and I feel more empowered as a result.

Here’s my situation: 401k is currently through Aspire Financial, with mainly high fee, front loaded Lord Abbot funds to choose from. Here are my choices (the first 4 are the funds that I currently hold to various degrees).
Name                           Ticker               Category      Fees   Loads   12-b fees   Notes
LA Mid Cap Stock                 ALAVLX   Midcap Value      .95%    Front   .25%   
LA Affliated A                     LAFFX   Large Value      .70%    Front 5.75%   .25%   
LA Multi-Asset Bal Opp A     LABFX   Med-Lrg Cap Gwth,    1.2%    Front 2.25%   .25%   
LA Total Return A             LTRAX   Int. Bond              .68%    Front 2.25%   .20%   
LA Core Fixed Income A     LCRAX   Long Bond            .63%   Front 2.25%   .20%   
LA Calibrated Dividend Gr a  LAMAX   Large CAP v/g           .97%   Front 5.75%   .25%   T
LA International Equity A     LICAX   Foreign Lrg G/v        1.17%   Front 5.75%   .25%   
LA Bond-Debenture A             LBNDX   80/20 b/s                 .80%   Front 2.25%   .20%   
LA Fundamental Equity A     LDFVX   Large Value      .96%   Front 5.75%   .25%   
LA Multi-Asset Growth A     LWSAX                  
LA Convertible A              LACFX                  
AB International Value     AIVIX                  
WT CIT for Metlife             MF4483                  
Pimco Income Instl           PIMIX      
            
I have scheduled a meeting with our company’s representative for this Thursday, with the main point being able to have low-cost index funds offered. How should I ask? What should I ask for (Vanguard, et al)? What questions or concerns should I bring up? Thank you.

(Sorry about the formatting, my table didn't come across nicely)

MDM

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Re: Help in preparation for 401K meeting
« Reply #1 on: October 11, 2018, 11:15:40 PM »

rivendale

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Re: Help in preparation for 401K meeting
« Reply #2 on: October 11, 2018, 11:27:13 PM »
I just read it-- very helpful!

TomTX

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Re: Help in preparation for 401K meeting
« Reply #3 on: October 14, 2018, 07:20:22 AM »
That lineup they offer is terrible, and I would consider it a breach of their fiduciary duty.

JAYSLOL

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Re: Help in preparation for 401K meeting
« Reply #4 on: October 14, 2018, 07:55:36 AM »
I wouldn't bother with a meeting at all, find the right provider of index funds for you and transfer over there where you don't have to campaign to get a good product at a fair rate

TomTX

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Re: Help in preparation for 401K meeting
« Reply #5 on: October 14, 2018, 09:48:13 AM »
I wouldn't bother with a meeting at all, find the right provider of index funds for you and transfer over there where you don't have to campaign to get a good product at a fair rate

Many 401k plans do not allow in-service rollover/transfer of funds. Employee funds are trapped there until the employee leaves.

rivendale

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Re: Help in preparation for 401K meeting
« Reply #6 on: October 14, 2018, 07:09:50 PM »
That lineup they offer is terrible, and I would consider it a breach of their fiduciary duty.

Thanks for the confirmation. After learning more and researching the matter, I felt that the fees and offerings were RIDICULOUS. I am hoping to come to a good resolution, but it might be a delicate matter. Its a small business and the owner is friends with the Edward Jones broker and "trusts him implicitly."

TomTX

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Re: Help in preparation for 401K meeting
« Reply #7 on: October 14, 2018, 07:13:10 PM »
That lineup they offer is terrible, and I would consider it a breach of their fiduciary duty.

Thanks for the confirmation. After learning more and researching the matter, I felt that the fees and offerings were RIDICULOUS. I am hoping to come to a good resolution, but it might be a delicate matter. Its a small business and the owner is friends with the Edward Jones broker and "trusts him implicitly."

Well, that is the MO of the EJ broker. Become "friends" with anyone they can suck money out of.

Indio

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Re: Help in preparation for 401K meeting
« Reply #8 on: October 14, 2018, 07:22:54 PM »
Fiduciary responsibility is a big issue with 401ks. https://www.investopedia.com/updates/dol-fiduciary-rule/

To prepare for the mtg, I would bring data about current Vanguard funds that are equivalent to the ones that are being offered by LA. Show year to date, cumulative, 5 years graph, and expense ratios and ask how it is justified to keep employees retirement savings in the LA options. When the numbers are laid out, it's not a matter of trust but competence.

rivendale

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Re: Help in preparation for 401K meeting
« Reply #9 on: October 15, 2018, 09:21:04 PM »
Would these be comparable funds to one another? Its all new to me.

LAVLX---VMVAX
LAFFX---VVIAX or VHDYX
LABFX---VASGX
LTRAX---VBTLX or VBILX

These LA funds are where I am currently allocated.

MDM

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Re: Help in preparation for 401K meeting
« Reply #10 on: October 15, 2018, 10:07:42 PM »
Would these be comparable funds to one another? Its all new to me.

LAVLX---VMVAX
LAFFX---VVIAX or VHDYX
LABFX---VASGX
LTRAX---VBTLX or VBILX

These LA funds are where I am currently allocated.
You might try Vanguard - Vanguard - compare mutual funds and ETFs | Vanguard.  E.g., that shows LABFX vs. VASGX isn't really apples v. apples due to LABFX's ~70/30 asset allocation vs. VASGX's ~80/20.

The LA funds sure are pricey.

rivendale

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Re: Help in preparation for 401K meeting
« Reply #11 on: October 16, 2018, 08:59:37 PM »
My problem is that I don't know what Vanguard funds to input in comparison. I was hoping someone might off-the-cuff know what some would be. But, I will go through with what I have so far and try and find more apples-to-apples.

Also, what would be the "ideal" Vanguard funds to ask for?
« Last Edit: October 16, 2018, 09:01:54 PM by rivendale »

rivendale

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Re: Help in preparation for 401K meeting
« Reply #12 on: October 16, 2018, 09:08:46 PM »
When I was playing around on Vanguard, it automatically offered me comparable funds as long as I selected a non-vanguard fund family first. Very helpful!

MDM

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Re: Help in preparation for 401K meeting
« Reply #13 on: October 16, 2018, 09:16:29 PM »
Also, what would be the "ideal" Vanguard funds to ask for?
If you had admiral class shares of the following, you could have a fine Three-fund portfolio.
    Vanguard Total Stock Market Index Fund
    Vanguard Total International Stock Index Fund
    Vanguard Total Bond Market Fund

Having some of the Vanguard target date retirement funds would also be reasonable.

Another Reader

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Re: Help in preparation for 401K meeting
« Reply #14 on: October 16, 2018, 09:17:40 PM »
The representative works for Edward Jones. They won't sell you low cost index funds.  That's not in their product line.  Eddy Jones is all about making as much money as they can off of you as their captive client. This guy has convinced the company owner he is putting the employees in good investments.  Meeting with him is a waste of time.

I would pull together a list of articles about fiduciary responsibility and the ways in which Eddy avoids meeting that responsibility.  Front load, high expense funds are an abuse of fiduciary responsibility, but the boss needs to realize this himself in a non-threatening way.  Sit down with the boss and ask him to read the information you compile and to consider moving the company 401(k) to another plan administrator that offers better investments and meets the fiduciary responsibility test.

MDM

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Re: Help in preparation for 401K meeting
« Reply #15 on: October 16, 2018, 09:18:30 PM »
When I was playing around on Vanguard, it automatically offered me comparable funds as long as I selected a non-vanguard fund family first. Very helpful!
Nice!  What page (i.e., URL) are you using for that?

rivendale

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Re: Help in preparation for 401K meeting
« Reply #16 on: October 16, 2018, 09:34:11 PM »
The same one you linked to. https://personal.vanguard.com/us/funds/vanguard/compare?navigatingFrom=5

When I put in an "outside" fund family, it opened a popup window with suggestions, but only for some of the LA funds. Not all of them.
« Last Edit: October 16, 2018, 09:39:12 PM by rivendale »

rivendale

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Re: Help in preparation for 401K meeting
« Reply #17 on: October 16, 2018, 09:35:24 PM »
Also, what would be the "ideal" Vanguard funds to ask for?
If you had admiral class shares of the following, you could have a fine Three-fund portfolio.
    Vanguard Total Stock Market Index Fund
    Vanguard Total International Stock Index Fund
    Vanguard Total Bond Market Fund

Having some of the Vanguard target date retirement funds would also be reasonable.

Thanks @MDM

rivendale

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Re: Help in preparation for 401K meeting
« Reply #18 on: October 16, 2018, 09:49:01 PM »
The representative works for Edward Jones. They won't sell you low cost index funds.  That's not in their product line.  Eddy Jones is all about making as much money as they can off of you as their captive client. This guy has convinced the company owner he is putting the employees in good investments.  Meeting with him is a waste of time.

I would pull together a list of articles about fiduciary responsibility and the ways in which Eddy avoids meeting that responsibility.  Front load, high expense funds are an abuse of fiduciary responsibility, but the boss needs to realize this himself in a non-threatening way.  Sit down with the boss and ask him to read the information you compile and to consider moving the company 401(k) to another plan administrator that offers better investments and meets the fiduciary responsibility test.

I googled Edward Jones and fiduciary responsibility and have no idea where to start. Any links you can provide? I am reading the bloomberg one now. https://www.bna.com/edward-jones-cant-n57982090454/

Another Reader

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Re: Help in preparation for 401K meeting
« Reply #19 on: October 17, 2018, 05:52:14 AM »
The representative works for Edward Jones. They won't sell you low cost index funds.  That's not in their product line.  Eddy Jones is all about making as much money as they can off of you as their captive client. This guy has convinced the company owner he is putting the employees in good investments.  Meeting with him is a waste of time.

I would pull together a list of articles about fiduciary responsibility and the ways in which Eddy avoids meeting that responsibility.  Front load, high expense funds are an abuse of fiduciary responsibility, but the boss needs to realize this himself in a non-threatening way.  Sit down with the boss and ask him to read the information you compile and to consider moving the company 401(k) to another plan administrator that offers better investments and meets the fiduciary responsibility test.

I googled Edward Jones and fiduciary responsibility and have no idea where to start. Any links you can provide? I am reading the bloomberg one now. https://www.bna.com/edward-jones-cant-n57982090454/

Lots of discussion on Bogleheads about these folks.

former player

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Re: Help in preparation for 401K meeting
« Reply #20 on: October 17, 2018, 06:49:48 AM »
This is a tricky negotiation you are going into.  You need to minimise the downsides for both the business owner and his EJ friend.  Present it as a small and harmless change that would help you out - perhaps Vanguard are your preferred provider for other investments and you just want the opportunity to put some of your retirement money with them as well.

If you imply that you are not dissing the EJ funds, and that you are not proposing that EJ loses the other employee's funds, or indeed not losing all of your retirement funds, then you are removing some of the barriers to the employer and EJ rep giving you what you want. 

I'd also frame any "fiduciary duty" arguments in this way - ie there is nothing wrong with offering the EJ funds, but it would be an extra service to employees to provide other (eg Vanguard) options and avoid any suggestion in the future that providing funds through a single provider was too limiting.

As well as suggesting particular Vanguard funds, a cheat sheet on the steps that the owner would need to go through to make the change to add those funds to their retirement scheme would be a good idea, so that the change can't be stopped or delayed with the argument that it's too difficult.


Of course, once the change has gone through there is nothing to stop you telling your fellow employees that there are these great new funds with lower fees that could give them a better retirement for their money.




MustacheAndaHalf

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Re: Help in preparation for 401K meeting
« Reply #21 on: October 17, 2018, 07:10:04 AM »
I am hoping to come to a good resolution, but it might be a delicate matter. Its a small business and the owner is friends with the Edward Jones broker and "trusts him implicitly."
That friendship could be a conflict of interest.  If you have an email where this friendship is evident, it's worth saving that email.  If they don't fix the problem while you're at the company, you can sue them after you've left.  Ongoing violations like this extend the time you're allowed to sue them, if it comes to that.

I've noticed that the worst plans seem to be at small companies.  I suspect there aren't any lawyers with relevant experience, and once those get hired the plans change quickly to conform to the law.

Car Jack

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Re: Help in preparation for 401K meeting
« Reply #22 on: October 17, 2018, 08:35:55 AM »
Sigh

Honestly, what I would do is completely opt out.  If enough employees opt out, anyone making any money will be limited in % they can invest which will make the cost go up even more for them.  Never buy into any front end loaded fund, ever.  If there's a stable value or money market or cash option without a load, then you could invest there. 

You might want to also start looking around for a new job.  If you find one and get an offer, let the owner know that it was because of this horrible 401k that got you looking.

rivendale

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Re: Help in preparation for 401K meeting
« Reply #23 on: October 17, 2018, 10:30:22 AM »
This is a tricky negotiation you are going into.  You need to minimise the downsides for both the business owner and his EJ friend.  Present it as a small and harmless change that would help you out - perhaps Vanguard are your preferred provider for other investments and you just want the opportunity to put some of your retirement money with them as well.

If you imply that you are not dissing the EJ funds, and that you are not proposing that EJ loses the other employee's funds, or indeed not losing all of your retirement funds, then you are removing some of the barriers to the employer and EJ rep giving you what you want. 

I'd also frame any "fiduciary duty" arguments in this way - ie there is nothing wrong with offering the EJ funds, but it would be an extra service to employees to provide other (eg Vanguard) options and avoid any suggestion in the future that providing funds through a single provider was too limiting.

As well as suggesting particular Vanguard funds, a cheat sheet on the steps that the owner would need to go through to make the change to add those funds to their retirement scheme would be a good idea, so that the change can't be stopped or delayed with the argument that it's too difficult.


Of course, once the change has gone through there is nothing to stop you telling your fellow employees that there are these great new funds with lower fees that could give them a better retirement for their money.

Thank you for the helpful framework for guiding the discussion. I will try and temper my hostility towards the EJ rep and hopefully come to a beneficial resolution. Its definitely a tricky situation due to the small nature of the company.

rivendale

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Re: Help in preparation for 401K meeting
« Reply #24 on: October 18, 2018, 06:44:18 PM »
Well, we just got back. I think I can say it went successfully. I have a list (81 pages!!!) of all the funds that are available under the current safe harbor plan. I can choose from these and start the process of getting some of them added to our plan selection, as long as they pass some type of 3rd party test or something. I forgot what he said, something along the lines of compliance to new regulations.

So, anyone want to help me weed through? For instance, anyone know of any funds from these offerings that mimic an Index fund? The EJ rep initially limited the conversation to adding some American Funds (expense ratios of roughly .5%) or T. Rowe Price

The main fund families are:
AllianceBernstein
American Funds
BlackRock
Calvert Investments
Columbia
Federated
Fidelity (they are all under the Fidelity Advisor, Asset Manager or Freedom label)
Franklin Templeton
Goldman Sachs
Hartford
Invesco
Ivy Funds
Janus Henderson
John Hancock
JPMorgan
LeggMason
MFS
Oppenheimer
PGIM
PIMCO
Putnam
T. Rowe Price
Thornburg
TIAA

Whew! None of the recommended funds from the Three Fund Portfolio link are available, at least according to their ticker.

The advisor really tried to push how great actively managed funds are compared to the S&P 500/Index Funds. I just kept repeating, albeit in different ways, that I was just interested in adding more low cost options to our selection, that low E/R fees were a MAJOR consideration for us.

On another positive note, I did learn that the front loaded fees are currently being waived on the Lord Abbott funds, but I don't have any paperwork to that effect and will need to call our record keeping company tomorrow to follow up and confirm.


Another Reader

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Re: Help in preparation for 401K meeting
« Reply #25 on: October 18, 2018, 07:55:50 PM »
That's about the best outcome you could have hoped for.  Unfortunately, the Fidelity funds are not the cheapest ones, but I would look at them first.

former player

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Re: Help in preparation for 401K meeting
« Reply #26 on: October 19, 2018, 02:48:23 AM »
I can't help with the funds, but congratulations on working your way through a tricky discussion to what seems like a distinct improvement, even if not yet everything you want.

rivendale

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Re: Help in preparation for 401K meeting
« Reply #27 on: October 19, 2018, 11:51:42 PM »
That's about the best outcome you could have hoped for.  Unfortunately, the Fidelity funds are not the cheapest ones, but I would look at them first.

Thank you for the encouragement. The Fidelity funds available are class A and M's, if that makes a difference.

rivendale

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Re: Help in preparation for 401K meeting
« Reply #28 on: October 19, 2018, 11:54:28 PM »
I can't help with the funds, but congratulations on working your way through a tricky discussion to what seems like a distinct improvement, even if not yet everything you want.

Thank you! Its because of this forum and MMM that I was able to enter this meeting with a feeling that, "I might not know it all,  but I know where I am heading and what I want."

JAYSLOL

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Re: Help in preparation for 401K meeting
« Reply #29 on: October 20, 2018, 12:08:45 AM »
I wouldn't bother with a meeting at all, find the right provider of index funds for you and transfer over there where you don't have to campaign to get a good product at a fair rate

Many 401k plans do not allow in-service rollover/transfer of funds. Employee funds are trapped there until the employee leaves.

Ah, sorry, I didn't catch that it was the employers rep he was planning to meet.  Yes, absolutely go for it, hopefully they see the light

rivendale

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Re: Help in preparation for 401K meeting
« Reply #30 on: October 20, 2018, 10:52:14 PM »
Quick question, are there types of share classes I should steer clear from as a whole for inclusion? A, B, C, R1-6, M????

MDM

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Re: Help in preparation for 401K meeting
« Reply #31 on: October 20, 2018, 11:30:10 PM »
Quick question, are there types of share classes I should steer clear from as a whole for inclusion? A, B, C, R1-6, M????
You don't want anything that charges a "load".  See The ABCs Of Mutual Fund Classes | Investopedia and Mutual funds and fees - Bogleheads.

In some cases a brokerage will waive load fees for 401k participants.

MustacheAndaHalf

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Re: Help in preparation for 401K meeting
« Reply #32 on: October 21, 2018, 12:27:46 PM »
In general aim for the lowest expense ratio you can find.  That consumes less of your money each year.  Plus it's generally going to be an index fund (if the plan has one), which tend to beat actively managed funds.

You also might try a simple change instead of a dramatic one at the meeting:
"Where are the index funds?  Some of the largest mutual funds are index funds, and yet our plan has none."

You might also look up a short list of S&P 500 index funds from various providers, so you can list (or show them) the biggest names in investment which all have index funds.  I'd say for a first meeting, "Where's the index fund?" might be a decent approach.

Then later you can complain about the index fund charging too much compared to all the other providers.  And you can ask "Why is it costing so much of my money?", which is both true and emphasizes these choices are about your money.
« Last Edit: October 21, 2018, 12:30:43 PM by MustacheAndaHalf »

rivendale

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Re: Help in preparation for 401K meeting
« Reply #33 on: October 22, 2018, 04:20:05 PM »
I am awaiting a phone call to confirm if the load fees are waived in our plan.

I am starting to go through all the pages (and pages and pages) of funds, and have been making notes.

The only index funds, with expense rations, available are:

OGEAX JP Morgan Equity Index (.45%)
CSXAX Calvert Lrg Cap Core Res. Index (.54%)
CFJAX Calvert Lrg Cap Value Res. Index (.57%)
LUTAX Columbia US Treasury Index (.45%)
VADAX Invesco Equally-weighted S&P 500 (.53%)
SPIAX Invesco S&P 500 (.58%)

Any thoughts or experiences with these?

The_Dude

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Re: Help in preparation for 401K meeting
« Reply #34 on: October 22, 2018, 04:46:42 PM »
A couple of things.

I saw Blackrock listed as one of the fund providers.  Unlikely, but are Blackrock's ishares available?  ishares are some of the lowest cost index funds on the market (even cheaper than Vanguard).

Share classes, what you want are R-6 shares if you can get it.  At least in my experience when researching share classes of common actively managed funds, the R-6 share classes had the cheapest fees.  Typically, only available in retirement account formats like 401k's.

The small sample of funds you selected with the word "index" in the description have atrocious expense ratios!  For any sort of large cap equity index fund you shouldn't be paying more than .1% 

MDM

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Re: Help in preparation for 401K meeting
« Reply #35 on: October 22, 2018, 04:50:56 PM »
OGEAX JP Morgan Equity Index (.45%)
SPIAX Invesco S&P 500 (.58%)

Any thoughts or experiences with these?
No experience with any.

Thoughts: would probably pick one of the two listed, because
a) An S&P 500 index is a very common and worthwhile index.
b) Depending on what OGEAX is indexing (e.g., S&P500?  Total US Market?  Some oddball assortment?), it might be even better than SPIAX due to the lower fee.  But it might be worse - what does it index?

As far as 401k plans go, those are far from either the best or worst fees.  Higher than you can get in an IRA - see Investment Order for how that should affect your prioritization.

lhamo

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Re: Help in preparation for 401K meeting
« Reply #36 on: October 22, 2018, 06:05:19 PM »
The Fidelity Freedom funds are their Target Retirement blended funds -- not a bad option for a "set it and forget it" one fund approach that still gives you diversification.

The fees on American Funds are typically 5%, not .5%.  We were stuck with those for many years, but thankfully our founder's trust fund investments brought the fees down to 0% -- unlikely that would happen with a small company, though.

The fees on those index funds are high compared to other options available on the market, but if they are lower than the fees for Fidelity Freedom you might still want to go with them.

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Re: Help in preparation for 401K meeting
« Reply #37 on: October 22, 2018, 07:55:47 PM »
OGEAX JP Morgan Equity Index (.45%)
SPIAX Invesco S&P 500 (.58%)

Any thoughts or experiences with these?
No experience with any.

Thoughts: would probably pick one of the two listed, because
a) An S&P 500 index is a very common and worthwhile index.
b) Depending on what OGEAX is indexing (e.g., S&P500?  Total US Market?  Some oddball assortment?), it might be even better than SPIAX due to the lower fee.  But it might be worse - what does it index?

As far as 401k plans go, those are far from either the best or worst fees.  Higher than you can get in an IRA - see Investment Order for how that should affect your prioritization.
OGEAX is S&P500 per duckduckgo results. It has also done better than SPIAX confirming the lower expense ratio worked, so OGEAX is the top choice here. Even an actively managed fund is OK if it has a lower ER than OGEAX. The expected return for an actively managed fund is market return - expenses + noise. If there is an active fund for 0.35% or less and you can see that so far it has not sucked, consider it as well.

VADAX might justify itself as a midcap fund....or not.

rivendale

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Re: Help in preparation for 401K meeting
« Reply #38 on: October 22, 2018, 08:02:21 PM »
A couple of things.

I saw Blackrock listed as one of the fund providers.  Unlikely, but are Blackrock's ishares available?  ishares are some of the lowest cost index funds on the market (even cheaper than Vanguard).

Share classes, what you want are R-6 shares if you can get it.  At least in my experience when researching share classes of common actively managed funds, the R-6 share classes had the cheapest fees.  Typically, only available in retirement account formats like 401k's.

The small sample of funds you selected with the word "index" in the description have atrocious expense ratios!  For any sort of large cap equity index fund you shouldn't be paying more than .1%

No Blackrock ishares unfortunately (or any other true low cost funds). Out of 81 pages of offerings, only 6 funds are index, at least at first perusal, and yes their fees are beyond compare.

I did find one other that I overlooked,

DBMIX Dreyfus Bond Market Index (.40%)

Thanks for the information regarding R-6 shares. There are a bunch of R1-4 funds, but only two of R6's.
FGGXX Goldman Sach's FS Gov't (.18%)
INVXX Invesco Gov't Money Market, (.35%)

Are these limited to government employees? Also, how is a money market account different than mutual fund within a 401k?



rivendale

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Re: Help in preparation for 401K meeting
« Reply #40 on: October 22, 2018, 08:27:04 PM »
The Fidelity Freedom funds are their Target Retirement blended funds -- not a bad option for a "set it and forget it" one fund approach that still gives you diversification.

The fees on American Funds are typically 5%, not .5%.  We were stuck with those for many years, but thankfully our founder's trust fund investments brought the fees down to 0% -- unlikely that would happen with a small company, though.

The fees on those index funds are high compared to other options available on the market, but if they are lower than the fees for Fidelity Freedom you might still want to go with them.

Thanks for the lead, I looked up the Fidelity Freedom funds within an estimated target date of 2030/2035 are FTTHX @ 1.24% and FTFEX @ 1.20%. So, it seems that they are out of contention.

rivendale

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Re: Help in preparation for 401K meeting
« Reply #41 on: October 22, 2018, 08:33:28 PM »
[Thanks for the information regarding R-6 shares. There are a bunch of R1-4 funds, but only two of R6's.
FGGXX Goldman Sach's FS Gov't (.18%)
INVXX Invesco Gov't Money Market, (.35%)

Are these limited to government employees? Also, how is a money market account different than mutual fund within a 401k?
No... those two invest in very short term federal government bonds. Here is what FGGXX and DBMIX have done in the past. https://quotes.morningstar.com/chart/fund/chart.action?t=FGGXX&region=usa&culture=en-US&dataParams=%7B%22zoomKey%22%3A9%2C%22version%22%3A%22US%22%2C%22showNav%22%3Atrue%2C%22defaultShowName%22%3A%22name%22%2C%22mainSettingId%22%3A%22main%22%2C%22navSettingId%22%3A%22nav%22%2C%22benchmarkSettingId%22%3A%22benchmark%22%2C%22sliderBgSettingId%22%3A%22sliderBg%22%2C%22volumeSettingId%22%3A%22volume%22%2C%22defaultBenchmark%22%3Afalse%2C%22id%22%3A%22F00000WPT3%7CFOUSA00FO1%22%2C%22type%22%3A%22FM%7CFO%22%2C%22region%22%3A%22USA%22%2C%22name%22%3A%22XNAS%3AFGGXX%7CXNAS%3ADBMIX%22%2C%22baseCurrency%22%3A%22USD%22%2C%22defaultBenchmarks%22%3A%5B%22%22%2C%22%22%5D%2C%22chartType%22%3A%22growth%22%2C%22startDay%22%3A%2210%2F22%2F2008%22%2C%22endDay%22%3A%2210%2F21%2F2018%22%2C%22chartWidth%22%3A955%2C%22SMA%22%3A%5B%5D%7D

So, FGGXX outperformed INVXX? Since it is a narrow focused account, it would have to be a part of a larger asset allocation, correct? Would it be something to seek to add as an option?

My main goal is to have a list of 7 to 10 funds to present for inclusion on our plan.

Radagast

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Re: Help in preparation for 401K meeting
« Reply #42 on: October 22, 2018, 08:46:22 PM »
So, FGGXX outperformed INVXX? Since it is a narrow focused account, it would have to be a part of a larger asset allocation, correct? Would it be something to seek to add as an option?

My main goal is to have a list of 7 to 10 funds to present for inclusion on our plan.
No, I couldn't get INVXX to show up. It should be very similar to FGGXX but more expensive. You may already have a money market fund available as part of the account, so FGGXX is the choice of the two but not high priority. DBMIX is a more generic bond fund with a highish expense, and would be a higher priority.

Indexer

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Re: Help in preparation for 401K meeting
« Reply #43 on: October 23, 2018, 08:32:50 AM »
From the employer's point of view, having lower cost funds helps them avoid accusations that they are breaching their fiduciary duty. Here are some companies in legal troubles over their retirement plans:

Wells Fargo sued by their own employees because of their 401k options: https://www.investmentnews.com/article/20171121/FREE/171129979/wells-fargo-sued-again-for-using-in-house-funds-in-401-k-plan

But they aren't alone. Blackrock, Fidelity, Invesco, T. Rowe Price, Charles Schwab, M&T Bank, Morgan Stanley, Putnam, and JP Morgan have all been sued by their employees over their 401k options. Some of these companies, like Fidelity and Wells, have been sued multiple times over this.  https://www.barrons.com/articles/fidelity-blackrock-401k-lawsuit-1539977967

Yes, those are all financial institutions, places where the employees know the difference between a bad 401k and a good one.

Oh, and while we are talking about Edward Jones: https://www.investmentnews.com/article/20161115/FREE/161119962/edward-jones-hit-with-second-lawsuit-over-excessive-401-k-fees

That's the second lawsuit over this.

And here is a list of a whole bunch of companies in legal trouble over their retirement plans, many of these aren't financial institutions. http://www.401khelpcenter.com/401k_court_legal.html#.W88wBWhKiEs


As a result of all of this, many retirement plans are adding a few index funds to their lineups as added protection against legal troubles.

FIREsigns

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Re: Help in preparation for 401K meeting
« Reply #44 on: October 28, 2018, 02:45:55 PM »
I am the plan admin for my company's (private, small, 45 employees) 401(k) plan.  I suggest that you approach your employer and ask him/her to "go to market" to obtain quotes for a better plan.  (Employers should do this every few years anyway.)  Explain to your employer that the front-end loads and the expense ratios make your current plan a bad value for his/her employees.

If he/she is unwilling to budge, you can let him/her know that, as the owner of the plan, he has fiduciary responsibility for the plan (meaning that he must ALWAYS act in the best interests of the participants), and that failure to satisfy this fiduciary responsibility can leave him vulnerable to potential professional AND personal liability.  Find a way to present this gently; you don't want him to perceive that you are threatening him...could be a career-limiting move.

Small businesses can be limited because of the small amount of total plan assets.  Typically, companies with assets of less than $5 million have limited flexibility.  BUT...there are providers out there who will work with you, and can probably offer much better deals.

Your boss is probably up to his/her eyeballs in alligators most of the time.  You could offer to take on collecting competitive information as an extra project.  This would allow the company to improve its offering without it being "one more thing" for the boss to focus on.

FIRE 20/20

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Re: Help in preparation for 401K meeting
« Reply #45 on: October 28, 2018, 02:55:40 PM »
@rivendale, I think that what you're doing is awesome!  Great job so far and keep pushing for better funds!

rivendale

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Re: Help in preparation for 401K meeting
« Reply #46 on: October 28, 2018, 09:33:36 PM »
Thanks for the encouragement @FIRE 20/20!,

Tomorrow, I am going to be sending the list of requested funds to be added. In order of importance/hope to be added:
1. OGEAX
2. SPIAX
3. VADAX
4. DBMIX
5. CSXAX
6.CFJAX
7-10. Some American Funds or T. Rowe Price funds that mimic the current Lord Abbot selections, but with lower expenses, such as AIVSX.



OGEAX is S&P500 per duckduckgo results. It has also done better than SPIAX confirming the lower expense ratio worked, so OGEAX is the top choice here. Even an actively managed fund is OK if it has a lower ER than OGEAX. The expected return for an actively managed fund is market return - expenses + noise. If there is an active fund for 0.35% or less and you can see that so far it has not sucked, consider it as well.

VADAX might justify itself as a midcap fund....or not.

There are no active funds available with an E/R of less than .35% as far as I could ascertain.

Also, the front-end load fees are currently being waived.

rivendale

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Re: Help in preparation for 401K meeting
« Reply #47 on: October 30, 2018, 08:46:06 AM »
OK, slight tangent, but I didn't want to start another thread.

While I am waiting, which could be a while, should I change my current allocations in the meantime?

Currently:
32.07% LAVLX Mid-Cap, E/R .95%
22.9%   LAFFX Large-value, E/R .70%
24.6%   LABFX 50-70% equity, balanced fund, E/R 1.2%
20.43% LTRAX Intermediate term bond, E/R .68%

What should I take into consideration?



MDM

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Re: Help in preparation for 401K meeting
« Reply #48 on: October 30, 2018, 11:53:12 AM »
What should I take into consideration?
In short,
1) Start with your desired Asset allocation, which refers to your investments across all accounts.
2) Decide what asset allocation you want in your 401k.  This may or may not be the same as your overall asset allocation.
3) Then estimate the return each investment choice would provide, ignoring fees.
4) Subtract the fees from the various return estimates, and choose the highest results.

To a first approximation, one might assume all stock funds will have the same return in step 3, leading to a choice of the stock funds with the lowest fees.

TomTX

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Re: Help in preparation for 401K meeting
« Reply #49 on: November 02, 2018, 03:37:06 PM »
OK, slight tangent, but I didn't want to start another thread.

While I am waiting, which could be a while, should I change my current allocations in the meantime?

Currently:
32.07% LAVLX Mid-Cap, E/R .95%
22.9%   LAFFX Large-value, E/R .70%
24.6%   LABFX 50-70% equity, balanced fund, E/R 1.2%
20.43% LTRAX Intermediate term bond, E/R .68%

What should I take into consideration?

Do you have hundreds of thousands of dollars invested?

If not, simplify down.