401k - Request for Proposal (RFP) - Employee Fiduciary

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401k - Request for Proposal (RFP) - Employee Fiduciary

Postby bzcti » Tue Aug 07, 2012 8:59 pm

Dear Bogleheads,

I am starting the process of asking my employer to switch from ING Retirement 401k to another provider.

We have a small health-care related practice with less than ten 401k participants and around 400k in total assets.

I have researched the bogleheads forum and have learned a great deal about the key steps to approach an employer to make a switch.

I am about to ask my employer to request a Request for Proposal from Employee Fiduciary. ( http://www.employeefiduciary.com/rfp.htm )

My practice currently has the funds listed below in ING Retirement 401k:

1. ING Fixed Account

2. Bond ING PIMCO Total Return Portfolio (0.88% expense ratio)

3. Asset Allocation
ING Index Solution 2015 Portfolio (0.80%)
ING Index Solution 2025 Portfolio (0.79%)
ING Index Solution 2035 Portfolio (0.80%)
ING Index Solution 2045 Portfolio (0.81%)
ING Index Solution 2055 Portfolio (0.81%)

4. Balanced - American Funds American Balanced Fund® - Class R-3 (0.97%)

5. Large Cap Value
American Funds Washington Mutual Investors FundSM - R-3 (1.03%)
ING Russell™ Large Cap Index Portfolio - Class S (0.66%)

6. Large Cap Growth
American Funds The Growth Fund of America® - Class R-3 (0.99%)
Fidelity® Advisor New Insights Fund - Institutional Class (0.96%)

7. Small/Mid/Specialty
ING FMR SM Diversified Mid Cap Portfolio - Service Class (0.91%)
ING Russell™ Mid Cap Index Portfolio - Class S (0.68%)
ING Russell™ Small Cap Index Portfolio - Class S (0.73%)
Pioneer Mid Cap Value Fund - Class Y (0.95%)
Wanger USA (0.98%)

8. Global/International
American Funds EuroPacific Growth Fund® - Class R-3 (1.15%)
American Funds New Perspective Fund® - Class R-3 (1.15%)

Questions:

1. Which funds would you recommend be included if we moved to Employee Fiduciary?
A key employee is "resistant to change" and asked me if the Vanguard funds through Employee Fiduciary were "just as good" as the ING funds.
I want to identify the best funds you'd suggest for portfolio diversification, the number of funds to include (10-20?), sectors, etc.

2. Is there another 401k servicer you would suggest to contact for an RFP?

Many thanks.
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Re: 401k - Request for Proposal (RFP) - Employee Fiduciary

Postby MallNinja » Tue Aug 07, 2012 10:46 pm

I would include a REITs fund like VGSIX.
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Re: 401k - Request for Proposal (RFP) - Employee Fiduciary

Postby xerty24 » Tue Aug 07, 2012 10:51 pm

You could throw a dart at a random Vanguard fund and you'd probably do better than ING, who is notoriously expensive.

bzcti wrote:1. Which funds would you recommend be included if we moved to Employee Fiduciary?
A key employee is "resistant to change" and asked me if the Vanguard funds through Employee Fiduciary were "just as good" as the ING funds.
I want to identify the best funds you'd suggest for portfolio diversification, the number of funds to include (10-20?), sectors, etc.

2. Is there another 401k servicer you would suggest to contact for an RFP?

I wouldn't bring any of them. If you prefer PIMCO Total Return to Vanguard Total Bond Market, try to get a cheaper share class for the PIMCO fund.

In general I wouldn't try to include too many funds, sectors, etc, unless your firm is fairly well educated about finance and investing. Simple is better for most. I would say maybe 5 core funds and maybe up to 5 speciality funds should do fine.

Money Market
Total Bond
Total Stock
Foreign Developed
Emerging Markets
Target Retirement Series
---
US Value
US Growth
Midcap
Small Cap
REIT
No excuses, no regrets.
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Re: 401k - Request for Proposal (RFP) - Employee Fiduciary

Postby Bfwolf » Tue Aug 07, 2012 11:38 pm

I'd keep the fund list short and sweet.

Vanguard Total Stock Market
Vanguard Total Int'l Stock Market
Vanguard Total Bond
Vanguard Short Term Bond
Vanguard TIPS (optional)
Then a series of funds that the "average" investor will be attracted to, like Target Retirement funds or Life Strategy funds. Given how aggressive the Target Retirement funds are, I'm coming around to the idea that the Life Strategy funds may be a better option (and you don't need as many of them).

I would find out which funds the stick in the mud likes with your current plan so you can ensure you have an adequate replacement in this fund and can explain why your replacement is superior.
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Re: 401k - Request for Proposal (RFP) - Employee Fiduciary

Postby JamesSFO » Tue Aug 07, 2012 11:53 pm

Depending on the phase of the moon Fidelity may be taking 401Ks from groups your size, I like the Fidelity plans a lot for small employers a fair bit (lots of low ER index funds + some actively managed funds that are low ER too). I like the Fidelity website and it was easy for payroll to get the funds in easily. That said, for small employers Fidelity will not allow you to customize the fund line up.

Worth at least inquiring.
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Re: 401k - Request for Proposal (RFP) - Employee Fiduciary

Postby Ranger » Wed Aug 08, 2012 2:49 am

You can also get RFP from Costco-Intuit 401k for small business.

http://www.intuit401k.com/d401k/ecs/int ... ?at=costco.

They have line-up of low cost ETF's
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Re: 401k - Request for Proposal (RFP) - Employee Fiduciary

Postby fcirullo » Wed Aug 08, 2012 9:13 am

bzcti wrote:I am starting the process of asking my employer to switch from ING Retirement 401k to another provider.
Good for you!
-
bzcti wrote:1. Which funds would you recommend be included if we moved to Employee Fiduciary?

For several reasons, a core menu of low cost index funds is the way to go. Keep the menu of funds simple (not more than eight to ten funds). The folks here have already given you some great ideas. In your presentation, remember to show employees at your company why it requires less time to select and montor index funds than it does managed funds, why a mix of low cost index funds are likely to beat a mix of managed funds in performance long term, and why it's easier to educate employees when a plan has a menu of index funds.
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bzcti wrote:2. Is there another 401k servicer you would suggest to contact for an RFP?
Yes, but start your discussion by using Employee Fiduciary as an example of a great low cost service provider. That way you will make your point, and you won't risk confusing the decision maker(s) with too many choices. A confused mind will not make a decision to switch to Employee Fiduciary or any other service provider!
Frank R. Cirullo | | "It isn't what we don't know that gives us trouble, it's what we know that ain't so." -- | Will Rogers
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