Asking to Add Better Options to the Company 401(k)

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Asking to Add Better Options to the Company 401(k)

Postby bardenay » Tue Apr 30, 2013 11:20 pm

My company is doing its annual 401(k) review and I am thinking of asking for better fund options. Specifically, better bond options. Has anyone done this? And if so, what did you find to be successful? Did you ask for specific funds or general criteria (low expenses, specific class, etc.)?

Thanks in advance.
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Re: Asking to Add Better Options to the Company 401(k)

Postby retiredjg » Tue Apr 30, 2013 11:36 pm

Not exactly what you asked, but have you seen this?

Wiki article link: How to Campaign for a Better 401(k) Plan
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Re: Asking to Add Better Options to the Company 401(k)

Postby Jeff7 » Tue Apr 30, 2013 11:38 pm

I'll just quick throw this in, that using too few descriptors could possibly be a problem, or at least open the door for it.
I've not been able to get any better fund options added where I work, but I can see where it could go astray. My employer's 401k exclusively offers American Funds mutual funds.
But, simply asking for "index fund mutual fund options" may not work so well. For example, American Funds does offer Vanguard's Total Stock Market fund - at an ER as high as 1.50%. :shock:
And a "low-cost" request could get you a money market fund that's yielding a whole lot of nothing.


Just something to keep in mind. (And best of luck to you in this. Hopefully it turns out well. :))



Edit: Another thought to throw in: If the funds would benefit everyone there, that could be a big help, and it would just be very nice for anyone else using the plan. (For example, if you need a little bit of small-cap to offset a heavy loading of large-cap elsewhere in your portfolio, that would mainly benefit you.) If you want to add some Vanguard LifeStrategy funds, for example, they offer a very simplistic, diversified, and inexpensive way of saving money for retirement, especially for the person who doesn't know much about investing.
Last edited by Jeff7 on Wed May 01, 2013 12:29 pm, edited 1 time in total.
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Re: Asking to Add Better Options to the Company 401(k)

Postby fcirullo » Wed May 01, 2013 9:11 am

bardenay wrote:My company is doing its annual 401(k) review and I am thinking of asking for better fund options. Specifically, better bond options. Has anyone done this? And if so, what did you find to be successful? Did you ask for specific funds or general criteria (low expenses, specific class, etc.)? Thanks in advance.

Always be specific about which funds you want, and explain in writing how those particular funds will improve the 401(k) plan.
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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Re: Asking to Add Better Options to the Company 401(k)

Postby Middle » Wed May 01, 2013 2:05 pm

I would be relatively persistent. But realize the structural hurdles that you have. Your in-house committee or HR person that is the point of contact for your 401K provider will need to have a good argument for adding the lower cost options. The provider is not likely to be keen on this addition as they probably don't get as good of an asset based revenue share (unless of course they think they can get away with an ER of 1.5% for an index fund, really? That's some cajones).

But I think the squeaky wheel approach is probably best. My experience is that most employees totally ignore the 401k plan and certainly don't ask for improvements. Maybe use the recent Frontline episode on 401k's as proof that it is for the greater good of the company and not just you.

Good Luck!
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Re: Asking to Add Better Options to the Company 401(k)

Postby bardenay » Wed May 01, 2013 9:18 pm

retiredjg wrote:Not exactly what you asked, but have you seen this?

Wiki article link: How to Campaign for a Better 401(k) Plan


I had not seen it. I will read it.
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Re: Asking to Add Better Options to the Company 401(k)

Postby Federal Agent » Thu May 02, 2013 8:22 pm

http://www.obliviousinvestor.com/gettin ... your-401k/

Mike Piper ( a fellow Boglehead and Blogger of the "Oblivious Investor") just posted a VERY good article on this very subject. Also, let the investment "overseers" watch the linked PBS documentary that Mike has referenced in his article.
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Re: Asking to Add Better Options to the Company 401(k)

Postby bardenay » Thu May 02, 2013 11:01 pm

I am thinking about asking for the following funds:

Vanguard Total Bond Market ETF (BND) Exp ratio 0.10%
Vanguard Total Stock Market ETF (VTI) Exp ratio 0.05%

My 401(k) has small, mid and large cap index funds as well as an S&P one.

Thoughts?
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Re: Asking to Add Better Options to the Company 401(k)

Postby jsl11 » Thu May 02, 2013 11:11 pm

bardenay wrote:I am thinking about asking for the following funds:

Vanguard Total Bond Market ETF (BND) Exp ratio 0.10%
Vanguard Total Stock Market ETF (VTI) Exp ratio 0.05%

My 401(k) has small, mid and large cap index funds as well as an S&P one.

Thoughts?

If high expense ratios pay for the operation of the plan as opposed to the employer paying the plan expenses, low cost funds will not be made available. Either you will not be able to get the funds you want, or they will come with extra expenses tacked on. Often, the problem does not lie with the funds that are chosen. It lies instead with the funding method of the plan. Unfortunately, if that is the way the plan is funded, it is unlikely that your employer will think your suggestions are a good idea. Furthermore, if this is the case, you may just get yourself characterized as a nuisance. So, my suggestion is to tread carefully and ask a lot of questions prior to making requests.
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Re: Asking to Add Better Options to the Company 401(k)

Postby tfb » Fri May 03, 2013 3:05 am

bardenay wrote:I am thinking about asking for the following funds:

Vanguard Total Bond Market ETF (BND) Exp ratio 0.10%
Vanguard Total Stock Market ETF (VTI) Exp ratio 0.05%

My 401(k) has small, mid and large cap index funds as well as an S&P one.

Thoughts?

Most 401k platforms still deal with mutual funds, not ETFs. Does your plan already have ETFs? If not, stick with mutual funds.
Harry Sit, taking a break from the forums.
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Re: Asking to Add Better Options to the Company 401(k)

Postby fcirullo » Fri May 03, 2013 8:46 am

In writing, ask the decision maker(s) this question:
Is there any reason why the Vanguard Total Bond Market ETF and the Vanguard Total Stock Market ETF can't be included in the menu? Next, explain why it makes sense to include these two funds.
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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Re: Asking to Add Better Options to the Company 401(k)

Postby billern » Fri May 03, 2013 10:57 am

tfb wrote:
bardenay wrote:I am thinking about asking for the following funds:

Vanguard Total Bond Market ETF (BND) Exp ratio 0.10%
Vanguard Total Stock Market ETF (VTI) Exp ratio 0.05%

My 401(k) has small, mid and large cap index funds as well as an S&P one.

Thoughts?

Most 401k platforms still deal with mutual funds, not ETFs. Does your plan already have ETFs? If not, stick with mutual funds.

Or, as an alternative, you ask for a brokerage window in the 401k plan. For some reason, some plans are more willing to do that they offer low cost mutual funds.
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Re: Asking to Add Better Options to the Company 401(k)

Postby bardenay » Mon May 06, 2013 8:10 am

Thanks for the feedback. This is a mid-sized company so it would be dealing with one or two people rather than a committee, so I think I have a good shot at making changes.
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