Feedback on Guideline 401k

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mdds
Posts: 7
Joined: Sat Jul 08, 2017 3:39 pm

Feedback on Guideline 401k

Post by mdds » Mon Oct 09, 2017 7:11 am

Hi everyone,

I am a partner in a small business which will have ~20 participants and am considering Guideline 401k and Employee Fiduciary for new 401k for 2018. The main points seem to be the following:

Guideline:
$500 setup fee
$8/participant/month (would be $1920/year for 20 participants)
No AUM fees
Good menu of low-cost Vanguard funds, some DFA as well
Provides 3(38) fiduciary responsibility and advice to participants, if participant desires

EF:
$500 setup fee
0.08% AUM fee
Can create own menu of funds
No 3(38) fiduciary responsibility or participant guidance unless adding service through Frugal Financial, which is a subsidiary of EF
AUM goes to 0.18% by adding FF

Looking for feedback on Guideline 401k as they are a newer provider. I was able to search the forums and there is some good information but a lot seems to be buried in threads, so I was hoping here at the end of 2017 to have a thread about others experience with Guideline as we are strongly considering going with them. I like the no AUM fees and that they do offer 3(38) and guidance to participants. Additional note, we do not plan to set up as profit sharing, if this makes a difference. Some points looking for:

-Ease of setup
-Website and viewing/managing investments
-Quality and responsiveness to emails and guidance to participants

Thanks!

KSActuary
Posts: 134
Joined: Fri Jan 13, 2012 10:53 pm

Re: Feedback on Guideline 401k

Post by KSActuary » Mon Oct 09, 2017 1:43 pm

Have never used Guideline so comments are based on review of web site and your original question. I currently offer EF as a possible 401k solution.

Guideline appears to be another version of the recent crop of internet 401k solutions where investment choices are limited to low cost index funds and advice is given to participants through a customer service structure. The intent of this approach, which is used by most internet solutions, is to present an attractive low cost solution. It is not clear who Guideline uses for recordkeeping. I am not familiar with the interface (administrative or participant) but assume that it is similar to other recent entrants into the field which is good.

EF has been around for quite some time and caters to the small business 401k market. They provide an open architecture environment for selecting funds line-ups so every fund is available. For plans with a lot of cash flow into the plan, the 8 bps trail can cause fees to exceed their competitors fairly quickly. The web site is not top notch.

As to cost comparison, they are both inexpensive and Guideline does not have any asset-based fees. I would focus on your participant group and how they will adapt to an online technology-driven customer service interface. Most participants do not use the web site or CSR for questions and everyone has questions regarding saving for retirement. As a fiduciary, the availability of advice is important and the recent internet solutions may not be the best fit but this may vary by employer.

retiredjg
Posts: 30380
Joined: Thu Jan 10, 2008 12:56 pm

Re: Feedback on Guideline 401k

Post by retiredjg » Mon Oct 09, 2017 1:53 pm

I have nothing to offer, but if you do use Guideline, I hope you'll come back in a year or two and give us a report. It would be nice to have a second company to suggest when people are looking for small business 401ks.

mdds
Posts: 7
Joined: Sat Jul 08, 2017 3:39 pm

Re: Feedback on Guideline 401k

Post by mdds » Mon Oct 09, 2017 8:13 pm

retiredjg wrote:
Mon Oct 09, 2017 1:53 pm
I have nothing to offer, but if you do use Guideline, I hope you'll come back in a year or two and give us a report. It would be nice to have a second company to suggest when people are looking for small business 401ks.
I definitely will do this if we end up with Guideline! Hoping someone else can jump in with some experience!

mdds
Posts: 7
Joined: Sat Jul 08, 2017 3:39 pm

Re: Feedback on Guideline 401k

Post by mdds » Mon Oct 09, 2017 8:27 pm

KSActuary wrote:
Mon Oct 09, 2017 1:43 pm
Have never used Guideline so comments are based on review of web site and your original question. I currently offer EF as a possible 401k solution.

Guideline appears to be another version of the recent crop of internet 401k solutions where investment choices are limited to low cost index funds and advice is given to participants through a customer service structure. The intent of this approach, which is used by most internet solutions, is to present an attractive low cost solution. It is not clear who Guideline uses for recordkeeping. I am not familiar with the interface (administrative or participant) but assume that it is similar to other recent entrants into the field which is good.

EF has been around for quite some time and caters to the small business 401k market. They provide an open architecture environment for selecting funds line-ups so every fund is available. For plans with a lot of cash flow into the plan, the 8 bps trail can cause fees to exceed their competitors fairly quickly. The web site is not top notch.

As to cost comparison, they are both inexpensive and Guideline does not have any asset-based fees. I would focus on your participant group and how they will adapt to an online technology-driven customer service interface. Most participants do not use the web site or CSR for questions and everyone has questions regarding saving for retirement. As a fiduciary, the availability of advice is important and the recent internet solutions may not be the best fit but this may vary by employer.
What is your thoughts on EF with or without a named/hired fiduciary? In email correspondence with EF, I was told that having one is "optional" but I am still a bit concerned with the lack of guidance, not for myself but for employees. I wouldn't use any advisory service myself as I use and manage a 4-fund portfolio myself. Something about an employer choosing an advisor for its employees feels odd to me, but maybe this is how it is typically done.

KSActuary
Posts: 134
Joined: Fri Jan 13, 2012 10:53 pm

Re: Feedback on Guideline 401k

Post by KSActuary » Mon Oct 09, 2017 9:13 pm

The employer, as a fiduciary, will decide who provides financial education to their employees whether it be an advisor or a CSR solution provided through the recordkeeper. Providing appropriate and cost effective participant support is one of the biggest problem with 401ks, other than hidden asset-based fees and poor fund solutions. Most employers distrust financial firms with good reason - the advisors are there to protect their ever growing asset-based fee stream which results in the employer being the focus of their attention and not the employees. It is an odd relationship. The employer, who predominantly does not pay the lion share of the fees, selects the service providers who will support the plan and its participants.

I assume that you are speaking of a 3(38) Investment Manager when you ask about hiring a fiduciary. Being a 3(38) Investment Manager relieves the employer of the fiduciary responsibility of selecting and monitoring an investment line-up in the plan. The employer is still required to monitor the actions of the appointed Investment Manager and still retains all other responsibilities of a fiduciary for the plan. I have always acted as a 3(38) Investment Manager when working with plans, including EF, as I perform the Investment Manager duties anyway when we screen and monitor the fund line-up each quarter.

The keys to a successful 401k include a low cost administrative solution coupled with a broad selection of low cost funds to choose from. How effective your plan will be long term is how well this solution is communicated and supported to the plan participants. Technology is a great tool but may not be a replacement for an advisor who can react to those participants who need to make good decisions.

mdds
Posts: 7
Joined: Sat Jul 08, 2017 3:39 pm

Re: Feedback on Guideline 401k

Post by mdds » Thu Oct 12, 2017 7:30 am

Bumping thread. Anyone using Guideline for their small business 401k?

mdds
Posts: 7
Joined: Sat Jul 08, 2017 3:39 pm

Re: Feedback on Guideline 401k

Post by mdds » Mon Oct 16, 2017 1:38 pm

Bump again for the Monday crowd😀

retiredjg
Posts: 30380
Joined: Thu Jan 10, 2008 12:56 pm

Re: Feedback on Guideline 401k

Post by retiredjg » Mon Oct 16, 2017 2:02 pm

I think you may have to be our :wink: guinea pig.

Spirit Rider
Posts: 6234
Joined: Fri Mar 02, 2007 2:39 pm

Re: Feedback on Guideline 401k

Post by Spirit Rider » Mon Oct 16, 2017 6:50 pm

I know that I have seen a handful of people here and on other forums indicating that they were going to go with guideline. Other than a couple of updates that things have been going well initially. I haven't heard anything else good or bad. Take that for what it is worth.

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