help with 403b committee fund changes

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Topic Author
Ferdinand2014
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help with 403b committee fund changes

Post by Ferdinand2014 » Sat May 25, 2019 9:41 pm

My DW is employed by a local hospital and she contributes to the 403b plan which is through Lincoln Financial. I am an independent contractor for the same local hospital. Although I am not employed by the hospital and therefore can't contribute to the 403b (I use Fidelity with my S-Corp), I am the hospitalist staff director and as a result have been put on an upcoming committee that will meet with a new independent fudiciary next month to help review the current plan. I am hoping to influence the committee on several points including lowering fees, dumping active funds, putting automatic enrollment and pay raise options into the plan and developing a formal investment education curriculum for the employees. I have already fired a shot across the bow by reviewing SPIVA data, expense ratios and M* studies demonstrating correlation to future returns, etc. Below is the current lineup of shame:


(American Funds Europacific Growth) REREX ER 0.83 (only international fund)
(MetroWest Total Return Bond Fund) MWTRX ER 0.67 (only bond fund)
(American Funds The Growth of America) RGAEX ER 0.68
(Baron Small Cap) BSCFX ER 1.30
(Columbia Large Cap Index) NINDX ER 0.20 (100% of my DW allocation, only index fund available, S&P 500 index - I balance AA with my Fidelity funds)
(Delaware Small Cap Value) DEVIX ER 0.90
(Eaton Vance Small-Mid Cap) EAASX ER 1.16
(JP Morgan U.S. Equity) JUEAX ER 1.01
(Virtus Mid Cap Value Equity) SMVTX ER 1.01
stable value fund through Lincoln Financial

I was going to suggest 1 total international index, 1 total U.S. stock market index(or keep the S&P 500 NINDX fund), 1 lower fee index based total bond fund, keep the stable value fund (or replace with MMF) and include a fudiciary approved static and target date allocation model sets. Or If available, a series of target date and static allocation funds as an alternative. Lincoln financial does use the above funds currently to come up with a ridiculous slice and dice AA based on your risk profile of conservative, moderate or high using a model from M* in either a static or life cycle target date model. They will also allow a custom portfolio of your choosing with the option of rebalancing quarterly, semi-annual or yearly. My experience with casual conversation amongst several of the employees is that most let the previous plan representative pick an allocation for them. Almost no-one I spoke with understood the difference between the funds and even what a bond vs stock fund meant. Nobody even knew what an expense ratio was.

At the moment I do not know what available funds or options we may have to change to. However, any suggestions or advice from anyone who has been involved with determining fund choices and working with a fudiciary for 401k/403b plans before would be helpful. Apparently we have never had an independent fudiciary before and have only had a plan representative from Lincoln Financial previously?
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett

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arcticpineapplecorp.
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Re: help with 403b committee fund changes

Post by arcticpineapplecorp. » Sat May 25, 2019 9:56 pm

your recommendations are good for the funds you would want to add. When I first worked for a non-profit out of college I had a 403(b) administered by Vanguard. Could Vanguard possibly be more costly than using Lincoln?

paying 1% (or close) for funds greatly eats away at your returns over time:
http://web.archive.org/web/201611100649 ... f-returns/

It's called the tyranny of compounding costs.
source: https://blog.wealthfront.com/tyranny-compounding-costs/

Any recommendations that would lower costs, and use more passive/index products would be a win for your company/employees.

these short videos are good regarding investor education:
https://www.ifa.com/indexfundsthemovie/
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

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ruralavalon
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Re: help with 403b committee fund changes

Post by ruralavalon » Sun May 26, 2019 10:09 am

Try to use the Thrift Savings Plan (TSP) as a model, offering just a few index funds like:
1) total stock market or S&P 500;
2) extended market or small-cap;
3) total international stock;
4) total bond market or intermediate-term bond;
5) stable value or prime money market; and
6) a target date series.
(Vanguard, Fidelity or BlackRock [iShares, LifePath] funds would work.)

If that can't be done try at least to get lower expense ratio versions of the international stock fund and the bond fund:
1) American Funds EuroPacific Growth R6 (RERGX) ER 0.49%; and
2) Metropolitan West Total Return Bd I (MWTIX) ER 0.45%.
Both are good, well diversified, moderately priced actively managed funds, suitable to be used with Columbia Large Cap Index Fund (NINDX) ER 0.20%.

In any event try to drop the other high expense funds.
Last edited by ruralavalon on Sun May 26, 2019 10:44 am, edited 1 time in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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arcticpineapplecorp.
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Re: help with 403b committee fund changes

Post by arcticpineapplecorp. » Sun May 26, 2019 10:41 am

there's a link at the wiki for campaigning for a better retirement plan and there are some links there as well to videos (investor education):

https://www.bogleheads.org/wiki/How_to_ ... 01(k)_plan
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

EdLaFave
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Re: help with 403b committee fund changes

Post by EdLaFave » Sun May 26, 2019 12:08 pm

I was able to get our school district OCPS (FL) to add Vanguard and Fidelity to their 403b/457b line up (wrote about it several times on the blog section of my site). You can ask me questions if you’d like.

Your first job is to educate and persuade everybody on the committee about what needs to be achieved. You may need to replace Lincoln with a better vendor. From there success becomes much easier, obvious goals:

1. Limited set of funds (total domestic, total international, and total bond) as well as funds of funds that use them (fixed allocation and target date).
2. Rock bottom expenses on every fund.
3. Automatic enrollment with a set contribution to a target date fund based on age (opt-out available).

That would be ideal.

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Stinky
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Re: help with 403b committee fund changes

Post by Stinky » Sun May 26, 2019 12:17 pm

EdLaFave wrote:
Sun May 26, 2019 12:08 pm
I was able to get our school district OCPS (FL) to add Vanguard and Fidelity to their 403b/457b line up (wrote about it several times on the blog section of my site). You can ask me questions if you’d like.

Your first job is to educate and persuade everybody on the committee about what needs to be achieved. You may need to replace Lincoln with a better vendor. From there success becomes much easier, obvious goals:

1. Limited set of funds (total domestic, total international, and total bond) as well as funds of funds that use them (fixed allocation and target date).
2. Rock bottom expenses on every fund.
3. Automatic enrollment with a set contribution to a target date fund based on age (opt-out available).

That would be ideal.
I agree. Replacing Lincoln is the key. If you’re able to accomplish that, the rest of your job will be a lot easier.

I wouldn’t expect Lincoln to go down without a fight. And they may very well have some historical goodwill with existing committee members.
It's a GREAT day to be alive - Travis Tritt

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Ferdinand2014
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Re: help with 403b committee fund changes

Post by Ferdinand2014 » Sun May 26, 2019 6:59 pm

Than you all for the suggestions and links. I meet in late June and again in July.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett

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Stinky
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Re: help with 403b committee fund changes

Post by Stinky » Sun May 26, 2019 8:03 pm

Ferdinand2014 wrote:
Sun May 26, 2019 6:59 pm
Than you all for the suggestions and links. I meet in late June and again in July.
Let us know how it turns out.
It's a GREAT day to be alive - Travis Tritt

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Ferdinand2014
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Re: help with 403b committee fund changes

Post by Ferdinand2014 » Wed Jul 31, 2019 9:29 pm

Stinky wrote:
Sun May 26, 2019 8:03 pm
Ferdinand2014 wrote:
Sun May 26, 2019 6:59 pm
Than you all for the suggestions and links. I meet in late June and again in July.
Let us know how it turns out.
Finally met with new fiduciary hired by local hospital. I presented my case to the CEO, COO and 403b committee regarding index based low fee options. Looks like they are going to keep our current custodian - Lincoln Financial - but dump all our current funds and go with Vanguard institutional index funds for our core options. The fiduciary seemed to like some of the lower fee actively managed American Funds, but agreed to the core U.S., International and bond fund options all with Vanguard. He also is working to lower the fees on the charges to run the 403b from Lincoln Financial. So my DW who is employed by the local hospital will now get Vanguard. Although I am on the committee as the hospital director, I am actually self employed and an independent contractor through my S-Corp. I actually use Fidelity for my SEP and CMA. So very good news. It really pays to push hard for changes! Thanks for all the suggestions.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett

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Stinky
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Re: help with 403b committee fund changes

Post by Stinky » Thu Aug 01, 2019 9:38 am

Ferdinand2014 wrote:
Wed Jul 31, 2019 9:29 pm
Stinky wrote:
Sun May 26, 2019 8:03 pm
Ferdinand2014 wrote:
Sun May 26, 2019 6:59 pm
Than you all for the suggestions and links. I meet in late June and again in July.
Let us know how it turns out.
Finally met with new fiduciary hired by local hospital. I presented my case to the CEO, COO and 403b committee regarding index based low fee options. Looks like they are going to keep our current custodian - Lincoln Financial - but dump all our current funds and go with Vanguard institutional index funds for our core options. The fiduciary seemed to like some of the lower fee actively managed American Funds, but agreed to the core U.S., International and bond fund options all with Vanguard. He also is working to lower the fees on the charges to run the 403b from Lincoln Financial. So my DW who is employed by the local hospital will now get Vanguard. Although I am on the committee as the hospital director, I am actually self employed and an independent contractor through my S-Corp. I actually use Fidelity for my SEP and CMA. So very good news. It really pays to push hard for changes! Thanks for all the suggestions.
Congratulations on getting much better fund choices into the 403(b) plan! It sounds like you've done a great thing for the participants in the plan.

Maybe next year, the Committee will see the wisdom of your other recommendation, and move away from Lincoln as the custodian. Keep bringing that up, as appropriate, and change will happen someday.
It's a GREAT day to be alive - Travis Tritt

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ruralavalon
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Re: help with 403b committee fund changes

Post by ruralavalon » Thu Aug 01, 2019 10:11 am

Ferdinand2014 wrote:
Wed Jul 31, 2019 9:29 pm
Stinky wrote:
Sun May 26, 2019 8:03 pm
Ferdinand2014 wrote:
Sun May 26, 2019 6:59 pm
Than you all for the suggestions and links. I meet in late June and again in July.
Let us know how it turns out.
Finally met with new fiduciary hired by local hospital. I presented my case to the CEO, COO and 403b committee regarding index based low fee options. Looks like they are going to keep our current custodian - Lincoln Financial - but dump all our current funds and go with Vanguard institutional index funds for our core options. The fiduciary seemed to like some of the lower fee actively managed American Funds, but agreed to the core U.S., International and bond fund options all with Vanguard. He also is working to lower the fees on the charges to run the 403b from Lincoln Financial. So my DW who is employed by the local hospital will now get Vanguard. Although I am on the committee as the hospital director, I am actually self employed and an independent contractor through my S-Corp. I actually use Fidelity for my SEP and CMA. So very good news. It really pays to push hard for changes! Thanks for all the suggestions.
Congratulations on your success in adding the Vanguard institutional funds :D . That is awesome.

Hope for success in lowering "the fees on the charges to run the 403b from Lincoln Financial".
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Topic Author
Ferdinand2014
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Re: help with 403b committee fund changes

Post by Ferdinand2014 » Sat Jun 13, 2020 9:13 pm

Update on my efforts to change my DW 403b fund lineup:

In a nutshell 1.) all fees went down 2.) REIT and Emerging markets added 3.) Many more index options 4.) Moral of story - do not give up. It took 1 year, but it has paid off - literally on the order of millions of dollars for 700+ employees over their investing lives.




LCB: NINDX 0.20/JUEAX 0.94 > VTSAX .04

LCG RGAEX 0.66 > PRUFEX .52

LCV DDVIX 0.68 > RMFGX .28

MCG EEASX 1.16 > VMGMX .07

MCV SMVTX 1.01 > RMFGX .28

SCG BSCFX 1.30 > JGSMX 0.74

SCV DEVIX 0.90 > VSIAX 0.07

FLG REREX 0.84 > BGIKX 0.64

EM N/A > BGKEX 0.84

REIT N/A > VGSLX 0.12

TB MWTRX 0.67 > VBTLX 0.05
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett

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Stinky
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Re: help with 403b committee fund changes

Post by Stinky » Sat Jun 13, 2020 10:15 pm

Ferdinand2014 wrote:
Sat Jun 13, 2020 9:13 pm
Update on my efforts to change my DW 403b fund lineup:

In a nutshell 1.) all fees went down 2.) REIT and Emerging markets added 3.) Many more index options 4.) Moral of story - do not give up. It took 1 year, but it has paid off - literally on the order of millions of dollars for 700+ employees over their investing lives.
Absolutely awesome!!! Your years of work paid off.

You can sleep well tonight knowing that, in a very quiet way, you have improved the financial lives of well over 1,000 people (including spouses).
It's a GREAT day to be alive - Travis Tritt

macher
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Re: help with 403b committee fund changes

Post by macher » Sun Jun 14, 2020 8:07 am

What about TIAA-CREF?

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ruralavalon
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Re: help with 403b committee fund changes

Post by ruralavalon » Sun Jun 14, 2020 8:47 am

Ferdinand2014 wrote:
Sat Jun 13, 2020 9:13 pm
Update on my efforts to change my DW 403b fund lineup:

In a nutshell 1.) all fees went down 2.) REIT and Emerging markets added 3.) Many more index options 4.) Moral of story - do not give up. It took 1 year, but it has paid off - literally on the order of millions of dollars for 700+ employees over their investing lives.




LCB: NINDX 0.20/JUEAX 0.94 > VTSAX .04

LCG RGAEX 0.66 > PRUFEX .52

LCV DDVIX 0.68 > RMFGX .28

MCG EEASX 1.16 > VMGMX .07

MCV SMVTX 1.01 > RMFGX .28

SCG BSCFX 1.30 > JGSMX 0.74

SCV DEVIX 0.90 > VSIAX 0.07

FLG REREX 0.84 > BGIKX 0.64

EM N/A > BGKEX 0.84

REIT N/A > VGSLX 0.12

TB MWTRX 0.67 > VBTLX 0.05
Congratulations :D .
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

KESP
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Re: help with 403b committee fund changes

Post by KESP » Sun Jun 14, 2020 9:03 am

That's excellent! I'm sure it took a ton of work. They never make changing things easy.

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