How to get Plan admins to offer Vanguard?

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DRiP Guy
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How to get Plan admins to offer Vanguard?

Post by DRiP Guy » Wed Feb 21, 2007 9:59 pm

This may be a dumb question, but how do I convince my plan admins to carry Vanguard funds, which universally have a lower fee, but at least equivalent returns, to the offerings from TRowePrice? The account is held at TR, so I am sure they have influence and some sort of contractual rights perhaps, but, hey, it's my money -- so, why wouldn't my plan admins get me the best deal?

Secondly, assuming I have no luck going that route, have people found that using the brokerage option to allow buying VG funds, even if they are not in the selections for 'normal' 401(k), to be worth doing it and paying whatever fees come along with invoking the brokerage option?

Thanks,
DRiP Guy

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tfb
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TRP funds not that bad

Post by tfb » Wed Feb 21, 2007 10:09 pm

TRP funds are not that bad. Because TRP administers your plan, it's unlikely they will add Vanguard funds. Using the brokerage option probably costs too much. I think you best bet is to rollover your 401k to Vanguard IRA after you are done with this employer.
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leonard
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Write an email; Get others involved

Post by leonard » Wed Feb 21, 2007 10:32 pm

Getting HR to listen to proposed 401k changes is a challenge. A couple suggestions:

Write an email and request additions to the 401k. I would tend to list the funds you want and why they are important to your investment portfolio. I think it is tempting to argue the efficacy of low cost and index funds. However, in my experience, 401k and benefits folks usually believe they are the expert on investing, thus trying to convince them to change their framework is harder. But, HR should at least act like it listens to employees concerns. Thus, your appeal, based on your situation, could carry some weight.

More importantly, try to get others to write similar emails to benefits/HR. HR folks love to run on consensus. The more people they think hold a particular view, the more likely they are to listen.

Finally, if you are in a smaller company with the connections, why not schedule a meeting or lunch with the 401k/benefits/HR person. Worst case, you will make another connection in the company. Best case, you may get an opportunity to make a case for changing the 401k.

Good luck.

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Post by zhiwiller » Wed Feb 21, 2007 11:40 pm

I've tried unsuccessfully, not just to get VG funds, but index funds in general.

My 401k plan has one index fund: a Charles Schwab 500 index with a .38 ER. :-( My response was that there was a committee at the head office (in CA, I am in FL) that makes those decisions. But who is on the committee isn't readily available.

Lame.

If you find out a good technique, please enlighten the board.

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hansp
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Brokerage Window

Post by hansp » Thu Feb 22, 2007 12:57 am

DRiP,

If you have a brokerage "window" in your 401k, I've found it best to use a combination of yearly ETF purchase, coupled with regular contributions to the best no transaction fee funds in each category. This way, you only pay commissions one time each year when you rebalance and move money into the ETFs. The disadvantage is that you can end up w/ both a fund and an ETF in each category.

Hans

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Post by TimDex » Thu Feb 22, 2007 9:23 am

Other people should be so lucky. TRP is not that bad, and I suspect, compared to fees and expenses with other tax-deferred plans, you're not doing too badly.

I'm not minimizing what you say. I'd rather invest with Vanguard too. But TRP has some good funds, and I know they have some index funds (though unsurprisingly they don't promote them much). So my suggestion would be to get TRP to include a few index offerings in your plan, and then roll it over to Vanguard once you leave employment.

Tim

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DRiP Guy
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Post by DRiP Guy » Thu Feb 22, 2007 5:34 pm

Thanks to all for the tips. I guess the TRowe is indeed not horrible, but when I was rebalancing for 2007, I compared the expenses for some prospective funds, and Vanguard sure does beat everyone else. When I looked at returns, the tracking was right on, as should be the case, so we are comparing apples to apples.


Type Investment Symbol Fee %
int growth T.Rowe Price Emerging Market Stock PRMSX 1.27%
int growth Vanguard Global Equity VHGEX 0.80%

lg growth Trowe BLUE CHIP GROWTH TRBCX 0.85%
lg growth Vanguard Growth Index VIGRX 0.22%

mid growth Trowe MID-CAP GROWTH RPMGX 0.80%
mid growth Vanguard Mid Cap Growth VMGRX 0.39%

small value T.Rowe Price Div. Small Cap PRDSX 1.25%
small value Vanguard Small Cap Value Index VISVX 0.23%

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Re: How to get Plan admins to offer Vanguard?

Post by pkcrafter » Fri Jan 11, 2019 9:38 pm

When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

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Re: How to get Plan admins to offer Vanguard?

Post by sergio » Fri Jan 11, 2019 10:28 pm

You could do a lot worse that TRP.

Our company is with AmericanFunds and the requirement is that 10 out of the 15 available funds need to be AF (all target date funds count as one AF). So we have the Vanguard Small, Mid, and Large cap indices, Oppenheimer Developing Markets, and an active non-AF bond fund.

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Re: How to get Plan admins to offer Vanguard?

Post by Cop51 » Sat Jan 12, 2019 2:25 am

I pay 96 bps for a S&P500 index fund in my ICMA 457. I’d take 38 any day.

nestorius
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Re: How to get Plan admins to offer Vanguard?

Post by nestorius » Sat Jan 12, 2019 3:27 am

Just Google "401K litigation" and start sending all those articles to your HR and legal department, warning them that lax fiduciary oversight of the 401K plan is a risk to the company. This type of class-action litigation has has hit a number of large companies and has been successful in getting judgments and settlements. My megacorp was one of those sued. The case was won by the company (narrowly) but it was amazing how our 401K plan suddenly got better funds and ER rates.

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Re: How to get Plan admins to offer Vanguard?

Post by nisiprius » Sat Jan 12, 2019 7:51 am

1) Don't talk about "Vanguard" or try to get them to offer "Vanguard funds." Concentrate on the kind of fund you want to see. For example, you want to see some "low-cost index funds." In particular, if they are using T. Rowe Price, you should at least ask specifically for the T. Rowe Price Equity Index 500 Fund if it is not already being offered--(is it?) Hopefully PRUIX (institutional shares, lower expense ratio), maybe PREIX. if it is not already being offers (is it?)

As you can see on this ten-year chart, over the last ten years there has been practically no difference between the performance of PRUIX, PREIX, or the Vanguard 500 Index Fund (Admiral shares), VFIAX. They're all good as a low-cost index fund to be the core US stock holding in a simple portfolio.

Image

2) Do not make a pitch for indexing being superior (or Vanguard being superior.) Couch it in terms of "I would like this and so would many other employees." The HR people may not know much about investing, or they may not be indexers themselves; if they have chosen T. Rowe Price as their 401(k) plan provider, you can be sure that T. Rowe Price will have told them that T. Rowe Price funds are good, and may even have discussed the "fad" for passive investing and why their active funds are better. Very likely your company has only picked funds for the plan that have had superior Morningstar star ratings and/or ten year return, so you are not going to be able to "prove" that index funds would have done better.
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Re: How to get Plan admins to offer Vanguard?

Post by livesoft » Sat Jan 12, 2019 7:56 am

It appears that this may have been the first post ever on the Diehards.org forum back in 2007.

At least the wiki has caught up with the question. :)
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Tony-S
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Re:

Post by Tony-S » Sat Jan 12, 2019 8:58 am

DRiP Guy wrote:
Wed Feb 21, 2007 9:59 pm
This may be a dumb question, but how do I convince my plan admins to carry Vanguard funds, which universally have a lower fee, but at least equivalent returns, to the offerings from TRowePrice? The account is held at TR, so I am sure they have influence and some sort of contractual rights perhaps, but, hey, it's my money -- so, why wouldn't my plan admins get me the best deal?
I have retirement accounts at TRP, Fidelity and TIAA, and my SO has accounts at Vanguard and Nationwide. I can tell you, TRP has the best online and customer service experience of the five (Nationwide is the worst). Fees really aren't bad at TRP. Does your company's plan offer their S&P Equity Index 500 (PREIX), Total Equity Market Index (POMIX), Extended Equity Market Index (PEXMX) and US Bond Enhanced Index (PBDIX) funds? These are all fairly low-cost (0.22%-0.35%).
DRiP Guy wrote:
Thu Feb 22, 2007 5:34 pm
Thanks to all for the tips. I guess the TRowe is indeed not horrible, but when I was rebalancing for 2007, I compared the expenses for some prospective funds, and Vanguard sure does beat everyone else. When I looked at returns, the tracking was right on, as should be the case, so we are comparing apples to apples.
In the end, what matters is return on investment after fees, and all the TRP fund performances are listed after fees.
lg growth Trowe BLUE CHIP GROWTH TRBCX 0.85%
lg growth Vanguard Growth Index VIGRX 0.22%
I have TRP Blue Chip Growth (not an index fund) and it has routinely outperformed total market and S&P 500 index funds by about 1.5% average per year since its inception nearly 30 years ago, so probably not an "apples to apples" comparison with VIGRX.

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