It's even more specific than that. I was only talking about public k-12, not all nonErisa 403b market. TIAA is getting out, and I speculate that Vanguard may be trying a different approach to getting in the non erisa market, especially k12. Vanguard knows that the 4 million public k-12 employees are left out with no protection what so ever from the new DOL fiduciary rules.Rupert wrote:Now we have competing theories: (1) Vanguard is trying to get out of the nonERISA 403b market and (2) Vanguard is trying to expand its presence in that market.sschullo wrote:Lots of debate over TIAA. Yeah, it's had issues with K-12 when it tried to be a major player in the K12 market, but it never understood the K-12 culture, as it has a century of experience with higher education and research institutes. I still like them. They are still miles better than any of the other large insurance carriers selling those terrible and expensive TSAs in the 403(b) plan.
I have about 20% of my 403(b) rollover fixed account with TIAA traditional annuity in which I pay no ERs (except, of course, the spread that is built in between what is credited to me 3.0% and what TIAA gets on the open market). Furthermore, it is 100% liquid, principal protection, and no ERs makes it an excellent fund for my fixed account allocation for this old man!
My take on Vanguard hiring Newport is to expand their reach to public K-12 districts. I have never had Vanguard in my districts 403b, from my experience I would be happy. Back in the day, I only an invesco and they charged 12b fees, but I took them because it was NOT an annuity and it was a noload that invested in equities.
I believe Vanguard sees what I see, 80% of public k12 educators who have a 403(b), getting sold those horrific annuities, so they hired Newport to at least get Vanguard within reach of tens of thousands more teachers than they do now. Yeah, if you have already had access to Vanguard and they start charging $5.00 a month, I would probably be angry too, but I would not withdraw my money from Vanguard.
Because 403b with public k12 is so corrupted and conflicted with absolutely no fiduciary standards from the aggressive sales force that are EVERYWHERE on district property, this is the best way Vanguard could reach and SAVE more teachers from high cost with pathetic returns that are a whole lot worse than $60.00 a year (I was not happy with Invesco 12b fees either).
From my end of the theory with close ties to how public k12 district bureaucrats think and behave and what Vanguard and TIAA has said and behaved for the last 20 years, not much has changed despite all of the print media publicity and investment forums available. For years, I have talked and written letters to both Vanguard and my district trying to get Vanguard on my districts 403b list, it's not even close. It will not happen under the current structures.
I am not convinced that hiring Newport will work with the 2nd largest school district in the country, LAUSD either. I'll find out at the next advisory meeting next month. Vanguard will not their stoop to the unrealistic demands of vast majority, but not all, k12 districts, especially here in California. It has never been in Vanguards interest. One district official who understood created the 457b plan to get around the tedious complexities, and now we have several Vanguard funds available including Vanguard Wellington, which I wanted way back in the dark ages of 1993.