Blog war breaks out between an RIA and ASPPA members
The tension starts with differing opinions about what represents fiduciary care of 403(b) investors
I agree with Brian that if we focus on fee disclosure this whole debate will get settled. Once someone looks at the expensive products that many large 403b plans offer, which are often times an individual tax deffered annuity offered within a 403b plan which is a tax deferred vehicle they might find out that there is in fact a better product available. My wife and daughter are teachers in two of the largest Texas school districts and their 403b offerings are bad at best. Expensive to begin with and if you use a mutual fund you have a sinlge fund family arrangement and if you select an annuity to get some multiple fund mangers you have M&E charges and normally a surrender charge. Acting as an IAR or a registered rep or just a life insurance agent with no securities license at all I’ll bet I could find a product with just as many “good” investment alternatives, with lower expenses that offers far more services to the participant than most non profit organizations offer their employees in most situations. The average participant in the plan might view 25 “good” investment options as a reduction in choices but that is only becasue they percieve 100 individual annuities (already discussed) as something good.
I 'm really new to this business but if I were an employee of a non profit organization offering a 403b plan I would want my employer to contribute to make it an ERISA 403b plan and let them take on the liabiltiy of selecting the “best” product for me and if they were smart they would want a broker (registered rep or IAR/RIA) that would take on plan level fiduciary status (and actually have ERISA fiduciary liabiltiy coverage)for selecting and monitoring the investments for them and me the participant so I could do the job I was hired to do instead of trying to figure out what an expense ratio or M&E charge was.
Please don’t anyone attack me on their blog since I don’t know what that is.
Thanks for commenting thoughtfully. We’ll try to keep the attacks to a minimum!
Editor at RIABiz