Secret Lower-Cost 403(b) Products That We Hope You Never Have To Use

Low-quality vendors sometimes offer secret lower-cost programs

Photo by Kristina Flour on Unsplash

There is an old saying, in the land of the blind, the one-eyed man is king. There is a similar saying in the world of 403(b) advocates, in the land of bad 403(b)s, the less-bad 403(b) is king. Ok, no one really says that, it just sounded good in my head, but there is truth in that statement.

We come across a lot of products at 403bwise and most are pretty awful. We tend toward recommending a list of vendors we know to have reasonable fees, these vendors are:

Aspire

CalSTRS Pension2 (only in California)

Fidelity

ICMA-RC

TIAA

Vanguard

There are many 457(b) plans run by states that we like as well (as well as several states with 401(k)s that are offered to teachers - Idaho, Colorado, North Carolina).

But what happens when we come across a school employer who has both bad 403(b) and 457(b) choices? 

Our first recommendation is to begin lobbying your employer for better options (see our resources page), the second is to consider contributing to a Roth IRA if you qualify (insert link). Roth IRAs are simple to set up, low in cost (basically free at Fidelity) and allow you great freedom in investment options, but if you are going to contribute more than the Roth limit, have an existing low-quality 403(b) and or you don’t qualify for a Roth, you’ll want to research if your employer offers a vendor with a secret lower-cost program.

It sounds mysterious and the vendors offering them would prefer they stay that way. While these programs are not advertised by the school employer or the vendors who offer them, they can be a refuge for those desperate to lower the costs in their 403(b). 

The vendors offering these programs are not offering them out of the goodness of their own heart, quite the opposite. They are offering them in order to keep quiet the people who might otherwise advocate for better choices in the 403(b) overall, it’s a way to silence those who have become wise to the 403(b). The vendor is thinking that if they just give in and satisfy this small group of agitators, they won’t become a bigger group demanding even bigger change (which might be a prelude to the vendor being removed). To some extent, this has worked, but as 403bwise is proving, it won’t work for long.

Who offers these programs?

So far I’ve been able to identify three providers, though it seems that the programs are not nationwide. There are likely to be other secret low-cost programs offered in particular states, if you come across them, let me know.

Lincoln Investment’s RetirementSolutions Participant Directed Program

This program is offered only in New Jersey, though I’m told it’s also offered in a few other select school districts, but I’ve not been able to identify them. If you have information on these other districts, please let me know. In researching the program the rumor was that this program was put together by the New Jersey Education Association, though I’ve not been able to find any evidence of this.

This product is essentially a clone of the Vanguard 403(b) product, it charges a flat fee and offers almost every major Vanguard fund (usually Admiral share class). I do not believe Lincoln pays any of the compliance fees on behalf of the school district, though I could be wrong.

This is a good way to get access to low-cost Vanguard investment options when you have no other choice.

Annual flat dollar fee: $60

Annual asset based fee:          0.00%

How to access: You simply e-mail inquiries@lincolninvestment.com and ask for the PDP application and they will e-mail it to you (with a gentle reminder from Lincoln that you really should re-consider doing this on your own). You’ll still need to process a salary reduction agreement separately.

Who can access:          As far as we can tell, only school employees in New Jersey.

PlanMember Participant Choice

For those not familiar with this company, they are now partially owned by AXA/Equitable, a notorious player in the 403(b) world. You will often hear the benefits of fee-based accounts and the word fiduciary is thrown around, but don’t mistake these representatives for full time, fee-only fiduciaries. 

This program is not “low-cost”, it’s better labeled “lower-cost”. It’s not the best option out there, but it does offer very good investment options with mostly institutional share classes where possible. Vanguard, DFA and American funds are all available along with a few T. Rowe Price funds. Think of it more as a curated, not crafted mutual fund list.

You can find information about it on 403bCompare, here.

Annual flat dollar fee: $50

Annual asset based fee:         0.35%

How to access: You can goto the 403bCompare page for this product and attempt to e-mail them for access to an application. I’ve done this, but have yet to receive a response. Here is the e-mail edelivery@planmember.com for PlanMember. you’ll still need to process a salary reduction agreement separately.

Who can access: Since this program is disclosed on 403bCompare, we assume it’s offered in California, but we see no reason why it wouldn’t also be offered nationwide anywhere that PlanMember (or potentially AXA/Equitable) has a payroll slot. We are working to get an official statement from PlanMember.

NEA Direct Invest offered through Security Benefit

This is a program that almost no one knows about but is probably the most widely available low-cost product offering in the nation. As far as we can tell, very few teachers use it and it’s not easy to get your money into it if someone hasn’t already set it up at your school employer. However, once it’s setup, it seems to work well and you are not bombarded with advertisements for other Security Benefit products (at least, I’m not).

For those who don’t know the history with the NEA and Security Benefit, the two have been selling high cost financial products for decades together and the relationship appears quite profitable for both. A wholly owned subsidiary of the NEA, NEA Member Benefits receives an annual base fee of $3,827,256 (see prospectus here) in exchange for promoting Security Benefit products and I suspect that number is higher, though NEAMB will not disclose how much they are paid be each of the vendors they work with, so I can’t be sure.

Dan Otter and I had conversations with the NEA many years ago about how bad their product offerings were, we like to think this had some influence on them starting this NEA Direct Invest offshoot product. The NEA does very little to market the product as they make the money selling higher margin products, but they have assured me that whereever Security Benefit has a payroll slot, this product will be available (note: this doesn’t mean the school employer will allow it).

My very first blog post, nearly twenty years ago was an expose on the NEA Valuebuilder program, you can read it here.

While I’m not a fan of the investment lineup (they offer Vanguard index funds alongside BNY Mellon index funds that pay Security Benefit revenue and which are 4 - 12 times higher in cost for the exact same investment) the great part about this program is that it does offer access to a few good Vanguard funds with a low annual fee (which can be waived). You can build a globally diversified portfolio by using the Vanguard Total Stock and Total International Stock funds combined with either a money market or a bond fund. It’s not perfect, but it’s better than most of the junk in the 403(b) marketplace. We would love to see them revamp the lineup to add a few more Vanguard funds and removed the high cost BNY Mellon funds (BNY Mellon S & P 500 fund cost 0.50% versus the Vanguard Index 500 at 0.04%).

Annual flat dollar fee: $35, waived for balances of $50,000 or more

Annual asset fee:         None (which is quite amazing, though this is due to all the other high cost funds in the lineup subsidizing the Vanguard funds)

How to access:         You can enroll online here, you’ll still need to process a salary reduction agreement separately. It can take 6-8 weeks to get the account set up if you’re the first to do so in a district.

Who can access:         As far as we can tell, anyone, even if not a union member.

What Should You Watch Out For?

These programs are often used as marketing lists. Expect to be bombarded with “information” about the company offering the program and trying to get you into their advisory services that are much more expensive. With that said I’ve been pleasantly surprised that the NEA Direct Invest program does not currently do this (my wife has an account with them and yes, it’s possible they’ve simply removed her account from the lists so that I don’t see any marketing, but I’m skeptical that’s the case). I do not have accounts with Lincoln or PlanMember, so I don’t have first hand experience and can’t say for sure they will market to you, though it’s common sense to think they will.

These programs might be acceptable, in some cases even good deals, but do not mistake them for good players in the industry, in my opinion, they are not. None of these companies in my opinion are high quality. The salespeople they employ are not full time fiduciaries and the companies didn’t set these accounts up out of altruism, in my opinion they did it to perpetuate the status quo.

Compliance fees are generally paid by these vendors on the participants behalf, they likely won’t be with these products. Many school districts hire a third party to perform tasks in order to keep their plan in compliance with IRS regulations, this isn’t cheap and the fees are often passed onto the vendors. The higher cost, lower quality vendors might absorb these fees given their higher profit margins, but there is no way to absorb such fees and not lose money with lower-cost options. You might end up paying $75 to 100 a year in flat fees between the vendor and the compliance fees. While this isn’t ideal, you’d pay a similar fee with using Vanguard. If you don’t have any other good options, paying these flat fees is cheaper in the long term than paying high asset-based fees.

You should consider whether the 457(b) is a better option for you and check to see if that plan is offered with better terms. Many states offer solid 457(b) options (and as mentioned earlier, a few like North Carolina, Idaho and Colorado offer great 401(k) options as well). 

Don’t Stop Advocating for Better Choices

If your school employer only offers poor 403(b) choices, but one of them happens to be from the above companies and you decide to take advantage, great, but don’t stop there. Advocate and Educate. Work to add a good vendor to your list. Help educate your HR staff and fellow employees on the benefits of a low-cost provider. It might not be easy, but it’s the right thing to do and you could literally save your colleagues hundreds of thousands of dollars over their lifetimes.

Account Closure Fees

The NEA Direct Invest does not seem to have account closure fees, however Lincoln charges $60 (as of May 2020) if you were to close this account. PlanMember as of May 20th does not show an account closure fee on 403bCompare, which means that if you have this account as of this date, they cannot charge an account closure fee if your account is associated with a California school district (a vendor cannot charge a fee that is not disclosed), however outside of California a fee may be assessed, so find this out first. I’ve had this issue with PlanMember in the past charging a termination fee not disclosed on Compare. After initial resistance, they realized they had no choice but to reverse the fee. Check the custodial agreement for language regarding termination fees.

Loan Availability and Fees

The NEA Direct Invest allows loans, but charges an arm and a leg. You will pay a $100 setup fee and $50 per year for your loan.

The Lincoln program charges $60 to setup a loan and a $60 annual fee to maintain it.

PlanMember is silent on loans, which doesn’t mean they don’t offer or charge, just that it’s not currently disclosed on 403bCompare.

Conclusion

I hate writing blog posts like this. The fact that teachers have to do so much work to find a reasonably cost retirement plan is ridiculous. The fact that the National Education Association continues to offer their own employees a Vanguard retirement plan while promoting high-cost, low-quality products to their members is infuriating. My wife is a member of the NEA and we are both supporters of our local, state and yes, even the national (NEA) union. We don’t believe unions are perfect, but in many respects they work hard to protect teacher’s rights. Why they have chosen to do the opposite in this case is hard to say, but we hope to change their mind.

If you don’t have good 403(b) options in your school district, work as a 403(b) advocate to get better options for you and your colleagues. In the meantime, maybe one of the above programs will provide a bridge to when that day comes.

403(b) Hack: Why You Might Want To Leave A Few Dollars In Your 403(b), Even If You're Retired And Don't Want It

When public school employees retire they should think twice before rolling their 403(b) money (or 457(b)) over to an IRA. I'm not talking about the hordes of insurance agents and brokers who are trying to sell you poorly structured products so they can take fancy trips, that's of course a good reason not to rollover, but there is another, potentially powerful reason why you should keep at least some money in a 403(b)/457(b) as long as you are retired.


When the financial crisis hit in 2008, interest rates were pretty high on mostly safe products, but that quickly changed as rates plummeted to nearly zero. Insurance companies who offered 3 and 4% guarantees were caught off guard and quickly shut down product lines and restricted new money. As the years went on, it became more difficult to find a product with a good rate and a high degree of safety. But there were still some products that didn't restrict new money and other companies that came out with new 403(b) products that had higher rates than similar IRA products, in some cases substantially higher. In other words, some 403(b) products offered higher rates than IRA products or had lower fees.

A client of mine had money in an IRA and we wanted to put some of it in a fixed account type product, but rates were terrible. The best we could find was 1.35%. I knew of a 403(b) with no surrender fees and a fixed account that was paying a net rate of 3.5% from a highly rated insurance company (yes, no commissions, no surrender fees, no surrender period), but my client was retired and if you're retired and you don't have an existing 403(b) you cannot open a new one. Then my client showed me an old policy that he had forgotten about. It was a 403(b) with a school district he had worked in years before (like 25 years earlier). It dawned on me, he was still a member of that school district's plan, the fact that he was retired had no bearing, he was still a participant because the vendor was still active and his policy meant he was part of the plan.

Since my client was a participant in the plan and that plan had the 403(b) option that paid the 3.5% rate, I opened a new 403(b) (remember, he is allowed to open it because he is still a participant in the plan due to him still holding that old 403(b)) and moved IRA money into it and started earning that higher rate.

My client earned in excess of 2% more than he could have gotten in an IRA because we didn't settle. We didn't require all his money be kept at one place for ease of accounting, it was a little more work on my part, but it was the right thing to do and made my client significantly more money. It's what a fiduciary does.

The moral here is that even if you find a great IRA to roll your money into, don't roll everything over. Leave some money in your 403(b) or your 457(b) just in case an option later comes along that can't be found anywhere else. Think of it almost as an insurance policy. Yes, it's a pain (another statement, another login an another RMD), but that pain just might pay off in the end like it did for my client.

Scott Dauenhauer, CFP, MPAS, AIF

Are you 403(b) Wise? 403bwise.org is the place on the internet to learn, advocate and build community.

403bCompare Rebirth

Way back in 2000, a group of 403(b) activists lobbied the California state legislature to pass a bill allowing school districts to control their 403(b) vendor list, the bill didn't make it in the original form, but instead became a disclosure bill. The law that was passed created what we now call www.403bcompare.com, a website where all 403(b) vendors in California must register if they want to offer their products to California public schools. They must register and disclose their products. There is no other database like this in the country.

I was involved in both the lobbying and the development of the original website and have provided consulting services to CalSTRS (who operates the site) ever since. I've watched over the past 18 months as the people at CalSTRS worked to redesign and modernize the site, the new site launched this week and I think they've done a great job.

 Just a few new features you will see is an expense ratio range (low - medium - high) and a disclosure of whether the product will pay a commission when sold (no data on what the commission would be at this point). Comparisons are now simpler and all the data for mutual fund and annuities are in real time, including performance information. There are also filters to help you exclude certain products and a design that should allow for simpler navigation.

I've linked to a brochure and flyer below and you can watch a few of the videos as well:

CalSTRS Press Release

CalSTRS 403bCompare Flyer

CalSTRS 403bCompare Brochure

Scott Dauenhauer, CFP, MPAS, AIF

Are you 403(b) Wise? 403bwise.org is the place on the internet to learn, advocate and build community.

More 403(b) Vendor Shenanigans & Trips...Those Amazing Trips

This past week I've come across several instances of what I consider improper marketing efforts by insurance agents for 403(b) vendors. 

As best I can tell, this week it's LSW and Midland, two of the worst 403(b) vendors in the industry in my opinion. 

I also found where LSW is having their Conference of Champions trip and have posted the details.

LSW Agent Violated District Rules?

The first issue is with an LSW representative, as reported to me:

The email was originally sent out to our principal (name redacted). In the email it states that he (the LSW insurance agent/salesperson) had:

"nominated our school for our 'sports equipment giveaway' program on numerous occasions in the past." 

It goes on to state:

"As you know, we are (an) approved 403(b) advisors with the district as well as the TPA (third party administrator) and we conduct retirement updates at numerous schools functions including staff/professional development meetings." 

The letter goes on to state that:

"we have 2 sets of sports equipment available to be donated in March that are being funded by one of our agents out of his own pockets with no corporate money involved."

So what's the problem? Several.

First, the rep is essentially bribing the school official with sports equipment in order to gain a quid pro quo of access to "staff/professional development meetings." This is unethical in my opinion. If you want to give the school equipment, just give it.

The bigger problem is that in this particular school district agents are prohibited from being on campus for any reason (other than if their child attends, of course). Yet the rep is attempting to gain access even though the rep new it was not allowed. I know the rep knew it wasn't allowed because the rep is listed as an LSW rep on the active agent list that LAUSD collects.

It gets worse. The agent represents that he is an "approved 403(b) advisor(s) with the district as well as the TPA". This is a misleading claim. The district doesn't approve agents and the Third Party Administrator doesn't either. The district simply makes all agents and brokers who sell products complete information so that they can track who is selling in the district and ensure they are following the rules. The list has not been vetted. You can read all the documents that LAUSD requires agents to sign here. LAUSD has not approved this salesperson in any fashion, simply required that they adhere to LAUSDs guideline if they wanted to sell in the district, to indicate otherwise seems quite dishonest to me.

To give you an idea of what the solicitation agreement entails, here are a few of the key points:

SECTION I – RULES AND PROCEDURES

1. Agent must sign the Rules of Solicitation Agreement and file with TSA Consulting Group, Inc., Plan Administrator, prior to working with employees of Los Angeles Unified School District.
   
2. Any Agent working in the district must be listed as an agent with at least one of the companies on the authorized investment provider list.
   
3. Agent is responsible for updating TSA Consulting Group Inc. of any changes in company/companies represented and any change in business contact information such as address, email and phone contact.
   
4. No agent may solicit employees or distribute promotional materials for the purpose of obtaining contracts for tax‐sheltered annuities, 403(b) voluntary retirement savings or similar benefits on District property.
   
5. Agents may not ask employees to utilize District facilities (fax machines/telephones) to arrange appointments or send materials related to 403(b) voluntary retirement accounts.
   
6. Agents are not permitted to meet with employees on District property for any reason related to the soliciting or servicing of an employee 403(b) Tax‐Sheltered Annuity.
   
7. Interference in any way with employees daily period of service will not be tolerated.
   
8. Agents may not for any reason sign‐in to the ART System for, or on behalf of the employee, to process any
   transaction or make changes to Salary Reduction Agreement information. Accessing ART utilizing someone else’s credentials is considered fraudulent activity and is grounds for immediate termination. 

The agent is listed with LAUSD which indicates he signed this agreement (note: I've not independently verified he signed the agreement, this is an assumption based on the process in place to get on the agent provider list). Notice Rules 4 - 7....the above e-mail seems to be looking to violate all of those rules. It's going to be hard to claim ignorance.

The second solicitation issue happened in the same city and same district and the rep involved is also listed several times on the districts agent provider list.

LSW/Midland Appointed Agent Represents As CalSTRS?

In this situation an agent who is appointed with LSW and Midland (and who has won awards apparently with both for selling their products) represents himself as being affiliated with CalSTRS, a common trick of insurance agents selling 403(b) products.

I don't know how the individual received the document below, but you can see that it asks questions related to the California State Teachers' Retirement System (CalSTRS) pension plan. But more importantly, the e-mail address literally starts with "calstrs". I've blocked out any identifying information.

LSW Advisor Resources by Scott Dauenhauer, CFP, MSFP, AIF on Scribd

This is another case of misleading solicitation. Even if the agents didn't mean to mislead, he used the name of CalSTRS in his e-mail address...that's a no-no. The agent brags on his website that "Since 2012 (name of agent) has reached the President’s and Platinum club levels with several nationally recognized Premier Retirement Planning and Insurance Carriers." If you are not aware, this is not a trait a consumer should look for in a trusted advisor - it simply means he sold enough of that company's products to achieve a certain level (which normally leads to trips similar to the ones below).

Bottomline - solicitation by reps of insurance companies that are bad for consumers continue to be a problem. Be careful out there.

Just so you understand what is driving these solicitations, I'm including below the trips that these types of agents might qualify for if they submit enough business to National Life Group/Life of the Southwest:

LSW 2017 by Scott Dauenhauer, CFP, MSFP, AIF on Scribd

LSW 2018 by Scott Dauenhauer, CFP, MSFP, AIF on Scribd

It's time this kind of stuff stopped.

Scott Dauenhauer, CFP, MPAS, AIF

Are you 403(b) Wise? 403bwise.org is the place on the internet to learn, advocate and build community.

Teachers Better Off In a Pension Than a 401(k)

This study was funded by CalSTRS, so understand that before proceeding, but good information. If someone tells you your kid's teacher would be better off with a 401(k) than a pension, don't believe it

Are you 403(b) Wise? 403bwise.org is the place on the internet to learn, advocate and build community.

LA Times: If someone tells you your kid's teacher would be better off with a 401(k) than a pension, don't believe it

If someone tells you your kid's teacher would be better off with a 401(k) than a pension, don't believe it

Are you 403(b) Wise? 403bwise.org is the place on the internet to learn, advocate and build community.

Teachers: Stop Replying To These Postcards

My wife gets a postcard in the mail at least every sixty days from a company that won't give its name,but the return address is "California Pension Administrator" and is located in Sacramento.

Warren Commission: Villas, Castles, and Vacations

Senator Elizabeth Warren began an investigation of insurance company non-cash compensation methods several months ago, what she found will be shocking to most people, but not to those of us who've been following the unethical sales practices of the annuity industry for decades.

Titled Villas, Castles, and Vacations: How Perks and Giveaways Create Conflicts of Interest in the Annuity Industry, the document outlines some of the incredible perks that insurance agents receive in addition to commissions when they sell annuity products. Warren hinted at some of these perks in a Senate Banking Committee back in April, you can watch her below:

In this report Warren attempts to discover the entirety of non-cash compensation, though she isn't entirely successful, here's an excerpt:

"Kickbacks pose an especially dangerous problem. When companies can offer kickbacks to agents for recommending high-cost financial products, and when those kickbacks are hidden from the customers, the likelihood that consumers will be duped into buying bad products increases sharply. 

To explore the prevalence of this type of conflict of interest, in April 2015 Sen. Elizabeth Warren (D-MA) opened an investigation, asking fifteen leading annuity providers for information on whether they offered non-cash incentives such as lavish cruises, luxury car leases, and other perks to annuity sales agents to promote their products and whether their customers were aware of the agents’ compensation arrangements."

Reading this report one wonders how the insurance industry continues to get away with such unethical and clearly conflicted business practices, it's a testament to the power of that industry and Warren is confronting them head on.

Dan Otter of 403bwise.com and I recently did a podcast on such compensation practices and you should be able to listen to it soon by going to www.teachandretirerich.com and clicking the podcast link.

I encourage you to watch the above video and then dive into Warren's report.

2015-10-27 Senator Warren Report on Annuity Industry

It's time to put a stop to these unethical compensation practices.

Scott Dauenhauer, CFP, MPAS, AIF

CalSTRS National Retirement Security Week

National Retirement Security Week

The CalSTRS Pension2 program is a proud participant in National Retirement Security Week. In the spirit of this week, we will be hosting a variety of events. Come join us to learn more about saving for your future.

Online Workshops

• Pension2: CalSTRS Retirement Savings Plan for Your Future
• Tuesday, October 20 at 4 p.m.
• Register now

• AMA (Ask Me Anything) Session with 403b/457b Advocate Scott Dauenhauer
• Wednesday, October 21 at 4 p.m.
• Register now

• Build a Budget Plan Using 50/20/30 Guideline
• Thursday, October 22 at 4 p.m.
• Register now

Free Financial Advice: Schedule a One-on-One 

Appointment at a CalSTRS Member Service Center

Half-hour Appointments Available

Member Service Center	Date	Times Available
Glendale	Tuesday, 10/20/2015	10 a.m. – 4:30 p.m.
Irvine	Wednesday, 10/21/2015	10 a.m. – 4:30 p.m.
Santa Clara	Wednesday, 10/21/2015	10 a.m. – 4:30 p.m.
Riverside	Thursday, 10/22/2015	10 a.m. – 4:30 p.m.
West Sacramento	Thursday, 10/22/2015	10 a.m. – 4:30 p.m.

Book your private session:

• Call 888-426-2684
• Email Pension2@CalSTRS.com

Pension2 on Campus (via CalSTRS New Beginnings Workshop)

Lake Elsinore School District: Wednesday 3:30 – 5 p.m.

Register now

Public School Employers Deceived By Shifty 403(b)/457(b) Providers

You may not know this, but if you are a public school employer and offer a 403(b) or 457(b) plan you are required to prove to the IRS that you've met with every employee every year to inform them about the plan. You might not know about this pesky requirement because it's completely made up, there is no such rule or regulation. Of course this doesn't stop what are in my opinion, deceptive providers of 403(b) and 457(b) programs, from claiming they must meet with all your employees each year.

Recently, my wife (a public school teacher) was informed that she needed to attend a mandatory meeting after school to learn about the retirement plan offered by her District. My wife had no choice but to attend the meeting (it was actually held during a normal mandatory staff meeting time). Both her and I knew it would be a couple sales reps hawking 457(b) and 403(b) products under the guise of "education" and "planning."

The reps attempted to explain the defined benefit plan (CalSTRS) and pre-tax deferrals as well as the advantage of the time value of money. They then talked about the 457(b) and 403(b) briefly, but mostly focused on the 403(b).

The whole presentation was made in order to sell 403(b) and 457(b) products for a likely commission. It was done under the guise of 457(b) regulations and likely 403(b) "Meaningful Notice" regulations, however neither plan have any sort of rule that states employees must attend sales presentations from brokers.

In addition, it was strongly inferred that each person in attendance was required to fill out a form to leave behind, you know, so that the district could be in compliance. I've provided a copy of the form below - it's what we in the industry call a "lead sheet."

In my opinion, these meetings are not designed to help a school district comply with IRS regulations or to help employees get into retirement plans - they are designed to produce product sales that generate commissions (or fees). The people making the presentation are not full time fiduciaries and are in fact sales people.

Is it really a responsible use of our public school teacher's time to subject them to sales presentations? It's one thing if unbiased and objective data is being presented by someone who does not have a financial interest in the outcome - it's another when school employees are being sold products for commissions while technically still on the clock.

I want as many school employees to be in supplemental savings programs as possible, but it should be done in an ethical manner by people without a financial incentive. At a minimum, full disclosure by the sales people should be made both in writing and orally.

Scott Dauenhauer CFP, MPAS, AIF

  457(b) Awareness Meeting

CalSTRS Releases RFP For 403(b)/457(b) Recordkeeper

The California State Teachers' Retirement System has released their first Request for Proposal for their 403(b) and 457(b) programs (collectively named Pension2) since 2006.

Submissions are due by December 19th, 2013.  Vendors interested in bidding on the program may find the information they need here.



The incumbent recordkeeper is TIAA-CREF and they are eligible to bid.

As part of the background CalSTRS states:

CalSTRS administers a hybrid retirement system which includes a defined contribution program, known as Pension2, to complement the defined benefit members receive as their primary means of retirement. Pension2 allows certified and classified California school employees to set aside savings in low-cost, flexible funds selected by CalSTRS. Pension2 offers several investment choices to certified and classified California school employees: 403(b)(7), Roth 403(b)(7) and 457(b). As of September 30, 2013, Pension2 has over 10,000 participants with over $500 million in assets. 

Meridian Fiduciary Consulting (of Meridian Wealth Management, my firm) is the consultant.

Scott Dauenhauer, CFP, MSFP, AIF