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Old 06-27-2019, 09:56 AM
 
Location: Haiku
4,071 posts, read 2,572,689 times
Reputation: 5996

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Quote:
Originally Posted by athena53 View Post
I agree on asking what ETFs they have. They don't need to have a zillion of them but they ought to have S&P 500, VTSMX (Vanguard Total Stock Market Index), etc. If all they offer is mutual funds, ask the questions people have posted earlier about expense ratios. I'm not opposed to paying expenses on mutual funds, but also look at the results NET of expenses. You could come prepared with some performance data
of basic indices such as the S&P 500, emerging markets, international, etc. over 1 year, 3 years, 5 years, etc. The representative should be able to show similar figures for their mutual funds and explain why they're different, if they are. (If he/she can't, that tells you something, too.)

If there are no ETFs, ask if there are plans to include them in the future. Also ask what, for example, they'd recommend instead of the S&P 500 ETF and then compare results with your cheat sheet.

I wish I could be a fly on the wall!
VTSMX is a mutual fund, not an ETF. Vanguard has an ETF equivalent to VTSMX which is called VTI.

The Admiral class mutual funds offered by Vanguard are cheap - VTSAX is their admiral class of VTSMX and its ER is 0.04%. The ER for VTI is 0.03%, a difference that is not worth squabbling over.

A provider like Vanguard may cut the ER further for select funds they offer in their 401k package.

It is important to get a large selection of funds in the 401k.

I wouldn't worry too much about trading costs as members of the 401k should not be actively trading anyway. Just buy into a good index fund (like VTI), sit on it, and in 20 years you will be surprised what it has grown to.
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Old 06-27-2019, 10:25 AM
 
Location: Florida
4,365 posts, read 3,698,498 times
Reputation: 4105
We had a potential advisor that proposed funds that were doing worse than our current funds. Reason, they only worked with about 100 investments.


I would ask them for their fund recommendations and then have then show you how 10,000 would have grown over the last 10 years and compare to the funds benchmark. Naturally fees should be deducted from the returns.


Have a variety of investments to pick from but probably not over 15. The more you have the harder it is for some employees to make a decision. Count target retirement year funds as just one fund in terms of the 15.
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Old 06-27-2019, 11:25 AM
 
Location: Las Vegas, NV
352 posts, read 249,211 times
Reputation: 815
Quote:
Originally Posted by Pianist718 View Post
Our company's current 401k is bad, considering high expense fees (2.2%). Finally we have another adviser coming to pitch his services, 401k. I know about the fees and I know to push for ability to have index funds at low cost, but what else??? What questions should we be asking of a new 401k adviser?

Our meeting is tomorrow morning.

Thank you.
A 401(k) is really more of a vehicle for tax shelter and for receiving a match from your company, if you are looking to the investments within the plan, you are approaching it wrong. ALL 401(k) plans should have some stock choices, some bond choices and some target fund choices. They will all return relatively similar rates, as they are generally all index funds of some kind. Expense ratios make an impact, but returns are quoted NET OF EXPENSES, so many people tend to calculate this wrong and double count the expenses.

I was a mutual fund analyst for years and spent about 15 years building and analyzing 401(k) and DB plans. The fund performance in previous years is essentially irrelevant.

Basically, the fund choices should be numerous enough that you can have a diversified portfolio, but you should be targeting 4-6% in your 401(k) annually, not chasing big returns. That's what an after-tax individual investment account is for.
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Old 06-27-2019, 11:26 AM
 
Location: Las Vegas, NV
352 posts, read 249,211 times
Reputation: 815
Quote:
Originally Posted by turkeydance View Post
ask the advisor to eliminate annuities from consideration.
Um, you can't have an annuity in a 401(k).
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Old 06-27-2019, 11:45 AM
 
Location: The Berk in Denver, CO USA
14,033 posts, read 20,349,383 times
Reputation: 22754
How do your
fund selection
fees
compare to Vanguard, Fidelity, Schwab?
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Old 06-27-2019, 12:26 PM
 
3,298 posts, read 850,592 times
Reputation: 3789
Quote:
Originally Posted by turkeydance View Post
ask the advisor to eliminate annuities from consideration.
Annuities, in the sense that you turn over your nest egg for a monthly benefit payment, we won't miss them. Defined benefit or defined contribution pensions are worth a look. Provided that the employee manages the 401k as if it's their primary retirement source, I've worked for companies that contribute an "additional" 3% of employee's income to a defined-contribution pension plan.

This is an imaginary number until the employee actually qualifies for and begins retirement. Else, there have been no "deductions" from either the employee's paycheck, nor expenses to the employer, if the employee leaves after 5-10 years without qualifying for this money.
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Old 06-27-2019, 12:29 PM
 
71,550 posts, read 71,730,589 times
Reputation: 49155
buying an immediate annuity is a way for a person to buy a pensionized income if they don't have one ....

studies show using them in combo with bonds and equities has better results and a higher income over a much wider range of outcomes
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Old 06-27-2019, 01:06 PM
 
3,298 posts, read 850,592 times
Reputation: 3789
Quote:
Originally Posted by mathjak107 View Post
buying an immediate annuity is a way for a person to buy a pensionized income if they don't have one ....

studies show using them in combo with bonds and equities has better results and a higher income over a much wider range of outcomes
Do I qualify for a higher annuity benefit if I'm unhealthy?

Retirement benefits and life/health insurance seem to be hedging against polar opposite outcomes. I want to get a great deal on at least one of them!
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Old 06-27-2019, 01:10 PM
 
71,550 posts, read 71,730,589 times
Reputation: 49155
Quote:
Originally Posted by ddm2k View Post
Do I qualify for a higher annuity benefit if I'm unhealthy?

Retirement benefits and life/health insurance seem to be hedging against polar opposite outcomes. I want to get a great deal on at least one of them!
they love unhealthy people ...... what you do is make a comprehensive package out of a single immediate annuity , your own investing and permanent life insurance ..win win all around
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Old 06-27-2019, 02:26 PM
 
3,557 posts, read 1,364,467 times
Reputation: 6980
short answer: annuity fees are too high.
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