July 2, 2013

Working On Making You Rich/Richer by Changing Our 401K For Lower Fees and Better Service!
I have signed paperwork to switch our 401K investment adviser, record keeper, and third party administrator. My aim is to lower our fees, increase our service, and make much more money for all of us over time. The downside is we will be out of the market for about a month (maybe less) while the companies switch.
 
Am I being nit-picky about fees? I don’t think so. The average fund fees we are currently paying is 0.68% (it was supposed to be .51%, but our current folks did not add the less expensive Vanguard funds like I specified), and the average fund fee we will be paying is 0.14%. In addition, the asset-based fee we pay to the service providers in aggregate will be reduced by as much as an additional 0.24%. So overall, the fees will be reduced by as much as 0.78%. Now in one year that may not seem like much but if we each lose (for example) $50 in fees, that is not just $50. That is $50 gone plus any gain we could have made on that $50. And over the course of many years, that could end up being thousands of dollars. Since we are all on the same team, I figure we are all on the same page when it comes to giving away thousands of dollars…WE DON’T WANT TO DO IT.
 
Better Service? Yes, currently our brokers Jackie and Gihan have only been putting funds in a core lineup for us to choose from. I always was under the impression Jackie and Gihan were fiduciaries with our best interest at heart, but Jackie recently stated that both she and Gihan were not fiduciaries. I am not saying Jackie and Gihan did anything improper, but I am saying that I want a fiduciary who has some skin in the game and can advise us on particular stocks, mutual funds, etc. instead of saying “here are some funds: are you aggressive, conservative or moderate?” This is exactly what our new adviser, Paul Jackson, will be doing. As a named fiduciary to the plan, Paul will be monitoring the investments in our plan to ensure they remain appropriate and will be available for one-on-one advice should you have any questions on how to invest your account. The Self Directed Brokerage Account option through TD Ameritrade will remain available (also at a reduced fee) should you desire to invest in mutual funds outside of the plan line-up as well as ETFs and individual stocks. Paul has been advising individual clients and retirement plans on portfolio positioning for almost 20 years and is located right here in the Sugar Land area. Along with the new recordkeeper, Paul will be guiding us through the transition period and help in getting your investments on track for retirement. In addition, if you decide to opt into the TD Ameritrade Brokerage Option, Paul will be able to give you input on stocks, mutual funds and ETFs to use outside of the plan lineup. Keep in mind, though, there are only certain stocks that Paul watches and those are the ones he will be commenting on.