The Advisor - December 2012

IMPORTANT NEWS FOR YOUR FINANCIAL AND PERSONAL FUTURE

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All-in Fee: Bundled vs. Unbundled Plans

Understand and consider the “all-in” costs associated with a vendor’sinvestment program. For example, if it’s a bundled plan, it may provide plan administration, investment options and record keeping from one provider, rather than choosing different providers for record keeping andinvestments. Many bundled providers are from insurance companies. With bundled plans:

  • The fees are not transparent – it’s hard to tell what you are paying for.
  • Fees are often paid on a percentage of assets, so the more your account earns, the more you pay – even though the plan is not providing any additional services for your money.
  • There is a potential conflict of interest with revenue sharing – which could lead to increased fees and/or a compromised investment line-up.

CTA’s new 403(b) plan supports an unbundled approach:

  • No hidden fees.
  • A flat administrative fee – every participant pays the same fee.
  • An array of mutual funds selected with the lowest-fee share class and recommended by our independent investment consultant.
  • A record keeper that offers expertiseand excellent service, with no conflicts of interest.

Keep this in mind: Sometimes, a flat administrative fee may appear more expensive at first glance, but if it is associated with low-fee mutual fund investments, it may cost you significantly less over time than an investment that carries a low administrative fee and high investment fees. High investment fees will eat up more of your earnings.

CTA has created a best-in-class, low-fee, high-quality 403(b) plan for educators:

  • High-quality investment options: A national independent investment advisory company will recommend funds for the plan based on their track record of performance, fees and stability.
  • Convenient participation: Members will be able to enroll with the help of an education representative who comes to school sites, on the web or on the phone with a registered investment advisor.
  • Choices for members at different ages and comfort levels with investment: The plan will offer target date funds that base their investment mix on how close participants are to retirement. Participants will also have the option of creating their own portfolio by choosing from the list of investments recommended by the independent investment advisor.
  • No conflicts of interest or commissioned sales representatives: This program will follow a fiduciary standard, which means all investment recommendations are made solely in the interest of the plan participants. The investment advisory company has no financial association with any of the funds offered. The education representatives and registered investment advisors are salaried rather than paid on commission.