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Dan's Blog

Single Vendor Plans Can Stink 🦨

May 3, 2022

We have longed championed single vendor 403(b) plans. Why? So many reasons...

  1. Pricing — When vendors are foced to compete, pricing comes down. 
  2. End of Sales Environment — No more phishy emails or lunch time sales pitches.
  3. Simplicity — One vendor. Once message. One recipient of monthly contributions. 

Being a single vendor plan is a key factor in earning an A in our District Plan Rating Project. However, my partner, fiduciary planner Scott Dauenhauer CFP®, has long warned that a single vendor plan is no panacea if a poor vendor is selected. We just learned how right he is...

Teacher Reaches Out

Scott and I were honored to present at the 58th Illinois Teachers of the Deaf and Hard of Hearing Conference this year. One of the attendees reached out recently to see if we could rate their district's 403(b) plan which was not yet part of our database. Initially we thought it was just run-of-the-mill bad. Then we were briefly — ever so briefly — excited to learn it had become a single vendor plan. Then we found out the details: advisor-only plan utilizing funds charging north of 2%, with many of the offerings sporting loads and 12b-1 fees. What is this 1992? How would you like a target date fund for 2.27%? Ugh!

Survey Says...

The School Association for Special Education 403(b) plan gets a D. Is the plan saved by its 457(b) offering? No. Equitable/AXA is the vendor. Sigh.

Glimmer of Hope

Illinois just rolled out a state-based 457(b) plan available to all school districts in the state. You can read more about that plan here. If I'm an employee of thisdistrict, I'm lobbying for the state 457(b) plan to be added. 

Stay wise and well (and help your district make better 403(b) and 457(b) choices)