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Posted by on August 28, 2008, 5:04 am
The company I work for has a typical 401k plan with about 15-20 mutual
funds to choose from, with various concentrations (growth, value,
international, bonds, money market etc.). The selection is ok, but it
could be better. The company that handles our 401k (Nationwide) signed
up with Wilshire Associates, and are now providing what they call a
"pro" account. Getting talent like that at Wilshire to manage your
money usually takes a lot of money (like large pension plans). They
would be handling my asset allocation, rebalancing my account, etc.
They would have access to more funds then I currently have. Cost?
1.35%. Is it worth it?
I'm trying to get as much feedback before I make up my mind.
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Posted by joetaxpayer on August 28, 2008, 11:51 am
49ermike@gmail.com wrote:
> The company I work for has a typical 401k plan with about 15-20 mutual
> funds to choose from, with various concentrations (growth, value,
> international, bonds, money market etc.). The selection is ok, but it
> could be better. The company that handles our 401k (Nationwide) signed
> up with Wilshire Associates, and are now providing what they call a
> "pro" account. Getting talent like that at Wilshire to manage your
> money usually takes a lot of money (like large pension plans). They
> would be handling my asset allocation, rebalancing my account, etc.
> They would have access to more funds then I currently have. Cost?
> 1.35%. Is it worth it?
>
> I'm trying to get as much feedback before I make up my mind.
I trust the funds have their own expense, perhaps 1%?
The extra fee isn't likely to enhance your return beyond the expense of
the fee. Does your company match any of your deposits? What are the fees
of these funds? Are some lower than others? For my 401(k), the S&P index
is crazy low, .05%. The foreign funds, not so good. So in my allocation,
the S&P goes into the 401(k) and other sectors go into the IRA accounts.
Joe
www.blog.joetaxpayer.com
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Posted by Elle on August 28, 2008, 11:53 am
> The company I work for has a typical 401k plan with about
> 15-20 mutual
> funds to choose from, with various concentrations (growth,
> value,
> international, bonds, money market etc.). The selection is
> ok, but it
> could be better. The company that handles our 401k
> (Nationwide) signed
> up with Wilshire Associates, and are now providing what
> they call a
> "pro" account. Getting talent like that at Wilshire to
> manage your
> money usually takes a lot of money (like large pension
> plans). They
> would be handling my asset allocation, rebalancing my
> account, etc.
> They would have access to more funds then I currently
> have. Cost?
> 1.35%. Is it worth it?
What other fund in particular would you like? Fifteen to 20
funds with the basic areas covered sounds plenty fine. If
there is some other fund you really want, is it possible to
invest in it via a Traditional or Roth IRA, or even taxable
account?
1.35% is steep and reduces your returns meaningful over ten
years. I would experiment with all the free online asset
allocators linked at
http://ellessite.googlepages.com/assetallocation . Note the
differences. Ask yourself, "Is this really such an exact
science?" If after reading more you think not, then do your
own asset allocation and rebalancing, once a year.
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to keep the conversations on-topic for financial planning. Other posting
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Posted by Default User on August 28, 2008, 12:07 pm
49ermike@gmail.com wrote:
> The company I work for has a typical 401k plan with about 15-20 mutual
> funds to choose from, with various concentrations (growth, value,
> international, bonds, money market etc.). The selection is ok, but it
> could be better. The company that handles our 401k (Nationwide) signed
> up with Wilshire Associates, and are now providing what they call a
> "pro" account. Getting talent like that at Wilshire to manage your
> money usually takes a lot of money (like large pension plans). They
> would be handling my asset allocation, rebalancing my account, etc.
> They would have access to more funds then I currently have. Cost?
> 1.35%. Is it worth it?
There is a lot of information that is needed before any useful input
can be given. Early thoughts:
1. That's a pretty high fee for what really isn't much work beyond the
initial asset plan. Most plans make rebalancing easy, and with slicing
of contributions rebalancing isn't even necessary much of the time.
With a taxable account, a manager can stay on top of tax-loss
harvesting, but that's not applicable here. What is this person going
to do to earn that kind of fee?
2. What kind of plan is the manager going to come up with? An
index-based approach emphasizing low fees, or trying to identify hot
fund managers? This talk of "expertise" sounds somewhat ominous. What
allocation plan do you have now, and how did you come up with it?
3. How bad are your current selections, and how great are the
additional funds? Some fund names/tickers or information would be
useful.
4. Do you have significant investments outside of the 401(k)?
Portfolios should normally be considered as a whole. Part of portfolio
management is getting the right assets in tax-advantaged versus taxable
accounts. Will this manager take that into account when creating the
allocation?
Brian
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Posted by joeDOTweinsteinATgmailDOTcom on August 28, 2008, 12:26 pm
The vast majority of professional stock/fund pickers do worse than the
market over the long term, and paying them an extra 1.35% is an
extra insult. In my opinion, find one broad index fund if you have
one,
such as that covers the S&P500 or wilshire 5000, and put all your
stock allocation in it, and be happy. Put whatever portion you want
in bonds, in a broad bond index if possible. How old are you? If
young,
most if not all should be in stocks.
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Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
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