Hot new three-way, with load

September 7, 2009 8:12 AM

Choice of retirement plans: TIAA-CREF, Vanguard, Fidelity? Mattress?

My university has changed its retirements benefits scheme, such that we can elect between TIAA-CREF, Vanguard, or Fidelity for our 401(a) and 403(b). The rollout of information, particularly anything that might allow comparative analysis, has been abysmal; basically, we can explore via Fidelity (which apparently serves as an intermediary, or service provider, regardless of where we sink the money) or by making individual appointments with representatives of one of the three funds.

I have had had poor customer service experiences with TIAA-CREF, but then again, I don't know what Fidelity or Vanguard would be like to deal with in this capacity, nor do I know much about their range of retirement products. Anyone been through this experience, or know of particularly good resources for helping to make a decision? Thanks very much.

P.S. I am aware of this, but it is now somewhat dated.

posted by Clyde Mnestra to work & money (7 comments total)

My two cents: I have accounts w/ all three, and I'd go with Vanguard. Their funds aren't the flashiest (i.e., they usually aren't at the top of their categories), but they've got plenty to choose from, and I believe their fees are lower than the other two mentioned. Vanguard's forte is index funds, and I tend to agree with that investment philosophy, esp. for retirement funds.
posted by Bron at 8:25 AM on September 7

Some of this may be dead obvious to you, in which case I apologize, but it all bears repeating I think.

Customer service would be low on the list of deciding factors for me; as long as you can move money around when you choose reasonably fast, the returns are worth more in the long run. In a retirement fund there won't be much movement, so not much of a concern. My broker drives me up the wall as far as her personality goes, but her communication and business advice is what I'm there for, and she's great in those areas.

My suggestions are more qualitative; take the names off the funds when evaluating them; Vanguard is a big name, but a closer look reveals you may be better off with your other choices depending on the fund. Which information are you looking for that the university isn't given? Remember the reps are going to push their own funds.

Check out the annual reports for the funds. These have to be released by law, and you can get them by going directly to websites of the company of your choice. Making a comparative analysis between companies can take awhile, and be a pain, but think of it as an investment.

If you want info on anything and aren't getting it, politely but firmly insist. Remember this is not at all personal, this is your money and you have a right to any information that will help you make decisions.

Post a followup if you can; my university is making some changes to so I'm curious as to how you're going to end up going about this.
posted by variella at 8:27 AM on September 7

Will proofread more carefully in future. 3 mistakes above that I can see.
posted by variella at 8:30 AM on September 7

Vanguard would likely have the lowest costs of the three options and costs eat into returns over time.

I would not expect to get great customer service from any of these companies as customer service is an operating cost that most companies do their best to minimize. (Whether this is a good idea is a legitimate debate but beyond the scope of this comment.)

Also, I would not rely on a web site provided by Fidelity to do any sort of comparison among the various fund offerings. I would take a look at the funds' annual reports. Here, for example, is a link to Vanguard's S&P 500 fund.

You should also be able to view general returns information for the various funds offered by your plan on the fund administrators' web site, and can do comparative analysis that way, if wading through an entire annual report is not your cup of tea.
posted by dfriedman at 8:54 AM on September 7

variella,

I agree; I was commenting on the limitations of my knowledge more than anything. What I have found surprising is that there is no readily accessible comparison of the fund alternatives available at each and their historical performances; instead you are forced to chat up a representative of each and disgorge what you can, then make your own side-by-side assessment. It is precisely the problem that reps will be pushing their own funds.

Given the "wealth" of experience out there, I would expect that others have been through similar comparisons, or that good aggregators exist, but mostly what I find are lame Yahoo Answers responses.
posted by Clyde Mnestra at 8:59 AM on September 7

My 403(b) and IRA are both with Vanguard. My dad (who is the person who helped me set them up) said that he had very poor experiences trying to deal with TIAA-CREF (who managed the retirement plans for my mother's employer) and Fidelity (which is what my aunts had before he moved them over to Vanguard because he didn't like their online statements).

I can't remember the exact funds that my stuff is hanging out in, but here's an example of one of their plans that I use (just the year is different, maybe): Target Retirement 2050 Fund.
posted by sperose at 8:59 AM on September 7

I agree that customer service would be low on my list. You shouldn't need much customer service. 401(k) plans are mostly set and forget. You can get all the information you need on their websites and make investment changes online.

Vanguard has the lowest overall costs and that would be my first priority. Those fees come right off your bottom line. Choosing one of Vanguard's Target Retirement Funds appropriate to your age and tolerance for risk is a good way to go for someone who doesn't want to fiddle a lot with their portfolio (and most people would come out ahead if they didn't fiddle).
posted by JackFlash at 9:23 AM on September 7