Employee Fiduciary vs Betterment

[rich]

We switched from a single pooled Vanguard plan to individual accounts at Betterment (B4B 401k - 3% Safe Harbor) for my solo practice a few months ago - not so much for cost savings as for how easy it is for individual employees who are all becoming eligible in January. Betterment functions as the 3(38) and I love the "one choice" approach that our EE's have to make - % Stocks/Bonds and that's it! No confusing menu of this or that mutual fund, and since we pay their fee (0.5%) that's not a concern to the EE.  Our previous pooled plan was OK from the simplicity aspect, but not flexible to each individual's current situation as I believe Betterment is.  We also work with an amazing TPA for a cross-tested PSP which maxes me to $59K/year - let me know if details needed I'm happy to recommend her.

Rich

[IMDoc]

When I was interacting with Betterment for Business several months ago, my contact there mentioned their disproportionate interest from physicians. He attributed this to physicians' interest in evidence-based practice, for whatever that's worth. Although I was impressed with Betterment, we ultimately went with Vanguard.

[East coast]

Old thread, but just read something I thought was relevant if IMDoc or anyone else is still considering Betterment

Betterment stated that they've signed up 300 companies to their new 401k business as of today and, from the article, they've seen "...especially large interest from medical and dental practices, law firms..."

I don't think it's a coincidence that the Vanguards and Betterments of the world are doing well as the Bogleheads/WCI blogosphere has exploded, so bravo to those who put in the work (both the writers/contributors as well as the business owners) to raise awareness and move folks away from the high expense plans to more reasonable ones.

 

[IMDoc]

thomashackett and openwideguy -

Thanks for the input and help. I sent you both private messages.

IMDoc

[openwideguy]

My small private dental practice has been with EF for maybe 3 years now.  We switched to them from a local bank with outrageous fees.  they made the process very easy  I cannot say enough good things about them.  My contact person, Lesley, answers the phone nearly every time I call and returns email questions promptly.  The fees are great and so is their service.  I highly recommend them.

[thomashackett]

I setup a company plan with EF last September. I'm happy with the level of service provided. They are surprisingly accommodating and patient for the ways I've structured my business to pass ACP and ADP tests. I also have my plan setup for mega backdoor Roth IRA contributions.

I disagreed with EF on my ability to structure some of the matching contributions when I setup the plan. Then I asked the same question 10 months later and I got the answer I wanted

[East coast]

We actually ended up going with a PEO firm to handle all HR/Benefit functions, so didn't move forward with Vanguard. Not 100% sure on the exact details a TPS/Financial Advisor would provide, so don't know if I can answer that question.  If we went with one of these firms for our plan we were strongly leaning toward having 3(38) fiduciary representation to help on the liability/implementation/advising end (Vanguard teams up with Mesirow Financial on that).

[IMDoc]

Thanks, East Coast. I appreciate your input.

Does Vanguard act as an advisor and TPA for your plan, or do you have others for that?

EF would act as a TPA but not financial advisor, while Betterment appears to serve both roles.

[East coast]

Can't speak to them as providers since we don't use either of them, but I gathered quotes when we set things up at my firm about a year ago, so can add my thoughts from the process.

Betterment hadn't released that product yet, so don't know anything there. I think it's only been a few months that they've had it up and running, so interested if anyone else has actually started using them for this service.

From my notes last year, EF had an AUM fee of .08% plus a flat $1500/year (additional .1% if we wanted to go with the ERISA 3(38) representation).

And I'd recommend looking into Vanguard directly as well as they were definitely the winners in terms of cost to the employer in the long run - No AUM fee and just a flat $3475/year fee (.06% for 3(38)). Depending on how much is already in the plan/how high the contributions are, the payback on higher yearly fee may come quickly. I have heard people on boards saying that vanguard turned them down for small business plans - no clue if that's because they've changed policy or i snuck my way in somehow.

[IMDoc]

Has anyone used Employee Fiduciary or Betterment for Business as a 401(k) provider? If so, what was your experience?

My group finally seems to be in a mood to reconsider our high cost plan that only contains actively managed funds. I've gotten a quote from EF and am in the process of getting one from Betterment. So far, it appears that Betterment is more expensive (about 0.70 vs EF's 0.27) but offers more services (individual guidance for employees, eg).

Appreciate anyone's thoughts.