The 0.13% is not paid to Guideline. The .10% is the average fund fee (the cost of the mutual fund from the manager, Vanguard for instance) and the .03% custodial charge that is a direct pass through for us. Not marked up in any way. It is important to have a great custodian.
Hi Roger, Please elaborate on the more comprehensive comment. We have all you mentioned and more without those excessive AUM fees. We don't outsource core functionality. Captain401k is not a recordkeeper. Your pricing structure also does not account for small businesses and completely disregards the detrimental costs to the plan participants. I'm not trying to pick a fight here, I understand how hard this problem is and the more people focused on it the better. I just wanted to clear up the inaccuracies.
We own this fund in spite of the fact that its main goal is tax efficiency (given that the efficiency is not needed in retirement accounts). Though the fund is outstanding for tax purposes, it also boasts low turnover, broad diversification, and an extremely low expense ratio of .11% (category median is 1.24%) considering it is not a “true” index fund. The S&P index it follows promotes low turnover, which lowers trading costs. The fund does not own as many mid-cap companies as rival funds and stays true to the small-cap arena, with at least 80% of its holdings in small-cap. This prevents unnecessary redundancy in an overall portfolio.
Appreciate that feedback. We are really focussed on the product and have not spent enough time on the marketing site. I'll pass on this feedback for sure!
Just want to be clear the funds are actually held at the custodian, not at Vanguard. That's why it is super important to have a well established Custodian. You can always rollover your funds in a qualified event to another employee sponsored plan or an IRA. BTW you can do that with most publicly traded funds, and you could also do a cash balance transfer.
Yeah, that's not the case for us. We do have Vanguard funds amongst other low-cost mutual funds. We also have our own investment committee which evaluates and adds funds as appropriate. We have no fund relationships and do not make commission.
This is a passed on fee, not charged by Guideline, not marked-up in anyway. We are just being transparent instead of wrapping it in the expense ratio like everyone else. It's very important to have an established custodian.
No secret sauce. We are a SaaS company, not an AUM fee based company. We are not a robo advisor. We focus on retirement, tax advantaged accounts not cash accounts. Compliance issues are perfect problems for computers to solve ;)
Yes, you are in fact misunderstanding the point. We don't wrap anything. We use the same Vanguard funds as you would find in a Vanguard plan. It's the exact same costs. We don't make money based on AUM fees. You're also forgetting about all the other services you need in a 401(k), fiduciary, compliance, education etc. Not available via Vangaurd you have to hire it out and pay AUM fees.
Actually, Vanguard is not less expensive. We use the same funds. You pay the same price for the funds in Guideline as you would if you bought them in a Vanguard plan. We don't make money on AUM, ever. We compete on being a full service 401(k) provider, that is not the case for Vanguard. You would still need all the third party services for fiduciary, compliance etc, and you would have very high startup costs and not to mention the lack of payroll integrations. And yes, we have super slick onboarding for employees and an 8 minute sign-up process for the business all without charging AUM based fees.
Incorrect info here. We are not trying to be the custodian in any way. It's actually quite important that the custodian is separate and that is why we did not bring that service in-house.
Hi I'm the CEO of Guideline. This is a common misconception. It's actually the topic for my next blog post. Target Date funds are just funds of funds. Your paying nearly twice the expense ratio for the same underlying funds. They charge the extra fees because they change the fund allocation for you as you age.
Hi, I'm the CEO of Guideline. I think you might have fallen into the same trap I did a few years ago. All 401(k) plans are not created equally, and it's not just about the fund menu etc. Vanguard for instance, is not a fiduciary. They will not help you keep your plan in compliance, they will not educate your employees. They don't even do their own record keeping. You will need to pay for those services separately. We are making great 401(k) plans attainable for the small business while focussing on the long term success of your employees.
Hi I'm the founder. The copy is not meant to focus on low prices, but rather low expense for the participant. I understand that might be coming through. You are correct on the custodian fee, that is a pass through and having a custodian is great! Appreciate the feedback!
Thanks for your support. I'm the founder of Guideline, Kevin. I just want to be clear. The .03 custodian fees is not paid to Guideline. That is a direct Custodian cost. We work everyday to lower all participant fees. This is our primary goal. Scale is reachable and the business economic are solid ;), thank you for the post!
Thanks for the support. I'll get you a full list and have someone followup. Here is a quick screenshot of my customer portfolio so you can see some of the funds quickly. https://cloudup.com/c_kk6Zi5jC1