6 ms·

Guideline isn't actually "fixing" your 401(k). They are primarily just competing on price. Employers can already get a decent 401(k) from Vanguard, which obvi

Guideline isn't actually "fixing" your 401(k). They are primarily just competing on price. Employers can already get a decent 401(k) from Vanguard, which obviously offers access to their low-cost funds. Guideline doesn't appear to be offering anything fundamentally new (in contrast to, for example, robo-advisors). If I were setting up a 401(k) plan for a company, I'd probably just go with Vanguard, with full confidence that my provider will not undergo any "growing pains" or even cease to exist in 5 years.

whack 10y ago
What does the plan-administration-fee look like at Vanguard? Minimizing this number seems to be Guideline's primary value proposition.
- Someone1234 10y ago
  Minimizing the number and actually TELLING you the number. Can anyone here even figure out what Vanguard charges? I cannot.
  - deleted 10y ago
    [deleted]
  - winter_blue 10y ago
    It $20 per year for an individual 401(k) account (commonly used by owners of small businesses).[1] One could assume the rates for regular employer 401(k)s are similar. That's slightly less than Guideline's 0.03% fee, for accounts with large balances. A $100k account would pay Guideline $30/year, and a $1mil account would pay $300/year. Although most Americans probably don't have that much in their 401(k)s. Considering a lot of people will have low balances, Vanguard and Guideline cost almost the same. I think the decision for a small business now comes down to just three factors: 1. Does Guidelines have a better website/app user interface, and better customer service? 2. Vanguard is a well-established company. Guideline is small and new. 3. From the business side of things, is Guidelines easier to work with compared to Vanguard? I.e. with things setting things up, adding new employee accounts, etc. I'd go with Vanguard just based on factor 2: because they're well-established and fairly trustworthy, and being investor-owned, they're not trying to profit off of their investors. [1] See: https://investor.vanguard.com/what-we-offer/small-business/individual-401k https://investor.vanguard.com/what-we-offer/small-business/i...
boulos 10y ago
Eh. The funds are actually held at Vanguard, so you could easily roll this over to them upon failure of Guideline (or even before). This all comes down to what your small employer can do.
- busque 10y ago
  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.
vwcx 10y ago
Your comment suggests that Vanguard is low-cost, which it is for the consumer in the form of low expense-ratios. But how do Vanguard's administrative costs stack up for the employer?
cylinder 10y ago
I find it insulting when I go to an employer and find they're using a high fee 401k. It just sends so many wrong signals. And then you ask HR what the fees are and they have no clue.
- zdw 10y ago
  In most examples I've seen, "Human Refuse" rarely has a clue about anything, other than how to get you fired for imaginary reasons.
  - sctb 10y ago
    This comment violates the HN Guidelines (https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html). Please don't do this here.
- harryh 10y ago
  FWIW this tends to happen with smaller employers that are scrimping on administrative fees. I've found that the situation is generally improving though as people become more aware of what a great 401k plan should look like. I've also learned to not worry about it so much. You'll generally only stay at an individual employer for a few years. After that you can roll over a 401k into a low fee IRA held by Vanguard (or whomever you prefer). In the end a few years of high fees with a relatively small $ balance shouldn't negatively impact your returns too much. Of course if you're one of those rare folks who spends a decade or more with a single employer you might want to think about things here differently.
  - snark42 10y ago
    > I've also learned to not worry about it so much. You'll generally only stay at an individual employer for a few years. After that you can roll over a 401k into a low fee IRA held by Vanguard (or whomever you prefer) You can also do a backdoor Roth conversion when you rollover your employer contributions (which can't be Roth contributions.)
mox1 10y ago
Can a small business just walk up to Vanguard and say, please give me an end 2 end 401(k) solution? With compliance, record keeping, etc? It was my understanding that they could not, but I could be wrong.
- latortuga 10y ago
  Yes[0] they do that and it is a bit pricey if you are quite small. We investigated them when setting up our 401k and found the fees to be a bit difficult to swallow for a 3 person company. [0] https://institutional.vanguard.com/VGApp/iip/site/institutional/clientsolutions/sdc https://institutional.vanguard.com/VGApp/iip/site/institutio...
  - ac29 10y ago
    Our small company has a SIMPLE IRA through Vanguard. It costs $25/year (waived if you have $50k managed with them across any type of accounts) plus the mutual fund costs, which are very low. Almost no paperwork to get it started. Definitely worth looking into for small businesses.
    - loeg 10y ago
      SIMPLE IRAs have lower employee and much lower employer contribution limits than 401(k)s.
  - Hannan 10y ago
    Any chance you can give a rough number on the costs you were quoted? The linked pages don't mention it at all, as far as I can see.
jimbokun 10y ago
"Guideline isn't actually "fixing" your 401(k). They are primarily just competing on price." Isn't the price the key thing needing fixed?
- SilasX 10y ago
  On one level, yes. Excessive fees suck. Bidding them down is great! But it's not the core problem. The 401k system, as it stands, is designed around extremely confused envy. Rather than allowing workers good tax-advantaged options for their retirement, it aims to give them the same options as The Man who currently employs them, in all his mustache-twirling evilness, irrespective of that Man's complete ignorance about mainstream IRA advice. Did that otherwise-respectable business have an HR moron set up the plan, and not have index funds? Too bad. What does your retirement savings have to do with your current employer? Why should they be so tightly coupled? Well, no reason, but remember that envy above? The plans require that savings (sorry, "contributions") have some parity with those of highly-compensated employees of that same employer. A sane system would allow anyone the same (index fund) options as say, federal employees, and not care whether some arbitrary cross-section of workers at a particular employer are saving nearly the same amount. As long as we have these Byzantine rules that put you at the mercy of your current HR department and confusedly envious legislators, we're stuck with it -- that is the problem.
busque 10y ago
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.
- rsync 10y ago
  So you're saying that instead of (for instance) signing up with both Principal (who has the funds) and also TRA (who ... does something) ... a firm just signs up with you and it's a one-stop shop ? What is the total fee load for your plain old S&P 500 index fund ?
  - loeg 10y ago
    > What is the total fee load for your plain old S&P 500 index fund ? https://www.guideline.com/pricing https://www.guideline.com/pricing They're just Vanguard + 0.03% custodial fee. So whatever institutional version of VFIAX they can get + 0.03. Maximum 0.08% if they only get the retail investor version (0.05%), minimum 0.03%.
- JediPig 10y ago
  I am waiting on the hammer to fall on 401k. Here is the current situation. 401k is a horrible idea, and its a good way to funnel money from savers. After 2000 & 2008, do you really want to trust the same people who needed bailed out? Yet, 401k is using those institutions to do business with. 401k is a wolf in sheeps clothing. The next down turn, who knows, governments have been known to seize retirement funds. What happens if US Congress decides to do that to save the nation? Look whats happening in the world, it has already happened in the last year in other nations. My advice, stay out of 401k, put your money where it has intrinsic value, and not a number on a computer screen.
  - 10y ago
roger_lee 10y ago
I'm Roger Lee, the CEO of Captain401 (YC S15). We offer a robust 401(k) platform and investment advising service that also serves small businesses and startups. We're more comprehensive and our pricing structure scales more favorably for growing companies. We act as your outsourced HR team by taking care of all of the 401(k) setup, ongoing administration (including sync with all major payroll providers), IRS compliance, and employee support to save you time. It’s a great fit for companies looking to scale. If you have any questions, let me know! https://captain401.com https://captain401.com
- busque 10y ago
  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.

whack 10y ago

What does the plan-administration-fee look like at Vanguard? Minimizing this number seems to be Guideline's primary value proposition.

Someone1234 10y ago
Minimizing the number and actually TELLING you the number. Can anyone here even figure out what Vanguard charges? I cannot.
- deleted 10y ago
  [deleted]
- winter_blue 10y ago
  It $20 per year for an individual 401(k) account (commonly used by owners of small businesses).[1] One could assume the rates for regular employer 401(k)s are similar. That's slightly less than Guideline's 0.03% fee, for accounts with large balances. A $100k account would pay Guideline $30/year, and a $1mil account would pay $300/year. Although most Americans probably don't have that much in their 401(k)s. Considering a lot of people will have low balances, Vanguard and Guideline cost almost the same. I think the decision for a small business now comes down to just three factors: 1. Does Guidelines have a better website/app user interface, and better customer service? 2. Vanguard is a well-established company. Guideline is small and new. 3. From the business side of things, is Guidelines easier to work with compared to Vanguard? I.e. with things setting things up, adding new employee accounts, etc. I'd go with Vanguard just based on factor 2: because they're well-established and fairly trustworthy, and being investor-owned, they're not trying to profit off of their investors. [1] See: https://investor.vanguard.com/what-we-offer/small-business/individual-401k https://investor.vanguard.com/what-we-offer/small-business/i...

boulos 10y ago

Eh. The funds are actually held at Vanguard, so you could easily roll this over to them upon failure of Guideline (or even before). This all comes down to what your small employer can do.

busque 10y ago
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.

vwcx 10y ago

Your comment suggests that Vanguard is low-cost, which it is for the consumer in the form of low expense-ratios. But how do Vanguard's administrative costs stack up for the employer?

cylinder 10y ago

I find it insulting when I go to an employer and find they're using a high fee 401k. It just sends so many wrong signals. And then you ask HR what the fees are and they have no clue.

zdw 10y ago
In most examples I've seen, "Human Refuse" rarely has a clue about anything, other than how to get you fired for imaginary reasons.
- sctb 10y ago
  This comment violates the HN Guidelines (https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html). Please don't do this here.
harryh 10y ago
FWIW this tends to happen with smaller employers that are scrimping on administrative fees. I've found that the situation is generally improving though as people become more aware of what a great 401k plan should look like. I've also learned to not worry about it so much. You'll generally only stay at an individual employer for a few years. After that you can roll over a 401k into a low fee IRA held by Vanguard (or whomever you prefer). In the end a few years of high fees with a relatively small $ balance shouldn't negatively impact your returns too much. Of course if you're one of those rare folks who spends a decade or more with a single employer you might want to think about things here differently.
- snark42 10y ago
  > I've also learned to not worry about it so much. You'll generally only stay at an individual employer for a few years. After that you can roll over a 401k into a low fee IRA held by Vanguard (or whomever you prefer) You can also do a backdoor Roth conversion when you rollover your employer contributions (which can't be Roth contributions.)

mox1 10y ago

Can a small business just walk up to Vanguard and say, please give me an end 2 end 401(k) solution? With compliance, record keeping, etc? It was my understanding that they could not, but I could be wrong.

latortuga 10y ago
Yes[0] they do that and it is a bit pricey if you are quite small. We investigated them when setting up our 401k and found the fees to be a bit difficult to swallow for a 3 person company. [0] https://institutional.vanguard.com/VGApp/iip/site/institutional/clientsolutions/sdc https://institutional.vanguard.com/VGApp/iip/site/institutio...
- ac29 10y ago
  Our small company has a SIMPLE IRA through Vanguard. It costs $25/year (waived if you have $50k managed with them across any type of accounts) plus the mutual fund costs, which are very low. Almost no paperwork to get it started. Definitely worth looking into for small businesses.
  - loeg 10y ago
    SIMPLE IRAs have lower employee and much lower employer contribution limits than 401(k)s.
- Hannan 10y ago
  Any chance you can give a rough number on the costs you were quoted? The linked pages don't mention it at all, as far as I can see.

jimbokun 10y ago

"Guideline isn't actually "fixing" your 401(k). They are primarily just competing on price." Isn't the price the key thing needing fixed?

SilasX 10y ago
On one level, yes. Excessive fees suck. Bidding them down is great! But it's not the core problem. The 401k system, as it stands, is designed around extremely confused envy. Rather than allowing workers good tax-advantaged options for their retirement, it aims to give them the same options as The Man who currently employs them, in all his mustache-twirling evilness, irrespective of that Man's complete ignorance about mainstream IRA advice. Did that otherwise-respectable business have an HR moron set up the plan, and not have index funds? Too bad. What does your retirement savings have to do with your current employer? Why should they be so tightly coupled? Well, no reason, but remember that envy above? The plans require that savings (sorry, "contributions") have some parity with those of highly-compensated employees of that same employer. A sane system would allow anyone the same (index fund) options as say, federal employees, and not care whether some arbitrary cross-section of workers at a particular employer are saving nearly the same amount. As long as we have these Byzantine rules that put you at the mercy of your current HR department and confusedly envious legislators, we're stuck with it -- that is the problem.

busque 10y ago

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.

rsync 10y ago
So you're saying that instead of (for instance) signing up with both Principal (who has the funds) and also TRA (who ... does something) ... a firm just signs up with you and it's a one-stop shop ? What is the total fee load for your plain old S&P 500 index fund ?
- loeg 10y ago
  > What is the total fee load for your plain old S&P 500 index fund ? https://www.guideline.com/pricing https://www.guideline.com/pricing They're just Vanguard + 0.03% custodial fee. So whatever institutional version of VFIAX they can get + 0.03. Maximum 0.08% if they only get the retail investor version (0.05%), minimum 0.03%.
JediPig 10y ago
I am waiting on the hammer to fall on 401k. Here is the current situation. 401k is a horrible idea, and its a good way to funnel money from savers. After 2000 & 2008, do you really want to trust the same people who needed bailed out? Yet, 401k is using those institutions to do business with. 401k is a wolf in sheeps clothing. The next down turn, who knows, governments have been known to seize retirement funds. What happens if US Congress decides to do that to save the nation? Look whats happening in the world, it has already happened in the last year in other nations. My advice, stay out of 401k, put your money where it has intrinsic value, and not a number on a computer screen.
- 10y ago

roger_lee 10y ago

I'm Roger Lee, the CEO of Captain401 (YC S15). We offer a robust 401(k) platform and investment advising service that also serves small businesses and startups. We're more comprehensive and our pricing structure scales more favorably for growing companies. We act as your outsourced HR team by taking care of all of the 401(k) setup, ongoing administration (including sync with all major payroll providers), IRS compliance, and employee support to save you time. It’s a great fit for companies looking to scale. If you have any questions, let me know! https://captain401.com https://captain401.com

busque 10y ago
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.