Uncommon Cents

I recently got my quarterly Vanguard statement [my 403(b) plan's administrator] and included in it was a newsletter with the exciting news: they’re going to start offering a brokerage option!

In short, a brokerage option lets a participant in a 401(k) or equivalent [like 403(b)] program use some of the money in the account for “self-directed” choices, meaning that funds (and perhaps even individual stocks and bonds) can be purchased through the plan. That can give the investor a much larger array of choices for their investments. For me, it means that I can finally dump that actively managed (but fairly, no load and very decently performing) international stock fund and get the Vanguard Total International Stock Index and possibly trade the Vanguard Total Bond Market Index for the Vanguard GNMA Fund (although these are pretty much interchangeable). According to the newsletter, 50% of my total account balance could be in the brokerage option program and I need to call to get an enrollment kit.

So I called.

And they’re not ready. Oh well, I’ll call next week.

Of course, this is not yet a done deal; I have no idea what expenses are involved, which could be a huge factor (although given that the funds I like are Vanguard and the brokerage house is Vanguard and Vanguard is known for their low fees, I doubt it will be a big deal), or if there’s any other issues I don’t know about. And for some, especially if they are offering the ability to buy individual stocks, this could be a rather large risk. But for the seasoned investor who knows what they want (and it’s not the funds that their plan offers), this could be a tremendous feature. I may yet get the portfolio I actually want!

And thankfully, they don’t offer a debit card…

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