Choose Your Own Adventure: Aspire Partners with Franklin to Create a New Green Rated Vendor Option

It also creates a Yellow and Red vendor

A new-ish 403(b) product is available in school districts where Franklin Investments is approved as a vendor. Historically, Franklin has only been available if purchased through a Registered Representative or an Investment Advisor Representative and thus received a Red rating from 403bwise.org (403bwise believes that participants shouldn’t be forced to use a middle person to access their 403(b) plan). While you can still obtain Franklin investments through the middle person route, the mutual funds are now also offered directly to participants via a new partnership with Aspire, a PCS Company. Franklin is an actively managed investment option (they do not at this time offer a set of index funds, but this might change).

There are three different options.

1. Commissionable

2. Fee-based (i.e. Investment Advisory Representative)

3. Direct to Participant

For those who want to use a broker, there is a commission option. We don’t believe a broker is necessary to invest in a 403(b) and this is why the option remains rated as Red. 

For those who want to pay an investment advisor (brokers are not advisors, thus why the fee-based option is separate from the commission option) to select among the investment options in the Franklin product, you can add that advisor for an additional fee and they will be required to act as a fiduciary (at least in respect to the investment recommendation, it may not be the case with other recommendations). This option does not have surrender charges and the advisor is not required, it’s simply an option. We are rating this option as Yellow. We rate Yellow because you are not required to use the advisor, it’s simply an option that can be added or removed at any point.

As mentioned, you do not have to have an advisor to gain access to this product. This is a new feature of the Franklin/Aspire partnership. For those who want access to the Franklin investment lineup, they can do so while using the second lowest cost share class offered by Franklin and with no additional asset based fee, just a $30 annual fee. We are rating this Franklin option Green Minus.

What follows is a quick synopsis of the Direct to Participant, Green Minus rated version of the Franklin/Aspire product:

• Utilizes the Advisor/I share of funds. This share class has an average expense ratio reduction of 25% compared to A share. Only the R6 share class costs less.

• The annual fee is $30/year.

• No asset based fee.

• Compliance administrator fees are passed through to the participant, if applicable. 

• The following asset managers (all Franklin owned/affiliated) are available: Franklin, Templeton, Western Asset, ClearBridge, BrandywineGLOBAL, K2, Martin Currie are all available. Putnam and Royce will be available soon.

• Roths now available, plan permitting.

• Loans now available, plan permitting.

• Target date option is 0.45% and is actively managed.

• 457(b) option likely available soon.