Hi from Herb in sunny/warm Massachusetts

[HerbS]

I'm new to this site so pardon me if my question seems basic.

I have a 401K in my office that just moved from ING to John Hancock. I just rebalanced my account into 6 different mutual fund choices. What I have difficulty with is that John Hancock uses units and not mutual fund prices. I've tried to track my funds with a google finance portfolio but they tell me at John Hancock it's not accurate since the google finance reports fund shares.

How is that transparency?

 

[friar1610]

I wonder if what you may have is an annuity (since John Hancock is an insurance company.) There are some subtle differences between mutual funds and the "portfolios" contained in variable annuities.

 

[freebird5825]

Welcome Herb

I did a little digging around at the John Hancock site, and found this list of funds with NAV data. Hope it helps.

John Hancock Funds - Mutual Funds - Daily Prices

 

[HerbS]

As an example...on 12/22/10 I rebalanced my 401k and one of the mutual funds I selected was Oppenheimer Developing Markets ODVYX. On the website (url is www.jhancockpensions.com) it reports the trade with a unit value of 66.515 x number of units at 157.848 = $10,499.20.

I tried to setup google finance to see the value of my 401k and it reported a share price for this mutual fund of $35.22 on 12/22/10.

Why is John Hancock using unit values of 66.515 as opposed to share values of $35.22? Maybe I'm skeptical...but it makes you wonder why they do this. I posted this question on the JH website and got "a canned answer" that didn't satisfy me at all.

 

[RonBoyd]

I posted this question on the JH website and got "a canned answer" that didn't satisfy me at all.

How did they explain it?

 

[HerbS]

see cut and paste below- canned email....

When contributions are allocated to Funds under your employer's group annuity contract with John Hancock, they will be held in a sub-account (also referred to as "Fund"), which invests solely in shares of the specified underlying mutual fund. The ticker symbols shown are for the underlying mutual funds in which sub-accounts are invested. The ticker symbols do not directly apply to the John Hancock sub-account and therefore any public information accessed using these symbols will not reflect the unit value of the sub-account, nor will such information reflect sub-account or contract-level charges under your plan's group annuity contract.

 

[RonBoyd]

see cut and paste below- canned email....

Oh! I see what you mean. That is very unhelpful... mumble jumble. I, too, would be suspicious of deception after reading that.

 

[REWahoo]

When contributions are allocated to Funds under your employer's group annuity contract with John Hancock...

As friar1610 says in post #2 above, the mutual fund shares held within a variable/equity indexed annuity are different from those on the open market. It is unlikely you will be able to accurately track the changes in the values of these funds.

 

[RonBoyd]

The "deception" I was referring to involved the OP's belief that he was invested in Mutual Funds and that "annuity" is a new (and unexpected) development.

 

[REWahoo]

I think I'd have some questions for my plan administrator about all this. I didn't think 401k money could be "invested" in an annuity while you were working and contributing.

 

[HerbS]

I'm sure these are mutual fund choices I selected. When you view the investment options on the JH website it drills down to a listing about the fund. Here is the drill down for ODVYX

Oppenheimer Developing Markets Fund21,56

Investing solely in Oppenheimer Developing Markets Fund (Class Y) Managed by OppenheimerFunds, Inc.

Ticker Symbol+: ODVYX

​

I just think they should be required to compute investment values using share prices so the investor knows what they are getting. There are expense factors that clearly should be disclosed.

 

[friar1610]

I think I'd have some questions for my plan administrator about all this. I didn't think 401k money could be "invested" in an annuity while you were working and contributing.

Quite a few years ago I was on a committee for the small company I worked for to try to find a better 401K plan than the one we had. We had a few providers in to give us their pitch. One of them - forget who - was pitching an annuity. As I looked into it, I learned that the 401K aspect of the investment trumped the annuity aspect. So, yes, you can have an annuity in a 401K or 403B plan. But it makes no sense because you don't need to pay the (higher) costs associated with annuities to get the tax deferral - you've already got that because it's a 401K. In my view, companies who get sold on annuity plans for their retirement plans are not looking out for their employees.

 

[HerbS]

I had an awful experience with our last 401k provider that I'll leave nameless. To get my maximum deduction I gave them a year end check for $20,000. It was sent in with a form they provided asking them to stick the entire amount in their money market account and not the mutual fund allocation I had set up before the market tumbled.

Several weeks after my check was deposited I went to the website our 401k provider had given our office and saw they had totally disregarded my investment direction and had instead applied the money to my mutual fund allocation. Needless to say the $20k investment tanked.

The answer I got was that they received the form I sent but it was "the wrong form". No outbound phone call to tell me they could not act on my investment, no letter to me asking for a new form. Their arrogance was startling.

I called the SEC and the attorney general in Massachusetts. Our plan administrator was of no help and wished me good luck. It took me months but I won my case with the attorney general and was sent a settlement check for between $3k and $4k. Bottom line...it took 10-20 hours on my part sending countless emails and making follow-up phone calls.

I got so many people in our office riled up that we moved our office 401k to John Hancock.

I no longer trust financial institutions.

 

[obgyn65]

Welcome to the board, HerbS.

 

[nancyp]

I'm sure these are mutual fund choices I selected. When you view the investment options on the JH website it drills down to a listing about the fund. Here is the drill down for ODVYX

Oppenheimer Developing Markets Fund21,56

Investing solely in Oppenheimer Developing Markets Fund (Class Y) Managed by OppenheimerFunds, Inc.

Ticker Symbol+: ODVYX

​

I just think they should be required to compute investment values using share prices so the investor knows what they are getting. There are expense factors that clearly should be disclosed.

Hi Herb, I too have the same issue with John Hancock and the very same account..the oppenheimer. Do you have any updates or any simpler explanations on why the unit costs varies so much from the actual share price?

 

[SecondCor521]

FWIW, I had a similar situation in the 401k at my last big company. However, in that particular case I trusted the employer, the 401k administrator, and the mutual fund involved, and everything was handled properly.

In my case, it was termed a unit investment trust. Let's say I put $100 in my 401k. My employer would transfer that $100 into the unit investment trust. Based on the amount of money that the employees had put in and the original unit investment trust price, maybe my $100 buys two shares of the UIT, so the UIT price is $50. The UIT then turns around and uses that $100 of additional capital to buy perhaps 4 shares of the mutual fund at a price of $25 each.

A similar process happens with dividends. If those four mutual fund shares spit out a dividend of $5, then I would own 2.1 UIT units x $50 = $105.

In other words, if everything is on the up and up, the unit price divided by the share price should remain constant over time. So in your case, it looks like that number is a little bit under 2. So if you compare the change in price of the mutual fund (available publicly anywhere) to your unit price, you should see the latter be slightly less than double the former over any given time period. (The number won't be precisely exact because MF share prices are rounded to the nearest penny and your UIT is probably rounded to 1/1000 of a share.)

I can understand how them messing up your contribution would cause suspicion about all things. I hope they're on the up-and-up with respect to the other thing.

2Cor521