Morningstar - Q2 2020 - 87

annual rebalancing. "Focus on the cost and
diversification," Isola says. "The returns will take
care of themselves."
Going Direct

Isola is a big fan of Vanguard's Admiral shares-
a suite of mutual funds in domestic and
international equities and bonds. To get teachers
access through their 403(b)s, he uses two
approaches. One is by using Aspire, a provider
that offers Vanguard funds and has a large
footprint in K-12 schools. The other is by working
directly with Vanguard, which has a 403(b)
platform it markets to schools but doesn't yet have
a critical mass in the market.
Both methods allow Isola to keep fees low
while providing financial advisement to his clients.
The maximum Vanguard fund fee is 0.07% of
assets annually, plus a yearly $65 administration
fee per account. He charges his clients a yearly fee
of 0.4% of assets, giving his teacher clients
an all-in cost of 0.47% with this setup compared
with 0.62% if he uses Aspire. Either way, the
overall fees significantly undercut annuities that
charge 2% or more annually.
The challenge is getting into the schools to
spread the word about Vanguard's low-cost option.
It would seem like an easy sell, but many
schools are resistant to change, Isola says. While
Vanguard is available to 403(b) participants
in a lot of institutions, teachers often instead just
sign up for the expensive annuity contracts.
"Who's in the schools?" he says. "It's all of the
annuity salespeople."

Tony Isola, CFP, head of the educator/403(b) division,
Ritholtz Wealth Management.
How he caught our eye: Working to change the
high-cost 403(b) industry to help public school
teachers save more for retirement.
Career path: Studied economics at Boston University
and worked as a currencies trader on Wall
Street. He left finance in 1992, got a master's degree
in education from Hofstra University, then taught
history and social studies at schools in Far Rockaway,
N.Y., and Stony Brook, N.Y. While teaching, he decided

to become a financial advisor. In 2003, he became a
Registered Investment Advisor and started his practice
with his wife, Dina. In 2015, the Isolas partnered with
Ritholtz Wealth Management.
Personal: Lives and works in Stony Brook, N.Y.
Married, with twin boys, age 17. Loves gardening,
especially wildflowers, and attending his sons'
sporting events. Watching the New York Yankees and
New York Giants "can sometimes be pleasurable
activities," he says.

There's a lot of work to be done to crack an
entrenched market, but with Vanguard at his back,
Isola sees a disruptive force taking shape.
"There is no one attempting this on this scale,"
Isola says. "We have a chance to make some
headway. The more that people could be aware of
this, the more momentum we'll have."
And the more teachers and others will be able to
rid themselves of costly financial products in their
403(b)s and save more for retirement. K
Charles Keenan is a freelance financial journalist.

Favorite funds: Vanguard Admiral shares.

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