Advisors Set to Capitalize on 403(b) Market's Growth, Cerulli Says

The firms that can accommodate the changing needs of the various 403(b) market segments and capitalize on the market’s growth, Cerulli says, include:

• Advisors: As the retail relationships between advisors and participants in the 403(b) space diminish, opportunities are being created for more 401(k)-like retirement specialist advisors who act as plan fiduciaries.
• Asset Managers: As 403(b) plans become more single-plan-provider- and ERISA-based, they will also be more open architecture, enabling IO asset managers to grow their DCIO businesses.
• TPAs: As more 403(b) plans become ERISA-based (during the past five years the percentage of ERISA 403(b) plans has increased from 17% to 40%), plan sponsors will continue to need help with the regulatory responsibilities, creating opportunities for TPAs with capabilities to accommodate the unique needs of this market. 

In related news, the National Tax Sheltered Accounts Association and The American Society of Pension Professionals & Actuaries recently announced the formation of an industry task force dedicated to increasing transparency in the 403(b) marketplace.

The focus of the task force is the creation of national fee and services disclosure standards to increase transparency within the 403(b) market. Partners include the National Education Association, the Association of School Business Officials, International, and members of the tax shelters accounts association with diversity of industry experience.

The groups say the taskforce is creating a model disclosure form that will give 403(b) participants—including teachers and other school district staff—the ability to make apples to apples comparisons between their 403(b) retirement plan options. The model disclosure form will provide public school employees with simple and clear information about the services and fees associated with their retirement plan options.