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Financial Advice Boosts 403(b) Outcomes: AXA Equitable

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AXA Equitable has released a new version of the white paper it uses to make the case that financial professionals can help teachers save more for retirement.

The New York-based financial services company commissioned the new white paper, and a new 403(b) plan participant survey, to substantiate the argument that financial professionals can increase how much teachers contribute to their retirement plans, teachers’ asset diversification levels, and teachers’ confidence in their ability to meet their retirement goals.

For the new survey and white paper, a firm polled 1,007 teachers, who taught grades kindergarten through 12th grade. Some of the teachers were enrolled in 403(b) defined contribution retirement plans and some were not. Some used financial professionals and some did not. About 12% of the participants who used 403(b) plans were in plans from AXA Equitable; the others were in plans from other companies.

The white paper team found that, among the survey participants who are in 403(b) plans, the financial professional users had a median account balance of $40,000, an average of 3.9 funds, and a $5,016 mean annual contributions.

The teachers who had access to financial professionals but chose to do everything themselves, without professional help, had a median account balance of $21,000, an average of just 3.4 funds, and a $3,372 mean annual contribution.

What Is a 403(b) Plan?

A 403(b) retirement plan is similar to 401(k) plan, but the 403(b) program is aimed at charities, public schools and other tax-exempt organizations.

Many 403(b) plan sponsors use group annuities to support the plan obligations.

Survey Details

An executive from AXA Equitable’s group retirement business wrote up the survey results with a team that included two other authors from AXA Equitable and Fred Gaudios of Zeldis Research Associates.

The AXA Equitable white paper team did not try to adjust the results for differences in teacher income, or provide data broken out by income level.

But the groups of 403(b) plan survey participants who have used financial professionals and those who have not “do not differ as a function of their age or tenure, suggesting these differences are truly due to the impact of a financial professional,” according to the white paper team.

AXA Equitable released a similar white paper and survey report in 2015.

(Related: Advisors Can Add 403(b) Value, Says Study)

In 2015, the AXA Equitable white paper team reported that, for their survey participant sample, the mean 403(b) plan contribution for the financial professional users was about $5,700.

For participants who had access to financial professionals but did not use the professional advice, the mean contribution was about $4,300.

Non-insurance advisors and money managers are often critical of advisors and providers that use annuities and other insurance products with 403(b) plans. In October, Nir Kaissar, an asset manager, wrote a column for Bloomberg that blasted annuity-based 403(b) plans.

— Read  Savings Plans Shortchange Public-School Teacherson ThinkAdvisor.

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