I have food allergies. Since I’ve gotten used to not having certain things in my diet, it’s more of an inconvenience than a problem. I can eat out, but I always have to give explicit instructions to the server. I used to work with a guy who called me “high maintenance.”
I was reminded of this during our recent national distribution conference. At dinner, I had the pleasure of sitting at the table of one of our field offices, with several people I had never met. After I had given instructions to the server, the woman sitting next to me brought up that “high maintenance” term again. Well, maybe I am.
This also calls to mind another area sometimes considered “high maintenance.” It’s a reason we hear occasionally from financial professionals as to why they don’t want to branch into the 403(b) plan space.
I realize that many people in the industry focus on how 403(b) plans are different than their 401(k) counterparts. Even some of my posts have covered legacy assets, education challenges, third party administrators, etc. The reality is that there are differences, but not enough that should overwhelm a financial professional and prevent him or her from getting into this market.
While it is true that retail, non-ERISA 403(b) plan arrangements are very different, an employer sponsored, ERISA 403(b) plan is very much like the 401(k) plan that financial professionals know very well. Sure, there are some nuances, but the overall structure and approach is the same. You need a plan document that describes the terms of the plan, designed to meet the needs of the plan sponsor to attract and retain employees, balanced with the cost. Investment options need to be chosen and monitored, employee education must be performed, and administration is required including record keeping, compliance testing, Form 5500s and audits.
Many 401(k) plan financial professionals have already capitalized on the opportunity in the 403(b) market by leveraging their 401(k) plan skills, and being able to distinguish themselves by being savvy in the dynamics that make a 403(b) plan a little different. The market opportunities continue to exist for financial professionals. It pays to look past “high maintenance” impressions – you might like what you see on the retirement benefit menu.
So, what opportunities have you been seeing in the 403(b) plan space? Share your thoughts in the comments.
Friedman is the tax-exempt national practice leader with the Principal Financial Group, an investment management and retirement leader. A noted expert on 403(b) plan design, he has been consulting with tax-exempt organizations for over 20 years and has been in the retirement plan business since 1986. This blog originally ran on The Principal blog. Follow Aaron on Twitter @1AaronFriedman1
Insurance products and plan administrative services are provided by Principal Life Insurance Company. Securities are offered through Princor Financial Services Corporation, 1-800-547-7754, member SIPC and/or independent broker dealers. Securities sold by a Princor® Registered Representative are offered through Princor. Princor and Principal Life are members of the Principal Financial Group® (The Principal®), Des Moines, IA 50392.
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