October 09, 2009
--- With new 403(b) regulations effective 1/1/2009, sponsors of 403(b) plans are looking for help, creating a great opportunity for retirement plan advisers wanting to grow their business. ---
However, the 403(b) marketplace is very different from the 401(k) marketplace, and advisers need to know their stuff before diving into this new territory, a panel of experts at the PLANADVISER National Conference in Orlando, Florida, pointed out. David Hinderstein, president of Strategic Retirement Group, National Retirement Partners (NRP) member firm, who has advised organizations in the non-profit retirement plan space for 20 years, said advisers first need to know the history of the marketplace: depending on the market segment, many 403(b) plans have had minimal or no sponsor involvement and a multitude of vendors or investment options.
Hinderstein pointed out that an adviser's value proposition should be well defined because non-profits guard their money, typically stipulating its use it for the "greater good," such as educational programs and medical training or development, so advisers must be able to articulate why they are worthwhile addition to the budget.
An adviser absolutely has to show expertise when selling themselves to a potential 403(b) client, said Steven Dimitriou, Managing Partner, Mayflower Advisers. Advisers should show they understand the unique needs of 403(b) plans and show sympathy for the sponsors' situation in complying with new regulations.
Jon Prescott, chief marketing officer at CPI Qualified Plan Consultants, Inc., a recordkeeper that has opened common remitter and compliance services to K-12 and higher education plan sponsors, noted that many entities that sponsor 403(b) plans lack the staff, technology, or other resources to comply with new regulations and see them as an administrative burden, so advisers should show up willing to help.