A recent LIMRA study found the higher education 403(b) segment is a $320 billion market, and health care 403(b)s represent another $165 billion, while there is $125 billion in K-12 403(b)s, Christopher M. Guanciale, Esq., of Plan Member Financial Corporation in Stow, Ohio, pointed out while speaking at the National Tax-Sheltered Accounts Association (NTSAA) 2013 403(b) Summit. The 2007 regulations were heavy for 403(b)s, and sponsors likely did not budget for it, he said.
Advisers should evaluate the landscape and determine what segment they can provide value for that will also be positive for their businesses. Keep in mind revenue can come from plan assets, as long as the method complies with retirement plan regulations. In addition, according to Guanciale, advisers may factor in eligible versus active participants and average account balances in their pricing. Advisers may also provide ancillary services to enhance revenue, such as 529 plan and long-term care plan sales.
The key is in presenting an adviser’s value to clients. Guanciale recommends being collaborative with clients; they are concerned about how much services will cost. Advisers should explain what they will do—help with plan design, benchmarking, serve as a fiduciary, etc.
“Bring something to the table,” Guanciale said. “Become an expert. Align with expert service providers.” Advisers should also have good internal resources and a good service model.
To develop a long-term relationship with non-profit clients, advisers should understand their missions and their needs, Guanciale advised. “Understand their donors; you may be expected to be one,” he added.“Do well by doing good,” he concluded. “Then you will be able to address the question ‘How do you expect me to pay for that?’”