Rule changes could open up 403(b) field

Oct 15, 2008 @ 12:20 pm

By Lisa Shidler

Advisers have a huge opportunity to win business in the 403(b) arena, but they must act quickly, a retirement expert said at a panel on the subject at the Center for Due Diligence’sconference in Scottsdale, Ariz.

Because 403(b) plans are facing new regulations Jan. 1, advisers have a unique opportunity to acquire these accounts, said Steve Smith, a vice president with Purchase, N.Y.-based Diversified Investment Advisors Inc.

As part of the new regulations, non-profit groups will be required to have plan documents in place and will be forced to pare down the providers. Many non-profit groups are still lagging behind and haven’t made the appropriate changes.

A 403(b) is a retirement plan for certain employees of public schools, employees of certain tax-exempt organizations.

Advisers need to realize that the 403(b) market is different from the 401(k) arena, Mr. Smith said.

“This is a very labor-intensive market, but it can also be very profitable. In this marketplace, you’ll find a lot of plan sponsors will look to you to be the expert,” Mr. Smith said.

Advisers should think carefully about what sector they want to specialize in the non-profit arena. Mr. Smith pointed out that K-12 school districts can often require a great deal of hand-holding, but there are also many opportunities in charitable organizations and hospitals.

He said that advisers need to be aware that many of these non-profit retirement plans have expensive funds and don’t have the proper documentation.

“This market has worked in the dark ages for many years and ignored rules and regulations,” Mr. Smith said.

The Center for Due Diligence is based in Western Springs, Ill.


What do you think?

View comments

Recommended for you

Featured video


Regulators' gloves are coming off with cybersecurity. Put up your dukes with these tips

Updated guidelines and some of the first-ever rule enforcements signal that regulators are getting serious about holding firms accountable for data breaches, according to special projects editor Liz Skinner and technology reporter Ryan Neal.

Recommended Video

Keys to a successful deal

Latest news & opinion

Advisers throw cold water on FIRE movement

Millennials love it, advisers don't: Turns out, extreme early retirement is a suitable goal for almost nobody.

10 universities with the most billionaire alumni

These 10 American schools have the greatest number of alumni who are billionaires.

Top-performing ETFs of 2018

The markets took a beating last year, but these exchange-traded funds bucked the trend

Morningstar says investors rushed the exits in 2018

Net flows into mutual funds and ETFs were the lowest since the 2008 financial crisis, while money-market funds captured inflows.

Widow awarded $4.2 million by Finra panel for theft by ex-Royal Alliance broker

The former broker, Gary Basralian, earlier pleaded guilty to theft and is facing up to 20 years in prison.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print