Time to Come Together

The progress that has been made over the last 10 years with participation in the 403(b) market can be attributable to two factors: school districts willingness to provide additional opportunities for the education of their employees and the advisor community’s creativeness in marketing. 

The level of education that has been provided to participants has not only helped increase participation, but has also helped educate the educators on the importance of diversification and asset allocation—which along with strong equity markets, has moved the needle regarding retirement readiness. Several advisors I have spoken with who have been in the industry for over a decade have been pleasantly surprised with a much larger percentage of new and existing participants who are showing a greater concern over topics such as: 

• retirement readiness;
• understanding their state pension plan;
• potential Social Security benefits; and 
• the type of 403(b) in which they should be participating.

Amid all of the progress that has been made in the last several years, as is the case for other industries, the pandemic has tapped the brakes on the progress. The ability to meet face-to-face in schools has come to a halt, and although firms and advisors have shifted quickly to a virtual approach, it hasn’t had the same effect—especially in the absence of school districts’ support.

A possible solution may lie in working more closely with the school business officials and unions, who in the past have steered clear of working closely with advisors. Both of these groups have a strong interest in providing quality information to their employees regarding all of the benefits that are available, which has opened a door to work more effectively with the benefit vendors.

It may also be time for the advisor community to step outside the box too. For years, school districts have been unwilling to provide one advisor or firm priority access to their employees, but when we begin to understand that this is about the employees and not about you, working together with other advisors and firms may be a better alternative than having no access at all. When you consider that the participation rate in the 403(b) program is 27% nationally, there are plenty of employees to go around. 

There are numerous examples of strengthening relationships with school business officials and improved access to the employees as a result of working together, even during the pandemic. The increase in participation through joint efforts to provide straightforward education on topics such as an employee’s state pension, retirement and Social Security planning has been considerable. The Certified Retirement Education Specialist (CRES) designation sponsored by the NTSA is becoming a standard in the advisor community and has been widely used on both an individual and joint presentation basis. This program which provides a toolkit of generic presentations and useful education material has gained significant traction in the TPA and advisor community; we believe that this program will continue to gain traction through broker dealer and advisor acceptance. 

We have a retirement pandemic and it’s time for the advisor community and school business officials to come together and provide the information necessary for their employees to make the educated decisions necessary to plan for a comfortable retirement.

For more information on the CRES program, please visit https://www.ntsa-net.org/professional-development/certified-retirement-education-specialist. 

Paul Prete is Director of Advisor Relationships at PenServ Plan Services. He is a member of the NTSA 2021 Leadership Council.