Though the for-profit DC market is still rich with opportunities for experienced plan advisors, some advisors in the mid market are seeing increased competition. Many plan advisors shy away from the education market because of different rules and different ways that these plans operate. But according to a recent report by Transamerica, "Retirement Plans for Institutions of Higher Education," the time may be ripe for the education retirement market.
Higher education institutions are looking to consolidate providers to save money and be more efficient, and perhaps limit liability as well. While most plans had used multiple providers 5 to 10 years ago, 52% now use a single vendor. And while plans had historically offered almost unlimited investment options, today there are just 21 investment choices on average.
ERISA 403(b) plans act mostly like 401(k)s, though there is a difference in the ways that these plan sponsors view retirement plans and their employees in general. Non-ERISA 403(b)s have become more like 401(k)s too, as rule changes effective in 2009 have caused more plan sponsors to go to single vendors. The problem was that the assets did not flow into the sole-sourced provider immediately. The so-called ”common remitter” plans may be more attractive — not just because assets may have built up after four years, but also because there is less competition.
