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403(b) Market Ripe for Plan Advisors?

According to a Cerulli report, advisors do have a significant share of the 403(b) market depending on the type of plan and organization.

Geography matters as well; advisors in certain areas, like the District of Columbia, have to go out of their way to not work with 403(b) plans. So which types of 403(b) plans work more with traditional advisors? Is this a market that advisors should consider?

First, let’s review the various types of 403(b) plans:


  • Health care

  • Higher education

  • Charitable and foundations

  • Religious

  • K-12


K-12s are non-ERISA plans and they started acting more like them after 2009 rule changes, though it’s still a very different market. As with 401(k)s, larger 403(b) plans require more sophisticated advisory practices and may even be limited to specialty firms.

According to Cerulli, the breakdown of advisor versus boutique shops covering various 403(b) plans is:


  • Health care — advisors 29%; boutiques 43%

  • Higher ed — advisors 13%; boutiques 38%

  • Churches, charities and research — advisors 38%; boutiques 25%

  • K-12 — advisors 50%; boutiques 25%


TIAA-CREF reports that half of all health care plans do not have an advisor, while only one-third of higher ed plans use an advisor or consultant. The 403(b) market is expected to grow to $1.8 trillion by 2018, a 30% increase from 2013.

As noted in a previous post, Are 403(b) Plans More Receptive to Financial Wellness?, 403(b) plans might be a great fit for plan advisors focused on improving outcomes, which is a growing trend among plan sponsors.

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