403bwise is a 501(c)(3) nonprofit organization.

The K-12 403(b) is broken.
Together we can fix it.
Dan's Blog

The NTSA Released a 403(b) Plan Enhancement Guide 😱

September 11, 2019

The NTSA is predominantly a lobbying arm for vendors and commission-based sales agents selling high-fee 403(b) products to K-12 teachers. You can read the organization’s self description here. Notice that there is not one mention of teachers, school districts or their interests. However, in order to continue to access this lucrative market, the NTSA has to behave as if it cares about teacher saving outcomes. So when the organization puts out “education” guides, “research” reports, and other material, its goal is to advance the interests of sales agents. It is not to serve the financial interests of teachers and school districts

A Glass .2713 Full

NTSA’s latest effort to curry favor with teachers and school districts is a document called the “403(b) Enhancement Guide.” Sounds like somebody is compensating for something! On the surface the NTSA lays out a few solid ideas (automatic enrollment, match programs and retirement education programs). These are concepts 403bwise has been advocating for years. The big problem with this publication, however, can be found on page 3. This is where the NTSA cites a previous piece of its own propaganda, a 2018 “study” which extols the virtues of a multi-vendor environment. Sigh. What’s telling is the box to the right listing the current national K-12 403(b) participation rate: 27.13%. The K-12 403(b) has been mired in a multi-vendor environment for almost its entire 61 year history and the savings rate is only 27.13%. The only thing the misguided multi-vendor environment enhances is fees, sales agent bonuses and participant confusion. 

The NTSA is also pitching something called The NTSA Certified Retirement Education Specialist (CRES) Advisor (page 11). The NTSA states that these non fiduciaries stand ready to “teach employees of your school district.” The organization proclaims the “Advisors” are vendor neutral. But you know what else is vendor neutral? An organization that pushes competitively bid single vendor plans serviced by fiduciary advisors. 

Et Tu, Apple Computer?

I have written it before and I’ll write it again: If the multi vendor approach was a best retirement plan practice the private sector would adopt if for the 401(k). Apple Computer has one 401(k) vendor while Redlands Unified School District in California has 44 403(b) vendors (!), the overwhelming majority of which are high fee insurance products pushed by sales agents. 

The Sound of One Hand Clapping 

In closing, I salute the NTSA for promoting automatic enrollment, match programs and retirement education, but to have real value these features work best in a competitively bid single vendor plan. At a minimum, the NTSA could promote the idea that all school employees should have access to at least one quality, low-cost plan. The danger for them is that this would invariably lead to scrutiny of the myriad of bad actors that would continue to litter 403(b) vendor lists.

For decades the tobacco industry was propped up by “research” from the Tobacco Institute. That all came crashing down in the 1990s when it became clear how toxic smoking is to health. High fees are just as toxic to savings balances. The public and attorneys are catching on to this. At some point, a majority of teachers and school districts are going to get wise to what NTSA is selling. It would be nice if NTSA got there first.