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

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

Too Many 403(b) Vendors 😤😩😱

February 23, 2021

Thanks to a financially savvy choir teacher, Scott and I did a saving for retirement presentation this week via Zoom for her colleagues in the Chaffey Joint Union High school district in San Bernardino, CA. 

Our Presentation

  • Importance of supplementing a pension
  • Not all teachers contribute to Social Security (California teachers do not). 
  • Side-side comparison of the 403(b) and the 457(b)
  • Investment costs matter. A lot.

Vendor Choices

We also shared the 403(b) and 457(b) vendor choices available to the attendees. Employees in the Chaffey Joint Union High school district have 42 403(b) vendors. Let me say that again: School employees in the Chaffey Joint Union High school district have a mind-numbing 42 403(b) vendors; 39 of which are “Not great, Dan” as my podcast partner Scott Dauenhauer, CFP, would say (borrowing the Pod Save America understatement catch phrase. You can see the entire list below. 

Three Diamonds

Granted, the district does offer three investing gems...

  • CalSTRS Pension2 (low-cost provider run by state pension agency)
  • Fidelity Investments (low-cost mutual fund company that is not American Fidelity Assurance Company)
  • Vanguard (low-cost mutual fund company that pioneered index investing)

Sound of One Hand Clapping

Unfortunately, pre-service teachers are not taught about the 403(b) and saving for retirement in their teacher certification programs. Few school districts provide this kind of education. Many more outsource “education” to the likes of the 39 not great choices. So most school employees opt for the high-cost plan peddled by the sales agent who frequents the staff lounge (pre pandemic) and the email inbox (during Covid) 

California Has Huge Vendor Lists

The district in the city I live — Redlands Unified —  has the identical 403(b) vendor list as Chaffey Joint Union High. San Francisco Unified and Los Angeles Unified also have large lists. But why?

Why Does California Have Huge Vendor Lists?

In 1969 California legislature created a 403(b) program for employees of the Department of Education serviced by a single broker (Smart. We all know that single vendor plans are generally low cost with a focus on plan education over product sales). In 1974, mutual funds were permitted in the 403(b). Whoops. I skipped over something. In 1970 the California insurance industry rammed through legislation banning school districts from putting their 403(b) plans out to competitive bid (no more single vendor). Insurance code 770.3, also known as the “any willing provider” provision, opened the floodgates on high fee, sales agent driven 403(b) products. 

The above comes directly from a story I wrote for our old .com site (403bwise.com) called Elephant in the Room which describes the myriad of problems this arcane insurance code creates for California school employees. It also offers what I call the Starsky & Hutch solution. 

I’ll add one more solution: Have Scott and I do a presentation for your employees. You can request a free presentation here

Related Stories

Chaffey Joint Union High 403(b) Vendor Choices

  • AIG Retirement Services
  • American Fidelity Assurance Company
  • American Funds Distributors, Inc. (AFD)
  • American United Life (AUL), a OneAmerica Financial Partner
  • Americo Financial Life and Annuity Insurance Company/Great Southern Life Insurance Company
  • Ameriprise Financial Inc.
  • Brighthouse Financial
  • CalSTRS Pension2
  • CTA Voluntary Retirement Plans for Educators, LLC
  • Equitable Financial Life Insurance Company
  • Fidelity Investments
  • Franklin Templeton Investments
  • Global Atlantic Financial Group
  • GWN Securities, Inc
  • Horace Mann Investors, Inc.
  • Horace Mann Life Insurance Company
  • Industrial-Alliance Pacific Life Ins Co, US Branch
  • Invesco (formerly OppenheimerFunds)
  • IPX (FPS Group)
  • Lincoln Investment, LLC
  • Lincoln Nat'l Life Ins Co (Lincoln Financial Group), The
  • MassMutual, through its subsidiary, C.M. Life Insurance Co.
  • Metropolitan Life Insurance Company
  • Midland National
  • Modern Woodmen of America
  • National Life Group through member company Life Insurance Company of the Southwest
  • Nationwide Life Insurance Company
  • New York Life Ins. & Annuity Corp.
  • North American Company for Life and Health
  • Orion Portfolio Solutions (Formerly FTJ FundChoice LLC)
  • Pacific Life Insurance Company
  • PFS Investments Inc
  • PlanMember Services Corp
  • Putnam Investments
  • Security Benefit
  • Thrivent Financial AKA Thrivent Financial for Lutherans, Thrivent Mutual Funds
  • Transamerica Life Insurance Company
  • USAA Life Insurance Company
  • Vanguard Group, The
  • Voya - ReliaStar Life Insurance Company
  • Voya Retirement Insurance and Annuity Company
  • Waddell & Reed, Inc


Stay wise and well (and visit the fee transparency website 403bcompare).

Related Podcast:

Too Many 403(b) Vendors Dan and Scott talk 457(b) video news and California's huge 403(b) vendor lists. Listen Now »