Fiduciary Focus: A Glimpse into 403(b) Plan Trends

Seventy percent of 403(b) plan sponsors are aware of the Department of Labor’s fiduciary regulatory package, but that number drops to less than 50 percent among small plans, according to the latest 403(b) Snapshot Survey from the Plan Sponsor Council of America (PSCA) and sponsored by the Principal Financial Group®.

In addition, the survey shows that 40 percent of all plan sponsors feel their plan service provider(s) act in a fiduciary capacity, while 50 percent say their plan advisor is not a fiduciary.

“Though the impending Department of Labor fiduciary regulatory package has certainly raised awareness of fiduciary responsibilities, plan sponsors who are unsure of their role—especially those small organizations—should review their plan governance processes with their service providers and advisors,” said Hattie Greenan, PSCA’s director of research and communications.

Plans for change
When asked what changes they’ve already made or plan to make due to the DOL fiduciary regulation, 24 percent plan to either hire an advisor to act as a fiduciary or change from a non-fiduciary advisor to a fiduciary advisor.

Other plans for change include:

• changing their investment line-up (19 percent)
• re-evaluating the plan’s governance structure (15 percent)

The majority (59 percent) plan to make no changes.

“This environment strongly suggests that all plan sponsors work with advisors to understand the various fiduciary roles and how responsibilities are fulfilled,” said Aaron Friedman, tax-exempt national practice leader at Principal®. “It will be a collaborative industry effort among advisors, plan sponsors and service providers.”

PSCA’s 2016 403(b) Snapshot Survey reflects responses from 281 not-for-profit organizations that currently sponsor a 403(b) plan. For more research, analysis and insights from Principal, visit the Principal Knowledge Center and connect with us on Twitter.

About the Plan Sponsor Council of America
The Plan Sponsor Council of America (PSCA) is a diverse, collaborative community of employee benefit plan sponsors, working together on behalf of millions of employees to solve real problems, create positive change and expand on the success of the employer-sponsored retirement system. With members representing employers of all sizes, we offer a forum for comprehensive dialogue. By sharing our collective knowledge and experience as plan sponsors, PSCA also serves as a resource to policymakers, the media and other stakeholders as part of our commitment to improving retirement security for millions of Americans. For more information, visit www.psca.org.

About Principal®
Principal helps people and companies around the world build, protect and advance their financial well-being through retirement, insurance and asset management solutions that fit their lives. Our employees are passionate about helping clients of all income and portfolio sizes achieve their goals – offering innovative ideas, investment expertise and real-life solutions to make financial progress possible. To find out more, visit us at principal.com.

Hattie Greenan and PSCA are not an affiliate of any company of Principal Financial Group.

Principal, Principal and symbol design and Principal Financial Group are trademarks and service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.

©2016 Principal Financial Services, Inc.

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