Diana Buchbinder, Director of Organizational Development, The Exploratorium, whose organization converted from a 401(a) made up of employer contributions, to two 403(b)s, one for employer contributions and one for employee deferrals, said they were concerned about the psychology of the change for participants, so they included participants in the decision. Speaking to attendees at PLANSPONSOR’s 2 nd annual 403(b) Summit, she said the decision to move to a 403(b) offering was made because the organization was not pleased with its current 401(a) vendor and the new vendor offered The Exploratorium more services and offered participants more choices.
After asking participants to rate vendors, Buchbinder said her organization found participants were not happy either; they wanted more education and faster and more personal service. Once the decisions to change vendors and switch to 403(b)s were made, The Exploratorium tried to educate participants on why the offering would be better for them.
However, the change was not simple. Buchbinder said the down market made participants reluctant to move assets, and the existing vendor also resisted the move (see 403(b) Plans: The Prior Provider Hurdle ). Looking back, Buchbinder said her organization should have communicated its intentions with the existing vendor sooner and gotten expectations for the existing vendor agreed to in writing.
Buchbinder added that unions can also be big stakeholders in plan decisions, but sponsors should not approach them in a bargaining frame of mind, just include them in the choices. Make sure the unions know they cannot make decisions for non-union employees, she advised.
A client success story from David Hinderstein, President, Strategic Retirement Group, Inc., an NRP member firm, also included giving participants choices, and his client hired a vendor to educate participants and organize the choice process. He agreed with Michael Kozemchak, Managing Director, Institutional Investment Consulting, an NRP member firm, that having outside counsel for consulting on plan decisions is a good fiduciary process.
Kozemchak added that having a plan committee in place that meets regularly and having formal procedures in place for plan decisions and operations will ensure compliance with regulations and that the 403(b) is a good benefit for participants.
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