I recently moderated a panel discussion at the LIMRA Retirement conference in Chicago. While it was an interesting discussion, the most engaging conversation took place afterwards with my co-panelists – other practitioners in the tax-exempt retirement plan space.
We all agreed that private higher education is the current emerging trend opportunity for advisors and providers, and it’s a topic I’ve previously written about. We also discussed the single biggest challenge to successfully implementing a change strategy for 403(b) plans in higher education institutions: resistance from the faculty.
The fact of the matter is that people are resistant to change. There are lots of business books out there to help people cope with and accept change in a business environment. I can readily think of one that features mice in a maze chasing after food. All cheese aside, one common theory about getting people to accept change is to make them a part of it.
Many faculty come from long family experience of only saving for retirement one way – the same lesson plan of following the typical 403(b) retail model and working with several providers to provide annuity and mutual fund options. The results? Burdensome administrative practices and confusing fiduciary roles. They are unaware that there are other options.
The first step in a proper review is to put responsible fiduciary review committees together. Secondly, assign separate committees to review plan design, administrative needs, educational needs and policies, and investment needs and policies. The simple solution – and common thread that needs to be sewn into the process – is that faculty must be on these review committees. It cannot simply consist of administration.
We’re talking about extremely talented and intelligent people here. When the faculty is part of the review, archaic views give way to modern plan designs and new approaches. When the committee faculty members both buy in to change and drive the decisions, then so do their peers – there’s nothing like a little peer pressure. And there’s something intriguing about teaching educators some new ways to look at 403(b) plans.
In addition to blogging here, I also tweet regularly about topics of interest to Tax Exempt plans. Follow me on Twitter: @1aaronfriedman1.
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