Work Underway to Restore 403(b) Relations

Last year destructive changes were made in the way teachers get financial advice and plan for retirement. Public school teachers have the option of paying part of their salary directly into 403(b) tax-advantaged retirement savings plans. School officials got tired of writing out checks to multiple insurance carriers, and decided they could reduce their workload if they only had to write out checks to a couple different insurance carriers.

This forced teachers/clients to leave their personal financial advisors to go with advisors mandated by the state. It had the effect of breaking up relationships that had been in place for years and forcing relationships with new advisors who may not have known what is in the teacher’s best interest. This has been particularly destructive in our current market climate, and transfers of plans have resulted in huge losses for some.

Yesterday, Senator Steve Warnstadt (D-Sioux City) and Representative Tyler Olson (D-Cedar Rapids) requested bill drafts in each chamber to repeal last year’s 403(b) changes. Senator Warnstadt warned that he could make no promises but was interested in hearing “horror stories” from disgruntled teachers.
The same is true regarding Representative Tyler Olson. He has already been contacted by TIAA-CREF and they are flying in a big player to meet with him.

Right now, CSG’s focus will be providing real life examples of damage that has been caused.

In addition, NAIFA (National Association of Insurance and Financial Advisors) will need to consider a fallback position should it become necessary. CSG will need to leave this to our team, but one suggestion would be to protect all relationships moving forward from this point. If the state changes carriers, the client would be able to retain his or her advisor.