New regulations that are shifting the 403(b) market from highly individualized and retail-focused to one that is more efficient and institutionalized present new opportunities for advisors, third-party administrators (TPAs), and investment-only asset managers, according to new research by Cerulli Associates.
The regulations, issued by the U.S. Treasury Department and the Internal Revenue Service in 2007 and that became effective in 2009, require 403(b) plans to more closely mirror 401(k) plans. Cerulli notes that 403(b) segments, such as healthcare, are moving toward a single provider and will more closely resemble a 401(k) plan than other 403(b) market segments like the K to 12 education market, which continues to have multiple providers.
Cerulli's research, which is available in its latest quarterly retirement-focused publication, also highlights the significant growth the 403(b) industry is experiencing. In 2010, 403(b) assets totaled $750 billion, surpassing the industry's previous high of $734 billion in 2007, Cerulli says. By 2016, Cerulli projects the 403(b) market will hit $1 trillion in assets under management.
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Melanie Waddell
Melanie is senior editor and Washington bureau chief of ThinkAdvisor. Her ThinkAdvisor coverage zeros in on how politics, policy, legislation and regulations affect the investment advisory space. Melanie’s coverage has been cited in various lawmakers’ reports, letters and bills, and in the Labor Department’s fiduciary rule in 2024. In 2019, Melanie received an Honorable Mention, Range of Work by a Single Author award from @Folio. Melanie joined Investment Advisor magazine as New York bureau chief in 2000. She has been a columnist since 2002. She started her career in Washington in 1994, covering financial issues at American Banker. Since 1997, Melanie has been covering investment-related issues, holding senior editorial positions at American Banker publications in both Washington and New York. Briefly, she was content chief for Internet Capital Group’s EFinancialWorld in New York and wrote freelance articles for Institutional Investor. Melanie holds a bachelor’s degree in English from Towson University. She interned at The Baltimore Sun and its suburban edition.
