This has sparked a renewed interest in education among 403(b)s.  Sponsors want to make sure participants understand the value of the retirement plan and what they are getting in return for fees paid. Disclosure is also an opportunity to reinforce that investment decisions should include ones retirement objectives and not solely be based on fees.

As a result, 403(b) sponsors have become very interested in one-on-one education to help participants through the process.  The Plan Sponsor Council of America's annual 403(b) survey underscores this interest:  more than 50 percent of 403(b) plans now offer employees one-on-one education meetings.   

But not all one-on-one meetings are the same and here is an opportunity for financial professionals.

Many 403(b) plans are used to the traditional one-on-one education model for 403(b) plans:    various service provider representatives sit in the cafeteria where they focus on selling their products to individual participants.  In very large organizations, the provider places a full or part-time representative on-site.  Although proponents of these approaches tout advantages of individual attention and choice, both models have historically produced lower participation and deferral rates, as well as a lack of consistent messaging.

Financial professionals can introduce 403(b) plan sponsors to a more modern approach using a single service provider.    

A modern one-on-one model

In the newer model, the employer develops an overall education strategy and consistent message. Using a single service provider helps ensure the message is delivered consistently, using a very disciplined approach.    Here is an example. 

Vail Valley Medical Center (VVMC) is a private hospital located in Vail, Colorado. As a tax-exempt organization with more than 190 physicians and over 700 professional and support staff, VVMC counts on its retirement program to help it attract and keep top employees.

Vail's financial professional, Darin Gibson president of Burnham Gibson Financial Group, Inc. in Irvine, CA, understood the client's concern that employees be as engaged as possible with the organization's retirement program and encouraged them to use a more effective model of one-on-one education. Beginning in February 2012, VVMC began using a service from their provider to make available to plan participants one-on-one meetings with salaried retirement professionals.

Held at the worksite on company time, the meetings allow participants to ask questions, share information and receive personalized action plans in a confidential environment. 

As of May 1, 2012, results at Vail include:

• Nearly 350 one-on-one meetings, which reached 47.8 percent of all participants.
• More than one-quarter of existing participants increased their deferrals.
• Almost fifteen percent of those who attended a meeting signed up for automatic deferral increases, compared to less than one percent of those who did not.
• The average deferral rate for those who attended a meeting is 8.2 percent higher than for those who did not attend a meeting.

Gibson calls these tremendous results. "I know my client feels better being able to provide these personalized meetings to help employees more fully understand the organization's plan, including the fee information."

We've found similar positive results when we looked at both 403(b) and 401(k) participants in retirement plans we service who attended a one-on-one meeting in 2011:

• 80 percent took positive actions, primarily increasing contribution rates and committing to ongoing automatic deferral increases
• Nearly 20 percent of one-on-one participants took action to automatically increase their retirement plan contributions compared to only 2 percent of participants who attended only a group meeting.
• One-on-one participants chose to increase deferrals on an average by one percent each year for five years.

We believe the success of the modernized on-on-one education approach is beginning to help shape the landscape for retirement readiness.

Financial professionals play a key role—especially in the 403(b) world where sponsors are still transforming their models and are hungry for guidance. They can add great value by paying close attention to the needs of the plan, and making sure the education programs are driving the results intended.