The latest review of 403(b) plan sponsors shows many non-profits could be unintentionally be shirking fiduciary best practices.
Only 60 percent of sponsors are reviewing investment options in plans, according to the Plan Sponsor Council of America's annual review of 403(b) plans.
And only 40 percent of smaller plans (1 to 49 participants) are reviewing investments, an action considered by ERISA experts to be fundamental to fiduciary responsibilities.
Recommended For You
While 70 percent of all sponsors did say they are reviewing fees in investments themselves, 20 percent said the responsibility to do so falls to recordkeepers, and more than 9 percent of sponsors said no one is reviewing fees.
A press release issued by PSCA said 64 percent of large plans are receiving assistance from "investment consultants," but the study did not breakout what classification of consultant were servicing sponsors—RIAs, broker-dealers, or accountants, for instance.
Smaller plans are often going it alone, or operating under the presumption that record keepers can cover all fiduciary grounds: only 18 percent of small plans are engaging an investment consultant to help evaluate plan investments.
Half of 403(b) sponsors said they have an investment policy statement, and only 36 percent of small plans do. IPSs are widely regarded as a fiduciary best practice, though they are not required under the Employee Retirement Income Security Act.
As is the periodic issuance of a requests for proposals to recordkeepers.
But only 40 percent of sponsors say they issue periodic RFPs to make sure their existing plan's fees are competitive, and 40 percent of plans said they don't issue RFPs at all.
Other eye-catching data from the report: more than 47 percent of sponsors were unsure if the funds in their plans had revenue sharing agreements
The study shows that sponsors rely heavily on recordkeepers more than any other source to deliver investment advice and education: 73 percent offer fund descriptions; 60 percent of sponsors said recordkeepers help participants with how to invest savings; and 54 percent of sponsors said providers help participants with how much to invest in each investment option.
Aaron Friedman, the tax-exempt practice leader with The Principal, which sponsored the survey, said much of the new data indicates many non-profits sponsoring retirement plans good benefit from a plan advisor.
Referring to the glaring absence of RFPs, particularly among smaller plans (64 percent do not conduct a periodic RFP), Friedman said, "This data point, along with many others in the survey, illustrates how small plans are underserved by financial advisors and could benefit greatly from their expertise."
"Small organizations often don't have dedicated HR personnel and could use the help from outside resources to assist them with their fiduciary responsibilities," added Friedman.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
