Skip to Content
Advisor Insights

403(b) Plans Not Adding Up

Contributor Scott Simon discusses what upgrades 403(b) plans should make, with lowering costs being the first improvement.

Ben Franklin said "a penny saved is a penny earned." This simple but powerful adage underlies any savings and investment program, whether established by someone on their own or whether they participate in a private retirement plan such as a 401(k) plan. The lower the costs of investment options incurred when making contributions to a nest egg (a penny saved), the more money that becomes available to invest and grow that nest egg (a penny earned). In the context of a retirement plan portfolio, this adage ignores that crazy little thing called risk, but this month's column focuses generally on costs.

Franklin's adage also applies to, say, retirement plans in the public sphere, such as 403(b) plans made available to educators by public school districts. It's no secret that many educators participating in 403(b) plans are forced into suboptimal investment options, such as high-cost annuities and mutual funds. Why? Because in many states like California and Texas, school districts can offer educators just about any looney insurance company-issued financial product no matter how high their costs may be and how imprudent they are. In such states, the bad guys rule the roost and the good guys--low-cost providers--stay away because they refuse to sign school district hold harmless agreements, which legally shield districts from unforeseeable events that may negatively impact a provider.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.