The successful chair of a committee serves the committee, the committee does not serve the chair. And so it was with the creation of the just-released "best practices" 403(b) Model Disclosure, which was developed jointly by NEA, ASBO, NTSAA and ASPPA. I was fortunate enough, and honored, to serve as the chair of that group. I have chaired  and served probably more than my fair share of retirement industry related committees over the course of my nearly 30 year career, but this effort was incredibly different: the driving force was not vendor interests, government policy interests, or of those serving our profession. From early on, the focus was instead plan participants,  to get to participants in non-ERISA 403(b) plans (and, in particular, employees of school districts) information that would be useful and inmportant in their purchase of 403(b) retirement products.  Lisa Sotir-Ozkan from NEA Benefits and Melody Douglas from ASBO very much drove the process, and kept us focused on this goal. 

Cloning 408(b)(2) or 404a-5 wasn’t sufficient, nor was relying on those thick prospectuses that accompany variable 403(b) contracts. As valuable as the DOL disclosure schemes are in the employer-sponsored, institutional context, and as important as prospectuses are in protecting investor interests, they the lack simplicity -or obscure in volumes of other data- that which is particulalry important to the individual 403(b) participant. These plan particpants are not fiduciaires, and often do not have anyone to be able to collect and compare data on their behalf. They are sold investment products directly. So it really becomes a very simple issue for that school teacher or adminstrator: how much sales commissions is my investment generating; what services am I getting in return; is there a way for me to compare it all; and how can I reasonably access comparative data on the investemnts themselves?

There is the practical problem: whatever would be recommended also had to be doable by the 403(b) vendor providing the product, so disclosure was based upon information that was already being collected in some way by providers in the ERISA world. The committee also recognized the value of the comparatve format for investments under 404a-5 (and the significant investment being made in those dsclosures),  and took advantage of the benfits of that work by recommending their use here.

The Committee, with skillful drafting support and guidance from ASPPA’s Deb Davis and with Craig Hoffman’s ongoing involvement in our work,   put in serious time over the past 6 mohts to balance the useful with the doable. Along with Lisa and Melody, Aaron Friedman, Carol Gransee, Chris Guanciale,  Scott Betts  and Theresa Ward put together what I consider a pretty good piece of "engineering."  Having known engineers from from my days in Michigan, who have told me that successful engineering is really the art of successful compromise (as, they have said, you cannot have the fastest, strongest AND most fuel efficent vehicle in one; its always a balance between them all), this group can lay claim to a pretty good result.

We all recognize that this first effort was not perfiect, and pratcice will be a good teacher for us as we try to bring a new level of transaprency into play.  There is likely to be changes as we find out what we really did here. But its a pretty good start.