Transamerica Retirement Services will make a push into the 403(b) market by mid 2007. Kent Callahan, president and ceo of Transamerica, said he sees 403(b)s as a growth opportunity because they are starting to look more like their 401(k) counterparts. Firms with expertise in 401(k)s will find it easier to offer services to the 403(b) market without having to hire a lot of outside expertise. Those services will be Transamerica’s selling point, he said. The firm plans to work with its distribution partners rather than using an internal sales force. Callahan could not be more specific on how his firm plans to competitively position itself against giants in the market such as TIAA-CREF and AIG VALIC.
Among the services Transamerica plans to offer are the Plus 15 and a fund rating service. Plus 15 provides plan sponsors a steady schedule of educational seminars. It takes its name from the guarantee of a 15% increase in participation rates within the first quarter or administrative fees are refunded.
Dennis Monaghan, v.p. of Aon Consulting, said Transamerica has an opportunity to impact the 403(b) market. "[Transamerica] could potentially grab this market if they provide cheaper services and products.” David Hinderstein of Westchester, N.Y-based National Retirement Advisors, which works with 403(b) plans, agreed that Transamerica could thrive if they offer something better. Monaghan added that there were rumors that AIG and TIAA-CREF were pulling back from the smaller plans, but Bruce Corcoran, v.p. of AIG’s K-12 market, flatly denied that and his said firm has never been more committed to the small plan 403(b) market and is confident it will build on its strong leadership position in the future. Calls to TIAA-CREF were not returned.