Data and Research

How Plan Sponsors Use Advisers

Results from PLANSPONSOR’s 2013 DC Survey show retirement plan sponsors turn to advisers more for help with investments than for individual participant guidance.

By Rebecca Moore editors@strategic-i.com | January 29, 2014

Overall, 90.9% of respondents indicated their financial advisers provide plan investment selection guidance. This was the number one service used by plan sponsors across the board—from the smallest of plans (<$1MM at 86.5%) to the largest of plans (>$1B at 80%).

While overall, two-thirds of plan sponsors said their advisers provide plan education, only slightly more than half reported their advisers provide individual participant investment guidance (53.9%) and individual participant education (53.7%). However, smaller plans use the personal touch of an adviser more.

On average, 67% of plans of size less than $25MM use advisers for individual participant investment selection guidance, nearly half (49.2%) of plans in the $25MM to $50MM range do, and less than one-quarter (23.9%) of the larger plans (>$50MM) said advisers provide this service. Similarly, on average, 65.2% of smaller plans reported their advisers provide individual participant education, while 50.5% of mid-size plans and an average of 24.2% of larger plans said the same.

The survey shows 47.6% of plans overall have advisers perform investment policy statement (IPS) review and monitoring, and 86.9% have them review fund performance. More than seven in ten (72.5%) overall said advisers present to the investment committee or internal plan administrator a review of the funds.

“Most employers do not have in-house staff with the skills—or the time—to adequately monitor and evaluate the thousands of investment options available to their DC plan, and since this oversight is one of the key fiduciary duties a plan administrator and/or committee has, it should be no surprise that advisers are turned to for this purpose in particular,” notes Quinn Keeler, senior vice president of Research and Surveys at Asset International, publisher of PLANSPONSOR.

The 2014 Plan Benchmarking Report features proprietary data collected in late 2013 by PLANSPONSOR in its annual Defined Contribution (DC) Survey. The report highlights various plan design features and outcomes of more than 5,300 U.S. DC plans. Information about how to purchase the report is here.