PLANSPONSOR Retirement Plan Adviser of the Year finalists and winners are noteworthy
for so many reasons. First and foremost, they are courageous enough to embrace
best practices as these emerge, including automatically enrolling participants
at deferral rates higher than the industry’s 3% norm; pairing that practice
with automatic escalation, sometimes at 2% or higher; and performing full-blown
re-enrollments to make sure no participant gets left behind.
On top of
this, many have embraced the introduction of holistic financial education or
financial wellness programs. Having served as a judge for this awards program
for the past six years, I can attest to how impressive these advisers and teams
are, and to the brilliant work they do. I hope you enjoy learning about them in
this issue and reading Q&As with them online at PLANADVISER.com.
What do plan
sponsors think that retirement plan advisers are doing right? And where are
those in your field falling down and needing to do a better job? “Lighting the
Way” gives the results of the 2017 PLANADVISER Adviser Value Survey. It is
based on the responses of 4,218 defined contribution (DC) plan sponsors that
participated in the 2016 PLANSPONSOR Defined Contribution Survey, and compares
responses of those who work with a plan adviser against those who do not. When
it comes to management of the plan, adviser-led plans are more likely to review
investments every quarter and be guided by a formal investment policy statement
(IPS). However, you may be surprised that plans with advisers actually have
lower average balances. This year, we took the results to a number of leading
retirement plan advisers to ask them for their opinions on what the results
showed—and what they think advisers need to do better.
If you are
not paying attention to leakage from the plans you serve, perhaps you should
be, as the industry continues to seek solutions to the problem of participants
draining their accounts. “Taking It With You” reveals that as much as $89
billion leaves 401(k) plans every year, with two-thirds of this due to
participants cashing out when they switch jobs, but also because of loans and
hardship withdrawals that default.
Independence” discusses the changes happening in the adviser industry as
advisers who are affiliated with broker/dealers (B/Ds) discuss what it means to
be tethered to commissions and in-house products in the current environment.
one in five (18.7%) retirement plans offering brokerage windows—and a whopping
49.6% of plans with $1 billion or more of assets offering them—this strategy is
more common than you may think. “Window Guard” explains how to educate
participants about the downside of investing on their own.
retirement plan advisers serve small plans, “Thinking Efficiently” is an
eye-opening feature that explains how best to work with this market.
We hope you
agree that this issue is rich with actionable ideas you can put into practice
to enhance your work with plan participants and sponsors. Happy reading!