2008 Survey of Advisers - Benchmarking Your Practice

Capturing the profile of the "typical" retirement plan adviser

By Alison Cooke Mintzer See Archive >

In the past, when pitching a retirement plan, advisers specializing in the retirement plan space often found themselves competing against wealth management advisers. However, advisers in this field say they are increasingly running into other advisers who think they have the same competitive advantage—an expertise in retirement plans.

A recent survey by PLANADVISER of advisers who work with employer­sponsored retirement programs finds that more than three-quarters of respondents have at least five years’ tenure as retirement plan advisers—and roughly one-third of those have more than two decades’ experience in the field.

Having said that, only about one in five is 100% dedicated to working with retirement plans, though, for more than half, retirement plans make up more than 80% of their “book." Advisers surveyed have a median 65% of business from 401(k) plans, and almost two-thirds of them are offering wealth management services.

The target market for the respondent sampling was solidly mid-market; more than half focus on the $2 million to $20 million segment. They seem to be hitting those targets, with the median client size at both individual and team-based practices directly in that range. Respondents not only have experience, but also a strong retention record with their clients; the median tenure was seven years—the average even longer.

While there has been an increased examination of plan fees and fee disclosure in the retirement plan world, there has not yet been a rush to move whole businesses over to the fee-based model. Most advisers surveyed still receive payments of asset-based fees (85.1%), and the median of revenue derived from such fees is 65%. The second most common fee type was commissions (54.9%), and the median revenue amount derived from that was 47.5%.

The continued prevalence of the commission structure might be as a result of respondents’ choice of business model—37.7% of advisers are associated with an independent broker/dealer, while another 29.2% are at a national full-service wirehouse.

That business model choice also may explain respondent fiduciary positioning. Nearly two-thirds of survey respondents have embraced that role, with reasons ranging from the practical (“we give advice") to the rational (“we are functional fiduciaries, so why not say so?") to the “obvious" (“clients expect it"). The reasons against were, for the most part, obvious, ranging from “not allowed’ to “too much risk." Interestingly enough, some note that, while they knew they were “technically" fiduciaries, they were not marketing it.

Nearly all adviser respondents offer a written service contract/guarantee, and nearly as many deal with investment monitoring, investment manager search and fund replacements, and IPS plan design. In addition, while there was a strong representation of firms that provide support in areas such as plan design, communication policy statements, enrollment meetings, and ongoing participant education, those services were noticeably less common. In fact, individual participant investment advice was the least commonly cited service area—though some of that was almost certainly a function of the line between education and advice that many advisers have chosen not (or been told not) to cross.

“How does my practice compare?" is a question that, at some point, passes through the minds of all successful advisers. Knowing what the best firms in your industry are doing is the best way to stay ahead of the crowd.

The Basics

Years spent as an adviser to employer-sponsored retirement plans:


Less than 1 year 0.4%
1-3 years6.7%
3-5 years14.5%
5-10 years20.0%
10-15 years20.4%
15-20 years14.9%
More than 20 years23.1%

What is your target market?


$20MM-$75MM 15.5%

Total assets under advisement:

Average: $1.1B
Median: $180MM

Total assets under advisement (individual):

Average: $229MM
Median: $65MM

Total assets under advisement (team/firm):

Average: $2.2B
Median: $530MM

Total qualified plan assets under advisement:

Average: $946M
Median: $118MM

Total qualified plan assets under advisement (individual):

Average: $123MM
Median: $32MM

Total qualified plan assets under advisement (team/firm):

Average: $1.6B
Median: $325MM

Average plan retention (years)*:

Average: 7.5
Median: 7.0

*19 respondents said they had never lost a client

Percentage of assets representing retirement plans:


less than 50%22.0%

Number of qualified plan clients:


Less than 1016.7%
61-75 6.8%
More than 7521.1%

Adviser firm affiliation:


National full-service wirehouse29.2%
Independent broker/dealer 37.7%
Regional broker/dealer 5.4%
Insurance brokerage 3.9%
Bank brokerage0.8%
Registered investment adviser (RIA)18.3%
Dually registered4.7%

Service Model

Business breakdown:

401(k) (99.6% of advisers)59.20%65%
DB (59.9%)9.80%5.0%
457 (32.6%)6.90%2.0%
403(b) (50.0%)10.90%5.0%
Nonqualified plans (49.2%)8.0%5.0%
Wealth management (69.4%)34.50%30%
Other (23.6%)18.0%10%


Most common broker/dealers:


Merrill Lynch 18.3%
NRP Financial 8.9%
NFP Securities, Inc.5.0%
Morgan Stanley4.0%
UBS Securities4.0%
LPL Financial Services3.0%
Raymond James Financial Services, Inc.3.0%
Smith Barney2.5%
AIG Financial Advisors2.5%

Does B/D affect the level of services you provide to retirement plans?

Yes, positively 49.0%
Yes, negatively 7.0%
No, but it would if I didn't take special steps5.0%
No 39.0%



How do you feel about your broker/dealer?

Love it 35.0%
Like it 41.0%
Don't like it, but no plans to move8.5%
Don't like it, and plan to move2.5%
No real feeling about it 11.0%
No basis of comparison2.0%



Does your B/D offer any of the following support specializing in retirement/qualified plans?


Yes No I don't know
Sales support68.2%24.4%7.5%
Expertise in 401(k) plans69.0%23.0%8.0%
Expertise in 403(b), 457 plans53.2%30.8% 15.9%
Expertise in defined benefit plans51.5%32.0%16.5%
Expertise in 409A/nonqualified plans42.7%30.7%26.6%
Expertise in other retirement plans60.2%22.9%16.9%
Lead generation or proposal/marketing support for qualfied plans36.3%52.7%10.9%
RFP/401(k) provider search support48.8%38.8%12.4%
Access to ERISA counsel43.5%37.0%19.5%
Participant education 44.8%44.8%10.4%
Asset allocation or managed account models for retirment plan participants61.0%31.0%8.0%

Most (60.1%) of advisers surveyed have some wealth management business. If you do not provide individual wealth management services, do you:

Refer to another member on your team?: 61.9%
Refer to an outside firm?: 27.4%
Other (most commonly "do not get involved"): 10.6%

Do you offer your services as a fiduciary?

Yes: 63.9%
No: 36.1%

Plan services performed for retirement plans as part of a retainer or annual service:


Written service contract/guarantee 99.5%
Investment monitoring/committee meetings98.3%
Manager search/fund replacements97.4%
IPS design97.0%
Provider fee analysis96.6%
Plan design94.2%
Asset allocation modeling94.1%
Communication policy statement design 93.1%
Vendor/fee review 92.9%
Enrollment meetings92.2%
Ongoing participant education91.3%
RFP/benchmarking for defined contribution plan provider87.1%
Individual participant investment advice83.5%


Support Services

What kind of support services/tools do you currently rely on from DC plan providers, investment managers, or your broker/dealer?


 Investment ManagersDC Plan RecordkeepersBroker/Dealer
Sponsorship of certifications/designations25.0%21.9%68.0%
DC plan benchmarking26.5%59.1%43.2%
DC plan lead generation24.7%50.6%55.1%
Investment monitoring products42.1%33.8%57.9%
Marketing collateral44.6%54.6%47.7%
Practice management support24.4%33.1%70.9%
Training specific to DC plans33.3%63.5%48.4%


Compensation and Fees

How are you paid for qualified plan business?

Asset-based fees85.1%
Commissions 54.9%
Hard dollar or flat fee29.0%
Per participant7.1%
Per project 22.0%
ERISA budget/ERISA reimbursable23.5%
Other 2.0%


Percent of business revenue derived from each source over previous 12 months:



Asset-based fees (82.4% of surveyed advisers) 60.20%65%
Commissions (59.7%)46.60%47.50%
Hard dollar or flat fee (21.4%) 29.80% 20%
Per participant (4.2%) 13.10% 7.50%
Per project (16.8%) 12.80% 10%
ERISA budget/ERISA reimbursable (20.2%)23.80%20%
Other (7.1%) 40.90% 30%

When are your fees disclosed to your clients?

At point of sale83.9%
As requested 28.0%
Other (most commonly plan proposal stage) 12.3%



How do you disclose your fees to your plan sponsor clients?

Contract 73.4%
RFP 29.8%
Annual review65.1%
Form ADV21.0%
Other (most commonly quarterly reports or meetings)12.3%

What percent of your revenue goes to the following:

Broker/Dealer 32.7%20.0%
Your Salary42.90%40.0%
Partner Salary26.10%20.0%
Staff Salaries18.40%15.0%
General Expenses20.40%20.0%



In July 2008, approximately 7,500 online survey questionnaires were sent to financial advisers from the PLANADVISER database, as well as client lists supplied by DC recordkeepers. We received 382 usable responses, of which 258 passed our eligibility criteria for the section reported here that the adviser be “personally involved in evaluating and recommending defined contribution plan providers/recordkeepers on behalf of qualified plan clients’ or “personally involved in evaluating and recommending fund choices on behalf of qualified plan clients.’ The questionnaire, developed by PLANADVISER editorial and research staff, consisted of more than 40 questions, with a significant emphasis on the scope of the adviser’s qualified plan business.

Illustration by Yuko Shimizu