Advisers Have Opportunity in Health Care Market

Defined benefit (DB) plans are prevalent in the health care market, offering opportunities for advisers to help with plan sponsors' concerns.

Overall, 42% of health care plan sponsors offer DB plans, and they are more common among sponsors of 403(b) plans (48%), according to the 10th annual survey of health care plan sponsors by Diversified and the American Hospital Association (AHA). Plan sponsors in the health care sector are concerned about the impact of defined benefit plans on company finances, as well as the long-term commitment to the plan, Brodie Wood, vice president and not-for-profit leader at Diversified Investment Advisors, said during a webinar about the research.

Plan sponsors in this industry anticipate they will be hiring consultants and/or freezing their DB plans in the future, making it a great place for advisers to market their services. Advisers consulting on defined contribution (DC) plans should also think about services they can offer defined benefit plans, Wood said, especially at a time when so many DB plans are being frozen. Fifty-one percent of survey respondents said their plans are frozen to new employees, and 49% said their plans are frozen to all employees.

The percentage of health care plan sponsors that said they use an adviser jumped from 79% in 2011 to 85% in 2012. According to plan sponsors, the top responsibilities of their advisers are “ongoing investment monitoring” (74%), “investment selection” (70%) and “development of investments policy statement” (54%). Only 42% said their adviser’s responsibilities included “act as the plan fiduciary,” but Wood said this may increase as the adviser’s role becomes more crucial (see “Health Care Employers Embracing 403(b) Enhancements”).

The role of the adviser will likely grow by more than 50% over the next three years, he added.

As advisers consider working in the health care space, they should keep in mind that many things they learned in the corporate market can also apply in the health care and nonprofit space. However, Wood added, “The health care space is quite unique.”

A total of 180 health care plan sponsors nationwide responded to the survey conducted during the second quarter of 2012. To request a copy of the survey report, send an email to