Advisers Help Keep the Communication Lines Open

A recent Spectrem Group study found that sponsors who use advisers as their main source of contact with providers are talking to providers more than others.

Overall, most sponsors are satisfied with their provider relationships, according to the survey of 150 defined contribution plan sponsors. Most sponsors awarded their provider an A or B grade for performance in relationship management (32% and 43%, respectively). There were also some Cs (18%), as well as Ds and Fs (7%). Although the survey indicated overall satisfaction, those who did dole out the lower grades was up since 2005.

According to the survey report, a small percentage (15%) of respondents said their primary contact with the provider is through the adviser who sold them the plan, and a similar number (17%) prefer this method. Half of the sponsors said their primary contact with the provider is an account representative assigned to their company, and 17% said it is an account team. An individual account rep or account team is the preferred method of contact from a combined total of 77% of sponsors.

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Almost one-tenth of respondents (9%) said they do not have a primary provider contact and 8% said they deal with different contacts based on the issue. Spectrem says the pattern of primary provider contacts is unchanged since 2005 across all-sized plans.

Interestingly, those sponsors who have an adviser as their primary contact are the most likely to have had five or more contacts with their provider. Sponsors with an assigned representative or service team are the least likely to have had no contact over the past month.

As far as what type of adviser the sponsors use to select a provider, the results varied, and some respondents obviously used more than one or none at all. The larger number of respondents (25%) said they didn’t use an adviser at all. Third-party administrators (TPAs) were used by 25% of the respondents. Insurance agents/brokers and specialized pension/investment consultants were each used by about 20% of respondents and stockbrokers by 6%, the report said.

The majority of plan sponsors (63%) initiated more than half of all contacts with the plan provider over the past month, and as in 2005, that proportion is highest among mid-size and large companies. The report notes that more provider-initiated contact at smaller plans could be because of simpler plan designs and more proactivity from the advisers for small plans.

Communication with sponsors and providers could become increasingly important as fiduciary responsibility continues to be at the forefront of sponsors’ minds. The report says that regular updates on legislative and regulatory issues is likely to increase. Three-quarters of plan sponsors say they receive periodic information on legislative/regulatory issues, and 62% of them say this information is valuable to them. The report suggests that sponsors will be looking to both providers and advisers to help ensure and anticipate the compliance of their plans.

The Best Practices In Relationship Management report can be purchased at