Advisers Recommend Fiduciary Outsourcing Services, Mostly for Small Plans

More than 20% of advisers said clients spend between a quarter and half of their time on plan administrative tasks that could be outsourced.


Plan advisers often recommend that clients use fiduciary outsourcing services, alleviating the administrative burden on both advisers and clients, according to new industry research.

Pentegra Services Inc. published a report titled, “Adviser Attitudes Toward 3(16) Fiduciary Outsourcing,” released in conjunction with the firm’s 3(16) Day, celebrating its expertise as a fiduciary services provider. The study polled advisers as to how they helped clients manage retirement plans using fiduciary outsourcing. More than 20% of advisers said their clients spend between 25 and 50 percent of their time on plan administrative tasks that could be outsourced.

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“Today, retirement plan administration has become increasingly complex. There are new regulations and increasing compliance burdens,” said Matt Mintzer, Pentegra’s executive vice president, in a statement. “For many employers as well as advisers, the time commitment can be overwhelming and distracts from the more critical responsibility of running a business—time that could be better spent focusing on growth and profitability.”

Fiduciary outsourcing helps to remedy many of the challenges presented by Mintzer. According to advisers, the leading advantages of fiduciary outsourcing are reducing administrative burdens and mitigating retirement plan risk.

However, 65% of advisers said less than one-quarter of their clients currently outsource fiduciary responsibility for 3(16) retirement plan administration. In contrast, only 16% of advisers expressed that 25% to 50% of clients use fiduciary outsourcing services.

What’s more, attitudes do not seem likely to change this year: More than 60% of advisers said that less than 25% of clients plan to add 3(16) fiduciary administrator services in 2023. Only 10% of advisers reported that 50% to 70% of clients will adopt these services.

In the results from the 2022 PLANSPONSOR Defined Contribution (DC) Surveyplan sponsors were asked if their plan employed a third party (TPA, adviser, recordkeeper, etc.) as a 3(16) fiduciary. Of those who responded, 28.2% responded that they do and that the third party has broad enough scope acceptance of the administrator role to include being named as the plan administrator in the plan document. 28.8% said they do employ a third party, but it has only limited scope acceptance of some of the administrative functions; responsibility outside of that scope is retained by plan officials. Of the remaining respondents, 28.1% replied, ‘No,’ and 14% were unsure. 

Additionally, advisers saw different market segments utilizing fiduciary outsourcing to varying degrees. Almost half of advisers said small retirement plans typically use these services, while less than 10% of large and mega plans do. The research returned similar percentages of respondents thought small-market segments could benefit from fiduciary outsourcing, while it is less relevant for large and mega plans.

Although not all clients are on board when it comes to fiduciary outsourcing, most advisers reported that they see the benefits to these services. When it came to familiarity with fiduciary outsourcing, half of advisers surveyed agreed with the statement, “very familiar, I recommend these services to my clients often.”

“3(16) fiduciary outsourcing offers a better way for plan sponsors and advisers to manage these responsibilities,” Mintzer said in the statement. “Clients and advisers enjoy the confidence that comes from having a professional handle the complexities and burdens that come with offering a retirement plan.”

Advisory M&A

OneDigital acquires 401K Resources, Clear Group; Itheric Wealth Advisors joins Sanctuary Wealth; and more.  


OneDigital Acquires 401K Resources, Clear Group
 

OneDigital announced the acquisitions of 401K Resources and The Clear Group 

A OneDigital Investment Advisors affiliate for more than three years, Scottsdale, Arizona-based 401K Resources designs retirement plans to help organizations achieve their overarching total rewards program objectives. Similarly, Florham Park, New Jersey-based Clear Group provides employee benefits solutions, retirement planning, human resources consulting and personal and business property and casualty solutions.  

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The acquisitions will enhance the available resources and support for the clients of the Clear Group and 401K Resources, while adding the latter will establish OneDigital’s presence in Arizona. 

“[401K Resources’] powerful combination of integrated Employee Benefits and Retirement (401K) consulting model for clients fits squarely into OneDigital’s value proposition. Under their leadership, I am confident that Arizona will be one of our fastest growing markets in the country,” said Jeff Fallick, regional managing principal for OneDigital’s West region, in a statement. 

Sanctuary Wealth Introduces Iterhic Wealth Advisors as Partner Firm 

Iterhic Wealth Advisors and its founder, Matt Terwilliger, have joined Sanctuary Wealth. 

Terwilliger and his staff bring $170 million in client assets under advisement to Sanctuary. Based in Dublin, Ohio, Iterhic Wealth Advisors is the third wirehouse breakaway firm from Ohio to join Sanctuary in 2023. 

Iterhic provides comprehensive wealth management services to individuals and families. The firm focuses on planning strategies for first first-generation business owners, executives with significant equity and deferred compensation, as well as professional athletes. Terwilliger played three years of professional basketball and played on Ohio State University’s team that reached the 2007 NCAA Final Four. 

“Sanctuary understands what the next generation of advisers are looking for to serve their clients and ha[s] built their platform around those needs,” said Terwilliger in a statement. “I’m excited to start the next chapter of my career as an independent adviser with a firm that thoroughly understands and fully embraces the unique needs of wirehouse advisers going independent.”  

Heller Private Wealth Launches Wealth Management Practice 

Heller Private Wealth LLC announced its launch as a registered investment adviser. The firm was founded by Justin Heller, formerly a vice president at Merrill Lynch, and Eric Win, also formerly of Merrill Lynch. 

“The COVID-19 pandemic allowed me to take a step back and evaluate the different wealth management models,” Heller said in a statement. “After a couple of years of research and many conversations with industry professionals from different financial institutions, I found that the independent Registered Investment Adviser model was best for my clients. Today, the best technologies, innovations, and service providers are focused on the Registered Investment Adviser segment, positioning us to give our clients the most modern approach to wealth management.” 

Heller and Win met as part of the University of Miami’s men’s basketball program. The Fort Lauderdale, Florida-based firm selected Charles Schwab & Co. Inc. to provide custodial services. Schwab will provide Heller Private Wealth with back-office support and custody of client assets.  

Hilb Group Adds Agencies in Texas, Minnesota, New Jersey 

The Hilb Group LLC announced that it has acquired agencies in Texas, Minnesota and New Jersey. The agencies specialize in benefits enrollment and administration. The three transactions became effective on February 1.    

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