Advisers’ Value to Clients, by the Numbers
Today, 77% of plan sponsors work with some type of plan adviser, according to data from the 2023 PLANADVISER Adviser Value Survey. That compares to an average of 60.3% from that same survey done in 2013.
But what is it that plan sponsors value most in plan advisement? What, according to the numbers, do those clients end up getting that they might miss out on without an adviser?
For this month’s special coverage on client retention, we mine our recent research for data points.
Adviser Value
In today’s market, plan sponsors of course have a variety of needs they are looking to fill from their advisers and third-party providers. But to get the latest focus areas, we turn to PLANSPONSOR’s 2023 DC Plan Benchmarking Survey.
According to that survey of 2,128 plan sponsors, the most valuable service advisers provide is conducting due diligence on recordkeepers. Between all the recordkeeper changes in recent years due to consolidation, along with offering-related litigation, it’s no wonder.
A close second to recordkeeper vetting is providing participants with one-on-one planning advice, presumably through the advisory itself or through a third-party offering recommended by the adviser. After that, plan sponsors highlighted developing a participant communication strategy and providing cybersecurity guidance to protect data as other adviser duties.
Q: Which of the following third-party services/support are (or would be) most valuable to you in your role as a retirement plan sponsor?
| Average Ranking (5 highest value, 1 lowest) |
||
| 1 | Conduct recordkeeper due diligence | 4.1 |
| 2 | Provide participants with one-on-one planning advice | 4.0 |
| 3 | Develop participant communication strategy | 3.8 |
| 4 | Provide cybersecurity guidance on participant data protection | 3.8 |
| 5 | Provide investment committee education | 3.7 |
| 6 | Develop/evaluate financial wellness programs | 3.6 |
| 7 | Help select/monitor managed account services | 3.4 |
| 8 | Develop/evaluate student loan repayment programs | 2.2 |
| 9 | Conduct employee enrollment meetings | 2.2 |
| 10 | Develop the investment menu option in our Health Savings Account (HSA) | 2.0 |
| 11 | Select a Health Savings Account (HSA) provider | 1.8 |
Source: PLANSPONSOR, 2024 Plansponsor Defined Contribution Benchmarking Report
Plan sponsor survey results also show what having an adviser can do for positive plan design.
Drawing on our 2023 plan sponsor surveying, we can see how a plan sponsor with an adviser generally has a better chance of offering the best of defined contribution plans to its employees in a variety of categories. Below are excerpts from the 2023 PLANADVISER Adviser Value Survey.
Value Add
Plan sponsors with an adviser are much more likely to offer an employer match, a proven method of increasing plan participation. In the answers below, an adviser can be a 3(38) fiduciary or a 3(21) fiduciary.
Offers an employer match contribution:
| Yes | No | Unsure | |
| With adviser | 77.9% | 29.2% | 1.0% |
| Without adviser | 69.8% | 21.6% | 0.6%< |
Most plan sponsors would agree they want to ensure their investment options are secure and up to date, especially during the recent years of volatility. Working with an adviser increases chances of quarterly review.
How often the plan’s investment options get formally reviewed:
| Quarterly | Twice per year | Annually | |
| With adviser | 54.9% | 16.5% | 24.2% |
| Without adviser | 26.7% | 10.5% | 35.2%< |
As PLANADVISER has reported in recent years, collective investment trusts are an increasingly popular low-cost option for plan investments, and plan sponsors are more likely to have them when working with an adviser.
Collective investment trust in use:
| With adviser | 25.5% |
| Without adviser | 15.9% |
If the ultimate goal of a plan is to get employees to save, having an adviser increases those odds, too, according to the data.
Through one-on-one, on-site meetings with a financial planner/adviser outside of the plan:
| With adviser | 63.3% |
| Without adviser | 26.0% |
Using a third party (i.e., Financial Engines, Morningstar, etc.) independent of our recordkeeper:
| With adviser | 30.0% |
| Without adviser | 11.5% |
Advice is not currently offered to participants
| With adviser | 8.3% |
| Without adviser | 30.2% |
It’s also more likely that a plan sponsor, when it has an adviser, will provide formal financial education and guidance to participants beyond the 401(k).
Saving strategies/prioritization
| With adviser | 81.5% |
| Without adviser | 66.7% |
Financial markets and investing basics
| With adviser | 79.0% |
| Without adviser | 52.2% |
Social Security withdrawal options/strategies
| With adviser | 41.8% |
| Without adviser | 21.7% |
None – plan does not currently offer any education targeted on these topics
| With adviser | 19.3% |
| Without adviser | 36.7% |
Those qualitative measures might stand out when an adviser is keeping, or attracting, clients. But as a recent PLANADVISER discussion between RFP experts indicated, there are many intangible elements that go into client retention and attraction, including the importance of meeting the unique needs of specific clients and other factors less measurable than the above.