Higher Education Plan Sponsors Turning to Advisers for Help

The use of consultants and advisers by retirement plan sponsors in the higher education market has almost tripled since 2010, with 90% of respondents to a survey by Cammack Retirement Group utilizing some type of adviser.

Michael Volo, senior partner with Cammack Retirement Group in Wellesley, Massachusetts, tells PLANADVISER he thinks this is one of the reasons higher education plan sponsors are more focused on fees, simplifying plan administration and engaging participants (see “Higher Education Plan Sponsors Step Up Their Game”). Fifty-nine percent of institutions polled for the fourth edition of the Higher Education Retirement Plan Survey report using a consultant, half use an attorney and 38% use a registered investment adviser to help them with running their plans.

The biggest reasons for hiring an adviser, cited by respondents, were heightened fiduciary concerns and changes in the legal/regulatory environment (each selected by 73% of respondents). Two-thirds (65%) of respondents say they meet with their advisers quarterly, and 44% of respondents said their adviser acts as a plan fiduciary, up from 25% in 2010.

Responsibilities advisers help higher education institutions with include:

  • Ongoing investment monitoring – 77%;
  • Plan compliance – 73%;
  • Development of Investment Policy Statement (IPS) – 67%;
  • Investment selection – 56%;
  • Plan design – 51%;
  • Vendor selection – 36%;
  • On-site participant education/communication – 23%; and
  • Other tasks – 5%.

While higher education institutions are adopting many industry best practices, the survey uncovered areas in which they could improve, such as increasing voluntary plan participation and limiting loan usage by participants. In addition, investment policy statements (IPS) are utilized by only 60% of fiduciary committees.

Eighty-four percent of respondents said a key initiative in the upcoming year will be to improve employee education. Other key initiatives for the upcoming year cited by respondents included changing the number of investment options in their plans (42%), creating an IPS (33%), and establishing a fiduciary due diligence process (24%).

“What we’ve seen through the survey and working with academic and research institutions, is there’s a level of complexity and difference in the higher education 403(b) market that should be recognized and understood. It is very different from 401(k)s,” Volo notes.

He says Cammack only provides the complete survey results to survey participants.