The Spectrem report about the online/phone poll of 150 plan sponsors with 1,000 or more employees taken earlier this year said that might mean the large employer might hire an investment consultant (including one familiar with a particular asset class) as well as a separate adviser with administrative expertise.
Nearly nine in 10 of the large plan sponsors said they have used an outside adviser in making plan decisions. “As plan size increases, sponsors find it necessary to use the services of more than one individual/firm to advise on the retirement plan,” Sprectrem researchers wrote. “This is to be expected since as a plan gets in size, is more likely to purchase services on an unbundled basis.”
Two-thirds of plans relying on a single adviser use one affiliated with their plan provider, the study found.
Among those using non-affiliated advisers, Spectrem said, nearly half use a fee-paid employee benefit consultant, with the remainder equally split between third-party administrators (TPAs), fee-paid investment consultants, and brokers/financial planners.
Nearly three-quarters of all large plan sponsors rely on their advisers to examine their investment performance as well as monitoring the plan to ensure it complies with all regulations. About six in 10 sponsors look to their advisers to provide investment education and a similar number are looking for their adviser to provide one on one advice.
Some 43% of plan sponsors report that their adviser meets with them on a quarterly basis to provide an in-depth review of the plan. One third had an as-needed meeting with the remaining sponsors saying that they meet with their adviser annually.
When asked what advisers serving large plans could do better, sponsors mentioned – among other things – that advisers needed to be more proactive and attentive to the client sponsor’s needs.
“Some sponsors may have difficulty in bringing up unpleasant topics such as breakdowns in service, thus, advisers and plan providers should regularly request feedback on the level of service that the sponsors are receiving and do what is necessary to bring to light any problems and rectify them,” Spectrem wrote in the report.
Large plan sponsors have quickly embraced and implemented the automatic enrollment and investment advice features made possible by the Pension Protection Act of 2006, Spectrem reported.
Spectrem noted that few new plans are introduced at the top end of the market and that providers have to fight for a piece of the 10% of plans that switch each year.