Plan Sponsors Clearly Focused on Fiduciary DC Specialist Advisers

For the first time in seven annual editions of its Plan Sponsor Attitudes Survey, fiduciary responsibility is cited as the top reason 401(k) retirement plan sponsors start using plan advisers.

The seventh edition of Fidelity’s Plan Sponsor Attitudes Survey contains some interesting and counterintuitive findings compared with previous years, especially as it pertains to retirement plan sponsor satisfaction and regulatory pressures.

Presenting a sneak-peek of the survey data to PLANADVISER, Jordan Burgess, head of specialist field sales overseeing defined contribution investment only (DCIO) business at Fidelity Institutional Asset Management, stressed the quality of this survey compared with some other research.

“The 2016 Plan Sponsor Attitudes Survey was conducted in collaboration with E-rewards, an independent market research company, via an online survey of 976 plan sponsors on behalf of Fidelity in February 2016,” Burgess explains. “Respondents were identified as the primary person responsible for managing their organization’s 401(k) plan, and unlike others, the survey did not just focus on plan sponsors in our own book of business. We also looked predominantly at plan sponsors actually using the services of a financial adviser or plan consultant.”

The result is a particularly informative look into the decisionmaking of the slice of plan sponsors already engaged with advisers, Burgess said, noting one of the clear standout finding from this year is the dramatic shift in plan sponsor attitudes towards their fiduciary responsibility. It’s a trend Burgess said “is obviously being fueled by the Department of Labor’s recent efforts, but it’s about more than that, too.”

Specifically, the survey results show 38% of the plan sponsors surveyed are concerned about their fiduciary duty, a significant increase from 24% last year. At the same time, a new high of 69% ranked an adviser’s willingness to take on a formal fiduciary role as important. Furthermore, for the first time, “fiduciary responsibility” is the top reason plan sponsors say they started using retirement advisers.

“Results also show sponsors cite the need for a more knowledgeable adviser who is an expert in a variety of areas, including how to best manage fiduciary responsibilities but also other areas related specifically to DC plan design and operations,” Burgess said.

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Interestingly, the Fidelity research also found that a record 72% of plan sponsors in the study are satisfied with their advisers, with two-thirds saying they get good value from their advisers.

“Despite this, the percentage of respondents actively looking to change their advisers also reached a new high of 23%,” Burgess warned. “It’s pretty remarkable and more than a little counterintuitive.”

The research shows the most common reason for looking for a new advisers is “the need for a more knowledgeable adviser who is an expert in a variety of areas,” including how to best manage fiduciary responsibilities. In addition, Fidelity finds plan sponsors surveyed are also looking for retirement advisers who can consult on plan design and improving plan performance, with an all-time high of 86% having made plan design changes in the last two years, and a similar 87% having made investment menu changes in the last two years.

“Advisers who specialize in the retirement plan market are delivering increasingly greater value, offering services that allow them to operate as a fiduciary, as well as building scalable ways to manage investment menus and serve their plan sponsor clients,” Burgess said. “Another all-time high in the survey data this year includes 88% of plan sponsors saying they have participants who delay retirement due to a lack of savings. It’s a tremendous opportunity for advisers to step up and help employers solve these very challenging problems.”

According to Fidelity, sponsors are focused on driving participation among their employees, with a record number of respondents (61%) citing this as a reason for design changes. In fact, more than three-quarters (76%) of plan sponsors surveyed are planning future design changes, “the highest percentage ever.”

“While retirement advisers and consultants are considered the primary driver of plan design changes, recordkeeper influence is expanding, with more plan sponsors saying that advisers and recordkeepers have equal impact on decisions,” Burgess concluded. “Advisers must be aware of what recordkeepers can offer, including simplifying plan administration, and they should ensure that their clients understand how a strong partnership that includes the plan sponsor, the recordkeeper and the adviser can benefit plan participants.”

Additional information about the survey can be found at