2013 Retirement Plan Adviser Survey: Chosen Path

It can be said that retirement plan advisers have a better—or at least a more comparative—perspective than their plan sponsor clients on the relative strength of products and services offered by investment and recordkeeping providers, not least because advisers can and usually do work with many providers concurrently. This year’s PLANADVISER Retirement Plan Adviser Survey, our seventh, endeavors to gain insight from the adviser community about how providers and funds are selected, as well as which are currently in favor.

This year’s survey, as always, will be published in two parts. In this issue, we examine advisers’ favored investment and recordkeeping providers. Our next issue will feature adviser practice structure and experience, with the intention to help advisers learn from, and benchmark against, peer experience. This year, we were fortunate to receive complete survey responses from 629 retirement plan advisers, enabling us to present data that is representative of the plan adviser community as a whole.

On the investment side, the criteria for fund selection have remained stable. This year, as in 2012 and 2011, performance versus benchmarks was the top criterion for selecting appropriate funds, and 92% of advisers ranked performance first, second or third in 11 categories. Five-year return was the next most important criterion (78.1% ranked this in the top three), followed by plan fee structure (68.4%).

When asked to list their top five fund family recommendations for plan sponsors, advisers once again chose PIMCO/Allianz as their preferred fund family, with 50.6% of advisers listing the firm, although this is a drop from last year’s 56.6%. Vanguard came in second at 44.2%, and American Funds ranked third (40.3%), followed by J.P. Morgan (31.6%) and T. Rowe Price (30.0%). 

Another stable trend is seen in the selection of the actual mutual funds for retirement plan fund lineups. Like last year and the year before, PIMCO’s Total Return Fund was the most popular fund suggested for plan menus, recommended by 37.4% of advisers, though this is down from 45.4% in 2012. Vanguard’s 500 Index Fund jumped to second place this year, finding favor with 24.8% of advisers. American Funds EuroPacific Growth Fund, which was second last year at 21.1%, dropped to third place at 13.4%. Among target-date funds (TDFs), this year, J.P. Morgan’s Smart Retirement Funds beat out T. Rowe Price’s Target-Date Funds, at 12.6% and 6.7%, respectively.

On the recordkeeper side, advisers again consider value for price as the most important criterion (57.5% ranked it first or second), followed by fee structure for the plan (49.4%) and investment options available (29.4%).

When we asked advisers to rate recordkeepers in various product and service areas and in different client segments, the results were quite different from last year. Fidelity Investments ranked first in six of 16 categories. John Hancock topped five categories, Great-West came in first in three, and Principal Financial Group earned two first-place spots.