Best of

Plan sponsors turn to their advisers for help in finding the best provider or investment manager. Advisers generally are well-positioned to assist in this endeavor because, unlike plan sponsors, they work with a variety of providers, with more frequent interaction. Considering the wave of change that has swept over these firms in the past year, it perhaps is not surprising to see some shifts in preferences among adviser respondents to PLANADVISER’s annual survey.

Fidelity Investments and Newport Group were in the top three spots for best service to small plans, mid-size plans, and large plans. ADP Retirement Services and New York Life Retirement Plan Services each appeared as best in two plan-size categories.

Advisers were asked not only the fund families they like to work with (American Funds was mentioned on nearly every list) but also the mutual funds they most recommend to clients, including target-date and target-risk suites. A noticeable change in responses—perhaps related to the market conditions of the past year—was a surge in popularity of the PIMCO Total Return funds as the mutual fund most recommended to a plan sponsor, cited by 37% of advisers. There was also a shift in what advisers said were the fund types that belong on an “ideal” defined contribution investment lineup. While large cap value, large cap growth, and international ruled the day (90.1% of survey respondents each), target-date funds declined significantly in the rankings this year, falling to sixth place (71.0%), behind fixed income/stable value (87.8%), large cap core (77.9%), and small cap growth (74.8%).

Diversity remains the order of the day and, in many categories, those in the top position garnered less than one-fifth of the vote. In fact, few categories of the top three providers or managers earned the recommendation of even half the respondents. 

METHODOLOGY

In July 2009, a 60-question online survey, developed by the PLANADVISER editorial and research teams, was sent to 8,500 people subscribed to the PLANADVISERdash e-mail newsletter, as well as to 1,000 advisers taken from client lists supplied by defined contribution (DC) recordkeepers. Of the 324 responses, 267 were considered valid. In order to rate DC recordkeepers, advisers had to be “personally involved in evaluating and recommending plan providers/recordkeepers on behalf of qualified plan clients.” For providers to be listed in the perception category, they had to receive a minimum of 40 favorability responses. In order to rate investment managers, respondents had to be “personally involved in evaluating and recommending fund choices on behalf of qualified plan clients.”