Standing Out From the Crowd
When times are tough, to whom do plan sponsors look? For many plan sponsors, the answer is to their advisers.
However, where do they find those skilled advisers? Who are they? For the last four years, it has been our honor to try to answer that question both quantitatively and qualitatively through our listings of “most successful” retirement plan advisers and the PLANSPONSOR Retirement Plan Adviser and Adviser Team of the Year awards. In the pages that follow, we highlight the quantitative standouts from this year’s entries in terms of “success,” as measured by dollar value of qualified plan assets under advisement, number of plans, and specialties in areas other than 401(k)s. This year, 31 advisers and 49 adviser teams were eligible to be included on these pages.
Just how successful are the 80 advisers and adviser teams listed here? Collectively, they represent $104.6 billion in assets under advisement and serve more than 2.7 million participants. The median individual adviser listed has $450 million in assets under advisement, 48 plan clients, and serves 13,000 participants. The median adviser team advises 55 plans with $700 million in assets and 17,000 participants. Between September 2007 and the end of August 2008, this group has added 774 plans, while only losing 111.
Most advisers listed are branching out beyond just 401(k)s. New regulations are looming large, and have generated an increased interest in 403(b) programs—and a full 13 of the adviser/adviser teams listed say that a tenth of their practice is focused on those plans. Additionally, there are 31 advisers or adviser teams with 10% or more of their business in defined benefit plans and 20 with the same contributions from nonqualified deferred compensation programs.
Advisers appear to be building these sizeable books of business from the $50 million and smaller market. More than four in 10 of these advisers are focused on the $10 million to $50 million space, while the second largest group targets the $2 million to $10 million segment (32.5%). The $50 million to $200 million market is the target for 19% of the most successful advisers and, for 5% of advisers, plans with more than $200 million in assets are the target. Just 1% aims for the micro space of $500,000 to $2 million in assets.
Automatic enrollment and contribution acceleration are design trends that are growing in popularity: 82.5% of advisers have clients using automatic enrollment and nearly as many (75%) have clients using contribution acceleration. Not that these programs are on auto-pilot—nearly all (96.25%) of these advisers offer ongoing participant education. Roughly a third (35%) meet with participants semiannually in groups and about a quarter (26.25%) hold those group meetings quarterly. Enrollment meetings are offered by 95% of advisers, while individual investment advice and personal planning are less common—offered by 71.25% and 65% of advisers, respectively.
As for plan sponsors, more than two-thirds of these advisers meet quarterly to discuss investments (investment monitoring is offered by 98.75% of advisers and investment policy statements are offered by 96.25% of advisers). Meetings to discuss the recordkeeper (92% of advisers offer RFP or benchmarking services and 91.25% perform vendor or fee reviews) or plan design issues are most commonly dealt with on an annual basis.
Methodology
The advisers listed here are taken from nominations for the PLANSPONSOR Retirement Plan Adviser and Adviser Team of the Year awards. Those entries were solicited online from retirement plan advisers, their employers and/or broker/dealers, and plan sponsors, as well as from working partners of these advisers, including investment vendors, accountants and attorneys, and pension administrators (advisers who have attained the PLANSPONSOR Retirement Professional designation receive an automatic nomination). To enter the awards process, nominees must complete a form providing various details of their practice, including the details shown here. These lists are based solely on quantitative factors, while the PLANSPONSOR Retirement Plan Adviser and Adviser Team of the Year awards consider both qualitative and quantitative factors, including factors not considered in determining the most successful lists.
Due to the differences in evaluation factors, finalists for the PLANSPONSOR Retirement Plan Adviser and Adviser Team of the Year awards are not necessarily included on the “most successful” listing.
The most successful retirement plan advisers:
Illustration by John Hersey