2013
Practice Benchmarking Survey

2013 PLANADVISER Practice Benchmarking Survey: Evaluating your peer group to benchmark your practice

Survey Data

Survey Data

Respondent Profile

Total retirement plan assets under advisement
2013
>$0–$100,0001.5%
>$100,000–$1MM4.4%
>$1MM–$5MM4.4%
>$5MM–$10MM4.6%
>$10MM–$20MM7.3%
>$20MM–$50MM11.3%
>$50MM–$100MM12.1%
>$100MM54.5%
Number of qualified plan clients
20122013CHANGE
<1017.1%18.2%6.9%
10 to 2017.5%14.8%-15.2%
21 to 4019.7%18.8%-4.8%
41 to 6014.4%14.5%0.5%
61 to 757.1%5.9%-16.8%
>7524.2%27.7%14.7%
Adviser firm affiliation
20122013CHANGE
National full-service wirehouse15.0%15.3%1.5%
Independent broker/dealer (B/D)26.0%24.2%-6.9%
Regional broker/dealer3.2%4.7%44.7%
Insurance or bank broker/dealer8.2%5.9%-27.9%
Registered investment adviser (RIA)19.7%23.1%17.7%
Dually registered (RIA and B/D)17.2%19.1%11.4%
Other10.7%7.7%-28.4%
An individual adviser practice26.1%
A team practice (in one office location)47.5%
A team practice (spread over multiple office locations)26.4%
Yes50.0%
No27.6%
Sometimes22.4%
Yes80.9%
No19.1%
Do you have a written business plan that governs your practice?
20122013CHANGE
Yes58.4%60.4%3.4%
No41.6%39.8%-4.3%
Are you a fiduciary to clients’ plans?
20122013CHANGE
Yes26.4%29.2%10.8%
Yes – 3(21)57.4%57.0%-0.7%
Yes – 3(38)19.7%22.9%16.3%
No27.6%22.3%-19.1%
Are you a fiduciary to plan participants?
20122013CHANGE
Yes34.0%33.5%-1.6%
No66.0%66.5%0.8%

Broker/Dealers and Custodians

Primary benefits received from broker/dealers
20122013CHANGE
Compliance oversight62.6%52.2%-16.7%
Investment due diligence28.9%30.2%4.5%
Brand name recognition28.6%26.3%-8.2%
Marketing support22.3%23.3%4.2%
Co-fiduciary support20.4%21.8%6.8%
Lead generation4.1%5.4%30.6%
Ret. plan industry expertise/toolsN/A38.8%N/A
Technology/IT supportN/A30.4%N/A
Other19.2%10.8%-43.8%
B/D adds no valueN/A14.0%N/A
Most common custodians for RIAs
% of RIAs using – 2012% of RIAs using – 2013CHANGE
Schwab25.5%26.6%4.2%
Fidelity/NFS18.1%23.4%29.3%
TD Ameritrade12.8%15.7%23.2%
Pershing12.1%15.7%30.1%
MatrixN/A11.4%N/A
LPL7.4%11.1%50.9%
Most common broker/dealers
20122013CHANGE
LPL12.1%13.2%9.4%
Morgan Stanley Smith Barney3.5%5.8%64.8%
UBS Financial Services5.3%4.4%-16.7%
Merrill Lynch6.3%4.2%-33.2%
Wells Fargo Advisors*2.3%3.6%59.1%
NFP4.0%3.0%-25.4%
Financial Telesis Inc.3.3%2.2%-32.7%
Raymond James3.3%2.2%-32.7%
Cambridge Investment Research1.5%2.2%45.9%
Commonwealth2.3%1.6%-29.3%
AXA Advisors2.0%1.0%-50.3%
Financial Network (Cetera)2.5%0.8%-68.2%
Excellent (consistently exceeds expectations)33.7%
Good (consistently meets expectations)42.9%
Satisfactory (usually meets expectations, sometimes does not)17.8%
Poor (consistently falls below expectations)5.6%
Footnote: *Wells Fargo Advisors (First Clearing LLC)

Marketing and Service Models

On average, how often do you communicate/meet with plan participants in the following ways?
MonthlyQuarterlySemi-AnnuallyAnnuallyAs Needed
In-person group meetings0.7%16.1%32.1%28.0%23.1%
In-person individual meetings2.2%12.6%19.9%19.3%46.1%
Via email16.0%19.4%4.3%2.5%57.8%
Via webcasts5.1%9.9%7.1%6.4%71.4%
Other electronic method5.9%7.8%3.0%3.0%80.3%
How often do you meet with plan sponsors to discuss the following?
MonthlyQuarterlySemi-AnnuallyAnnuallyAs Needed
Investments2.2%12.6%19.9%19.3%46.1%
Plan design/compliance16.0%19.4%4.3%2.5%57.8%
Recordkeeper/TPA* selection5.1%9.9%7.1%6.4%71.4%
Footnote: * Third-party administrator;
Where do you find most of your new clients?
20122013CHANGE
Advertising (newspaper, TV, online, etc.)0.3%0.0%-100.0%
Cold calling7.1%8.0%14.0%
Direct mail0.3%0.8%227.4%
Email marketing/newsletters1.5%1.0%-31.8%
Referrals from existing clients23.2%25.8%11.2%
Referrals from other professionals/strategic relationships59.7%59.2%-0.9%
Search engine optimization (SEO)0.3%0.0%-100.0%
Seminars2.0%2.1%2.3%
Social media(Twitter, Facebook, LinkedIn, etc.)0.3%0.2%-18.1%
Webinars0.3%0.2%-18.1%
Other5.3%2.7%-49.3%
Plan services offered as part of retainer or annual service
20122013CHANGE
Ongoing investment monitoring89.6%94.0%5.0%
Attendance at investment/retirement plan committee meetings92.6%92.3%-0.3%
Investment policy statement design88.5%90.2%1.9%
Manager search/fund replacements88.3%90.2%2.1%
Fiduciary and fund governance81.7%88.9%8.9%
Provider fee analysis78.6%87.0%10.7%
Defined contribution (DC) plan design76.3%86.0%12.6%
Benchmarking DC plan providers76.8%85.1%10.8%
Compliance reviews76.1%84.9%11.6%
Employee group meetings, ongoing76.1%84.2%10.7%
Written svc contract/svc guarantee76.8%84.2%9.5%
Enrollment meetings78.4%83.5%6.6%
Vendor/Fee review or benchmark study71.8%78.6%9.5%
Communication policy stmt design69.5%77.4%11.5%
Employee meetings, one-on-one66.2%72.6%9.8%
Asset allocation models69.0%69.9%1.4%
Vendor search/Requests for proposals62.3%69.2%11.1%
Individ participant investment advice48.6%49.2%1.3%
Defined benefit (DB) plan design37.7%45.5%20.9%
Nonqualified plan design40.7%37.1%-8.9%
Private wealth/HCE^ services25.2%22.2%-12.0%
Footnote: ^ Highly compensated employee

Fees/Revenue

Average annual charge for services to retirement plans, by plan size (BPS = basis points)
$1MM $5MM $20MM $50MM $100MM $250MM
<1 BP4.4%2.1%2.5%4.0%8.4%18.9%
1–5 BPS2.3%1.4%2.5%8.7%37.0%57.8%
6–10 BPS1.4%2.1%12.8%43.0%41.2%14.5%
11–25 BPS8.4%29.7%65.8%38.9%10.7%6.8%
26–50 BPS40.2%50.1%12.8%4.0%1.1%1.6%
51–75 BPS24.4%7.4%1.6%1.0%0.8%0.0%
76–100 BPS13.5%4.0%0.5%0.3%0.8%0.4%
>100 BPS5.3%1.7%0.3%0.0%0.0%0.0%
How fees are disclosed to plan sponsor clients
20122013CHANGE
Annual review70.2%71.1%1.2%
Contract64.6%65.1%0.7%
Fee disclosure statement75.9%76.1%0.3%
Form ADV40.0%38.4%-4.1%
Request for proposals (RFP) 24.9%21.3%-14.4%
Other5.6%5.6%0.2%
How advisers are paid for qualified plan business
20122013CHANGE
Commissions/12b-1 fees55.8%51.4%-7.8%
Fees based on assets73.3%76.4%4.2%
Hard-dollar or flat fee*51.1%50.3%-1.5%
Per participant9.9%9.8%-1.4%
Per project24.8%21.3%-14.2%
ERISAˆ budget/ERISA reimbursable30.7%31.5%2.4%
Other2.4%2.3%-2.6%
Footnote: *Regardless of asset size; ^Employee Retirement Income Security Act
Average division of revenue
20122013CHANGE
Broker/dealer20.7%19.5%-5.5%
Adviser salary34.8%33.0%-5.2%
Partner salary8.6%9.0%4.3%
Staff salaries12.7%12.1%-4.7%
Travel expenses3.9%3.6%-7.6%
General expenses14.5%13.4%-7.2%
Other4.9%4.7%-4.1%

Concerns and Expectations

What is your top concern facing your practice today?
20122013CHANGE
Adding new clients36.7%29.8%-18.9%
Fee compression7.6%9.8%29.0%
Practice management6.3%9.3%47.5%
Government regulation8.0%9.1%14.5%
Profitability4.1%6.4%57.5%
Compliance/Fiduciary issues9.2%6.3%-31.1%
Marketing3.7%5.6%50.5%
Staffing3.3%5.6%67.2%
Participant communication/education3.5%3.9%10.4%
Overall economy6.1%2.9%-53.0%
Client retention3.7%2.9%-22.5%
Competition3.0%2.7%-8.8%
Plan sponsor communication/education1.7%1.5%-8.8%
Technology1.1%1.4%21.6%
Fee disclosure/transparency2.0%0.7%-66.8%
OtherN/A2.1%N/A
What is the exit strategy for your business?
20122013CHANGE
No exit strategy plans52.7%47.2%-10.5%
Sell to partners/employees31.6%33.9%7.2%
Sell to larger entity7.8%9.1%16.4%
Participate in roll-up strategy2.1%2.6%22.1%
Initial public offering (IPO)0.2%0.5%168.5%
Other 5.6%6.7%21.5%
What do you predict will be the most significant growth area/strategy for your practice over the next 12 months (through July 2014)?
20122013CHANGE
401(k) plans41.7%30.2%-27.5%
Referrals6.7%14.4%114.5%
Fiduciary services12.9%12.9%0.0%
Participant advice/education4.9%8.1%67.7%
Plan/Fee benchmarking11.6%7.3%-37.0%
403(b) plans6.9%5.4%-21.4%
Rollovers3.6%5.4%53.0%
Retirement income products3.0%4.2%41.9%
Defined benefit plans3.4%3.7%11.0%
Nonqualified plans2.2%1.9%-16.7%
Fee disclosure3.2%1.2%-62.6%