RESEARCH | December 8, 2016

2016
PLANADVISER Practice Benchmarking Survey

The 2016 PLANADVISER Practice Benchmarking Survey gives you a guidepost to see how you compare with your peers.

Reported by PLANADVISER | Art by Jing Wei

Survey Data

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Survey Data

Respondent Profile
Total retirement plan assets under advisement
	Total	Top Concern	Growth Area*	Avg # of Office Locations	Avg # of Advisers in Practice	Avg # of Support Staff in Practice
<$10MM	5%	Fee compression	Fee benchmarking	1.0	3.3	2.0
$10MM – $100MM	10%	Compliance/Fiduciary	Fiduciary svcs	1.6	3.3	2.8
>$100MM – $200MM	18%	Gov’t regulation	Fiduciary svcs	1.7	3.9	3.5
>$200MM – $400MM	18%	Fee compression	Fiduciary svcs	1.7	4.2	5.8
>$400MM – $800MM	14%	Fee compression	Fiduciary svcs	2.1	4.4	5.3
>$800MM – $1B	6%	Participant education	Fiduciary svcs	2.6	6.0	4.8
>$1B – $2B	15%	Competition/Differentiation	Strategic partnerships	4.1	10.7	22.5
>$2B	14%	Gov’t regulation	Fiduciary svcs	4.9	13.7	28.2
Footnote: *Besides 401(k) plans

Adviser firm affiliation
	2016	2015	CHANGE
National full-service wirehouse	24%	25%	-5%
Dually registered (RIA and B/D)	24%	24%	-2%
Registered investment adviser	22%	24%	-10%
Independent broker/dealer	22%	17%	24%
Insurance or bank broker/dealer	2%	2%	-24%
Regional broker/dealer	1%	3%	-52%
Other	5%	4%	49%

Practice Structure
Are you personally involved in evaluating and recommending fund choices in an advisory capacity with your qualified plan clients?
	2016	2015	CHANGE
Yes	94%	93%	2%

Are you personally involved in evaluating and recommending defined contribution plan providers/recordkeepers in an advisory capacity with your qualified plan clients?
	2016	2015	CHANGE
Yes	93%	94%	-1%

Do you have a written business plan that governs your practice?
	2016	2015	CHANGE
Yes	85%	84%	1%

Are you a fiduciary to plan participants?
	2016	2015	CHANGE
Yes	53%	44%	20%

Are you a fiduciary to clients’ plans?
	2016	2015	CHANGE
Yes, 3(16)	4%	5%	-19%
Yes, 3(21)	92%	90%	2%
Yes, 3(38)	60%	56%	5%
No	5%	6%	-15%

Do you provide individual advice or wealth services to plan participants?
	2016	2015	CHANGE
Yes	63%	60%	5%

Fees/Revenue
How fees are disclosed to plan sponsor clients
	2016	2015	CHANGE
Annual review	81%	75%	7%
Contract	79%	76%	4%
Fee disclosure statement	69%	68%	1%
408(b)(2) disclosure statement	65%	67%	-3%
Form ADV	48%	53%	-9%
Request for Proposals	32%	35%	-9%

Average division of revenue
	2016	2015	CHANGE
Adviser salary	30%	29%	6%
Broker/dealer	20%	21%	-5%
Staff salaries	16%	16%	-1%
General expenses	9%	9%	1%
Partner salary	9%	10%	-11%
Travel expenses	4%	4%	-9%
Marketing expenses	3%	3%	-7%
Tools and services	3%	3%	2%
Compliance expenses	2%	2%	9%
Other	3%	4%	-17%

How advisers are paid for qualified plan business
	2016	2015	CHANGE
Fees based on assets	88%	88%	-1%
Hard dollar/Flat fee (regardless of size)	80%	78%	3%
ERISA budget/ERISA reimbursable	50%	52%	-3%
Per project	35%	37%	-6%
Commissions/12b-1 fees (flat fee)	32%	30%	6%
Commissions/12b-1 fees (variable)	26%	30%	-15%
Per participant	8%	8%	-6%

Whether compensation varies based on products or services offered
	2016	2015	CHANGE
Yes	43%	43%	1%
No	57%	58%	-1%

Average annual charge for services to retirement plans, by plan size (BPS = basis points)
	$1MM	$5MM	$20MM	$50MM	$100MM	$250MM	$500MM	$1B
<1 bp	1%	1%	0%	0%	0%	3%	6%	13%
1–5 bps	1%	1%	1%	4%	19%	39%	29%	14%
6–10 bps	0%	1%	15%	43%	45%	14%	6%	1%
11–25 bps	10%	32%	73%	36%	7%	3%	1%	0%
26–50 bps	42%	55%	7%	1%	1%	0%	0%	0%
51–75 bps	22%	6%	0%	1%	0%	0%	0%	0%
76–100 bps	10%	1%	0%	0%	0%	0%	0%	0%
>100 bps	1%	0%	0%	0%	0%	0%	0%	0%
Do not service this size	0%	0%	0%	0%	0%	0%	0%	0%

Broker/Dealers and Custodians
Most common custodians for RIAS
	% of Advisers Using Each 2016	% of Advisers Using Each 2015	CHANGE
LPL Financial	29%	29%	1%
Schwab	26%	38%	-30%
Fidelity (NFS)	24%	25%	-5%
TD Ameritrade	11%	19%	-40%
Pershing, LLC	9%	10%	-10%
Matrix	7%	14%	-54%
Vanguard	5%	6%	-14%
NFP Securities, Inc.	5%	4%	40%
Independent Financial Partners	5%	2%	122%
UBS	5%	6%	-20%
Wells Fargo	5%	5%	-14%
Wilmington Trust	4%	10%	-61%
State Street	2%	7%	-66%
J.P. Morgan	2%	6%	-69%
Prudential Financial	2%	4%	-57%

Primary benefits received from custodians
	2016	2015	CHANGE
Trading platform	47%	49%	-6%
Retirement specialists	29%	26%	8%
Online access to trust reporting	23%	22%	5%
Robust trust and trading reports	20%	19%	10%
Plan distribution processing (to plans)	11%	14%	-23%
Trading alerts	10%	6%	63%
Other	17%	20%	-15%
Custodian adds no value	15%	18%	-14%

Adviser ratings of their custodians
	2016	2015	CHANGE
Excellent	24%	34%	-30%
Good	56%	48%	15%
Satisfactory	17%	17%	0%
Poor	3%	1%	391%

Most common broker/dealers
	2016	2015	CHANGE
LPL Financial	28%	27%	4%
Morgan Stanley Smith Barney	15%	17%	-14%
UBS Financial Services	6%	7%	-22%
Merrill Lynch	4%	6%	-20%
NFP Securities, Inc.	4%	5%	-21%
CapFinancial	2%	1%	90%
Wells Fargo Advisors (First Clearing LLC)	2%	2%	-15%
Commonwealth Financial Networks	1%	1%	105%
Raymond James Financial Svcs, Inc.	1%	2%	-58%
Cambridge Investment Research	1%	2%	-58%
MML Investors	1%	0%	n/a*
M Holdings Securities	1%	1%	-58%
Footnote: *n/a = not applicable

Primary benefits received from broker/dealers
	2016	2015	CHANGE
Compliance oversight	79%	72%	10%
Technology/IT support	58%	55%	5%
Marketing support	46%	38%	22%
Brand name recognition	45%	43%	6%
Participant education materials/support	42%	32%	34%
Wealth management support	41%	39%	5%
Lead generation/Referrals	39%	14%	177%
Retirement plan search	34%	26%	34%
Investment due diligence	33%	42%	-21%
Retirement plan expertise	23%	42%	-44%
Retirement income projection tools	21%	17%	21%
Co-fiduciary support	17%	41%	-59%
B/D adds no value	6%	6%	0%

Adviser ratings of their broker/dealers
	2016	2015	CHANGE
Excellent	44%	50%	-11%
Good	39%	39%	1%
Satisfactory	14%	11%	27%
Poor	3%	1%	227%

Marketing and Service Models
Where do you find most of your new clients?
	2016	2015	CHANGE
Referrals from other professionals/Strategic relationships	64%	65%	-2%
Referrals from existing clients	25%	22%	11%
Seminars	3%	2%	27%
Cold calling	4%	4%	-10%
Email marketing/Newsletters	1%	2%	-66%
Search engine optimization	1%	0%	n/a*
Webinars	1%	1%	-32%
Social media	0%	0%	n/a
Other	2%	3%	-29%
Footnote: *n/a = not applicable

Which of the following success measures do you use with retirement plan clients?
	2016	2015	CHANGE
Participation rates	77%	82%	-7%
Deferral rates of various employee segments	70%	75%	-6%
External/Competitive benchmarking of plan design	65%	69%	-6%
% of participants with “appropriate” asset allocations (i.e., close to target-date fund glide path, etc.)	52%	57%	-8%
% of participants meeting retirement income replacement ratio goals (i.e., will replace X% of income in retirement)	50%	56%	-11%
% of participants who increased deferral rates in the prior 12 months	45%	50%	-10%
% of participants saving to match	42%	47%	-11%
% of participants meeting projected monthly retirement income goals (i.e., $X per month in retirement)	32%	34%	-6%
% of participants using advice tools/seminars offered through the plan	28%	31%	-11%
Employee satisfaction with plan (through survey)	26%	28%	-10%
Other	14%	7%	110%
None (We have no formal plan success measures)	3%	3%	5%

Concerns and Expectations
What is your top concern facing your practice today?
	2016	2015	CHANGE
Fee compression	34%	35%	-3%
Compliance/Fiduciary issues	33%	25%	33%
Government regulation	33%	38%	-13%
Adding new clients	30%	26%	16%
Practice management	27%	28%	0%
Competition/Practice differentiation	25%	28%	-11%
Marketing	18%	17%	10%
Staffing	18%	21%	-15%
Participant communication/education	16%	24%	-33%
Profitability	13%	16%	-21%
Plan sponsor communication/education	11%	11%	1%
Client retention	11%	10%	8%
Technology	10%	12%	-18%
Succession planning	8%	7%	9%
Overall economy	6%	5%	20%
Fee disclosure/transparency	4%	6%	-35%

In terms of the number of investment options on your DC plan client lineups, have the number of funds changed in the past year?
	2016	2015	CHANGE
The number of funds on DC plan lineups have increased for many/most of my DC clients	0%	11%	-100%
The number of funds on DC plan lineups have stayed the same for many/most of my DC clients	0%	61%	-100%
The number of funds on DC plan lineups have decreased for many/most of my DC clients	0%	28%	-100%

How confident are you that most of you plan sponsor clients’ employees will achieve their retirement income goals by age 65?
	2016	2015	CHANGE
Very confident	4%	4%	-9%
Confident	22%	25%	-9%
Somewhat confident	46%	42%	9%
Only a little confident	19%	20%	-6%
Not at all confident	8%	9%	-2%
Unsure	1%	0%	96%

What do you predict will be the most significant growth area/strategy for your practice in the next 12 months?
	2016	2015	CHANGE
401(k) plans	51%	48%	7%
Fiduciary services	46%	36%	27%
Referrals	33%	32%	4%
Strategic partnerships	30%	31%	-3%
Participant advice/education	28%	33%	-15%
Plan/Fee benchmarking	22%	19%	15%
Defined benefit plans	14%	14%	0%
403(b) plans	13%	17%	-26%
Nonqualified plans	12%	14%	-13%
Rollovers	8%	8%	7%
Retirement income discussions	8%	14%	-40%
Target-date funds	6%	6%	-8%
Other workplace benefits	5%	5%	4%
Retirement income products	5%	6%	-25%
Fee disclosure	4%	3%	20%
Health care	3%	2%	4%
Exchange-traded funds	2%	2%	-22%