RESEARCH | December 11, 2017

2017
PLANADVISER Practice Benchmarking Survey

Our definitive annual report on how retirement plan advisers run their practices

Reported by PLANADVISER | Art by Lisk Feng

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	1%	Adding new clients	Plan/Fee benchmarking	2.0	5.0	5.0
$10MM - $100MM	9%	Adding new clients	Referrals	2.0	5.2	13.9
>$100MM - $200MM	10%	Compliance/Fiduciary	Referrals	2.4	6.3	8.0
>$200MM - $400MM	18%	Fee compression	Fiduciary services	1.4	3.1	2.6
>$400MM - $800MM	21%	Government regulation	Fiduciary services	1.7	4.3	3.6
>$800MM - $1B	5%	Marketing	Fiduciary services	1.2	3.5	5.2
>$1B - $2B	17%	Practice management	Participant advice/education	1.7	5.7	5.3
>$2B	20%	Competition/Differentiation	Participant advice/education	4.6	10.0	21.7
Footnote: *Besides 401(k) plans

Adviser firm affiliation
	2017	2016
National full-service wirehouse	34%	24%
Dually registered*	22%	24%
Registered investment adviser	25%	22%
Independent broker/dealer	10%	22%
Insurance or bank broker/dealer	1%	2%
Regional broker/dealer	1%	1%
Other	7%	5%
Footnote: *Registered Investment Adviser and broker/dealer

Practice Structure
Are you personally involved in recommending funds for qualified plan clients?
	2017	2016
Yes	95%	94%
No	5%	6%

Do you have a written business plan that governs your practice?
	2017	2016
Yes	83%	85%
No	17%	15%

Do you provide individual advice or wealth services to plan participants?
	2017	2016
Yes	67%	63%
No	33%	37%

Are you a fiduciary to plan participants?
	2017	2016
Yes	63%	53%
No	37%	47%

Are you involved in recommending DC plan providers for your qualified plan clients?
	2017	2016
Yes	96%	93%
No	4%	7%

Are you a fiduciary to clients' retirement plans?
	2017	2016
Yes, 3(16)	7%	4%
Yes, 3(21)	95%	92%
Yes, 3(38)	68%	60%
No	2%	5%

Fees/Revenue
How fees are disclosed to plan sponsor clients
	2017	2016
Contract	85%	79%
Annual review	83%	81%
408(b)(2) disclosure statement	72%	65%
Fee disclosure statement	67%	69%
Form ADV	44%	48%
Request for Proposals	34%	32%

How advisers are paid for qualified plan business
	2017	2016
Fees based on assets	87%	88%
Hard-dollar/Flat fee (regardless of size)	87%	80%
ERISA budget/ERISA reimbursable	44%	50%
Per project	43%	35%
Commissions/12b-1 fees (flat fee)	19%	32%
Commissions/12b-1 fees (variable)	15%	26%
Per participant	10%	8%

Average division of revenue
	2017	2016
Adviser salary	27%	30%
Broker/dealer	24%	20%
Staff salaries	17%	16%
General expenses	11%	9%
Partner salary	8%	9%
Travel expenses	3%	4%
Marketing expenses	3%	3%
Tools and services	3%	3%
Compliance expenses	2%	2%
Other	3%	3%

Whether compensation varies based on products or services offered
	2017	2016
Yes	33%	43%
No	67%	57%

Average annual charge for services to retirement plans, by plan size (bps= basis points)
	$1MM	$5MM	$20MM	$50MM	$100MM	$250MM	$500MM	$1B
<1 bp	0%	0%	0%	0%	2%	4%	11%	16%
1 - 5 bps	1%	0%	3%	9%	28%	41%	33%	20%
6 - 10 bps	1%	0%	13%	39%	41%	14%	5%	1%
11 - 25 bps	5%	33%	72%	39%	7%	0%	0%	0%
26 - 50 bps	43%	50%	6%	2%	0%	0%	1%	1%
51 - 75 bps	21%	7%	1%	0%	1%	1%	0%	0%
76 - 100 bps	10%	1%	1%	1%	0%	0%	0%	0%
>100 bps	5%	0%	0%	0%	0%	0%	0%	0%
Do not service this size	14%	9%	3%	11%	22%	39%	49%	63%

Broker/Dealers and Custodians
Most common custodians for RIAS
	% of Advisers Using Each 2017	% of Advisers Using Each 2016
Fidelity (NFS)	30%	24%
Schwab	30%	26%
LPL Financial	17%	29%
TD Ameritrade	16%	11%
Pershing, LLC	12%	9%
Matrix	10%	7%
Wells Fargo	9%	5%
State Street	8%	2%
Vanguard	8%	5%
Wilmington Trust	6%	4%
UBS	5%	5%
Prudential Financial	4%	2%
Exeter Trust Co.	3%	n/a
NFP Securities, Inc.	3%	5%
J.P. Morgan	3%	2%

Primary benefits received from custodians
	2017	2016
Trading platform	55%	47%
Online access to trust reporting	38%	23%
Retirement specialists	29%	29%
Robust trust and trading reports	22%	20%
Plan distribution processing (to plans)	14%	11%
Trading alerts	13%	10%
Other	12%	17%
Custodian adds no value	17%	15%

Adviser ratings of their custodians
	2017	2016
Excellent	31%	24%
Good	47%	56%
Satisfactory	20%	17%
Poor	2%	3%

Most common broker/dealers
	2017	2016
Morgan Stanley Smith Barney	29%	15%
LPL Financial	19%	28%
Merrill Lynch	7%	4%
NFP Securities, Inc.	5%	4%
UBS Financial Services	3%	6%
Wells Fargo Advisors (First Clearing LLC)	3%	2%
CapFinancial	2%	2%
Commonwealth Financial Networks	2%	1%
MML Investors	2%	1%
Raymond James Financial Services, Inc.	2%	1%
Cambridge Investment Research	1%	1%
M Holdings Securities	1%	1%

Primary benefits received from broker/dealers
	2017	2016
Compliance oversight	70%	79%
Technology/IT support	54%	58%
Brand name recognition	50%	45%
Investment due diligence	48%	33%
Wealth management support	46%	41%
Co-fiduciary support	42%	17%
Marketing support	37%	46%
Retirement plan expertise	34%	23%
Participant education materials/support	29%	42%
Retirement income projection tools	18%	21%
Retirement plan search	17%	34%
Lead generation/Referrals	10%	39%
Broker/dealer adds no value	12%	6%

Adviser ratings of their broker/dealers
	2017	2016
Excellent	46%	44%
Good	27%	39%
Satisfactory	22%	14%
Poor	4%	3%

Marketing and Service Models
Where do you find most of your new clients?
	2017	2016
Referrals from other professionals/Strategic relationships	63%	64%
Referrals from existing clients	25%	25%
Cold calling	5%	4%
Webinars	1%	1%
Seminars	0%	3%
Email marketing/Newsletters	0%	1%
Search engine optimization	0%	1%
Social media	0%	0%
Other	7%	2%

Which of the following success measures do you use with retirement plan clients?
	2017	2016
Participation rates	84%	77%
Deferral rates of various employee segments	78%	70%
External/Competitive benchmarking of plan design	72%	65%
% of participants with appropriate" asset allocations (i.e.	close to target-date fund glide path	etc.)"	69%	2017-12-08 17:12:12	5
% of participants meeting retirement income replacement ratio goals (i.e., will replace X% of income in retirement)	58%	50%
% of participants who increased deferral rates in the prior 12 months	55%	45%
% of participants saving to match	52%	42%
% of participants using advice tools/seminars offered through the plan	37%	28%
% of participants meeting projected monthly retirement income goals (i.e., $X per month in retirement)	32%	32%
Employee satisfaction with plan (through survey)	25%	26%
Other	8%	14%
None - we have no formal plan success measures	2%	3%
Footnote: 52%

Concerns and Expectations
What is the top concern facing your practice today?
	2017	2016
Fee compression	40%	34%
Adding new clients	32%	30%
Practice management	30%	27%
Competition/Practice differentiation	28%	25%
Government regulation	24%	33%
Staffing	23%	18%
Compliance/Fiduciary issues	22%	33%
Profitability	21%	13%
Participant communication/education	18%	16%
Marketing	15%	18%
Client retention	14%	11%
Succession planning	12%	8%
Plan sponsor communication/education	8%	11%
Fee disclosure/transparency	7%	4%
Technology	7%	10%
Overall economy	4%	6%

In terms of the number of investment options on your DC plan client lineups, have the number of funds changed in the past year?
	2017	2016
Number of funds on DC plan lineups have stayed the same for many/most of my DC clients	66%	60%
Number of funds on DC plan lineups have decreased for many/most of my DC clients	27%	30%
Number of funds on DC plan lineups have increased for many/most of my DC clients	8%	10%

How confident are you that most of you plan sponsor clients’ employees will achieve their retirement income goals by age 65?
	2017	2016
Very confident	5%	4%
Confident	31%	22%
Somewhat confident	43%	46%
Only a little confident	16%	19%
Not at all confident	5%	8%
Unsure	0%	1%

What do you predict will be the most significant growth area/strategy for your practice in the next 12 months?
	2017	2016
401(k) plans	53%	51%
Fiduciary services	40%	46%
Referrals	40%	33%
Strategic partnerships	32%	30%
Participant advice/education	30%	28%
Plan/Fee benchmarking	17%	22%
Defined benefit plans	16%	14%
Nonqualified plans	16%	12%
403(b) plans	14%	13%
Rollovers	9%	8%
Retirement income discussions	7%	8%
Target-date funds	7%	3%
Other workplace benefits	5%	5%
Retirement income products	5%	4%
Fee disclosure	5%	6%
Health care	1%	5%
Exchange-traded funds	1%	2%