RESEARCH | December 11, 2018

2018
PLANADVISER Practice Benchmarking Survey

Reported by PLANADVISER | Art by Katherine Streeter

Survey Data

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Survey Data

Respondent Profile
Total retirement plan assets under advisement
	Total	Top Concern	Top Growth Area Other than 401(k) Plans	Avg # of Office Locations	Avg # of Advisers in Practice	Avg # of Support Staff in Practice
<$10MM	3%	Compliance/Fiduciary	Retirement income	7.3	29.5	56.7
$10MM - $100MM	10%	Competition/Differentiation	Fiduciary services	4.6	10.8	14.8
>$100MM - $200MM	8%	Practice management	Referrals	2.1	5.4	4.3
>$200MM - $400MM	19%	Adding new clients	Fiduciary services	1.8	4.4	4.7
>$400MM - $800MM	12%	Practice management	Strategic partnerships	1.4	3.5	4.2
>$800MM - $1B	4%	Participant education	Fiduciary services	1.9	2.6	3.3
>$1B - $2B	13%	Fee compression	Referrals	2.8	13.8	12.9
>$2B	28%	Fee compression	3.5	11.6	24.3

Adviser firm affiliation
	2018	2017
National full-service wirehouse	28%	34%
Dually registered*	27%	22%
Registered investment adviser	23%	25%
Independent broker/dealer	12%	10%
Insurance or bank broker/dealer	2%	1%
Regional broker/dealer	2%	1%
Other	6%	7%
Footnote: *Registered investment adviser (RIA) and broker/dealer (B/D)

Practice Structure
Are you personally involved in recommending funds for qualified plan clients?
	2018	2017
Yes	96%	95%
No	4%	5%

Do you have a written business plan that governs your practice?
	2018	2017
Yes	81%	83%
No	19%	17%

Do you provide individual advice or wealth services to plan participants?
	2018	2017
Yes	62%	67%
No	38%	33%

Are you a fiduciary to plan participants?
	2018	2017
Yes	51%	63%
No	49%	37%

Are you involved in recommending DC plan providers for your qualified plan clients?
	2018	2017
Yes	94%	96%
No	6%	4%

Are you a fiduciary to clients' retirement plans?
	2018	2017
Yes, a 3(38)	72%	67%
Yes, a 3(21)	24%	30%
No	4%	3%

Fees/Revenue
How fees are disclosed to plan sponsor clients
	2018	2017
Annual review	83%	81%
Contract	82%	79%
408(b)(2) disclosure statement	70%	65%
Fee disclosure statement	65%	69%
Form ADV	50%	48%
Requests for proposals	36%	32%

How advisers are paid for qualified plan business
	2018	2017
Fees based on assets	92%	88%
Hard-dollar/Flat fee (regardless of size)	81%	80%
ERISA budget/ERISA reimbursable	46%	50%
Per project	38%	35%
Commissions/12b-1 fees (flat fee)	23%	32%
Commissions/12b-1 fees (variable)	14%	26%
Per participant	11%	8%

Average allocation of revenue (by expense)
	2018	2017
Adviser salary	28%	30%
Broker/dealer services	22%	20%
Staff salaries	18%	16%
Partner salary	9%	9%
General expenses	7%	9%
Travel expenses	3%	4%
Marketing expenses	3%	3%
Tools and services	3%	3%
Compliance expenses	2%	2%
Other	5%	4%

Whether compensation varies based on products or services offered
	2018	2017
Yes	39%	43%
No	61%	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%	0%	1%	10%	16%
1-5 bps	1%	1%	2%	5%	28%	43%	39%	19%
6-10 bps	1%	1%	12%	50%	47%	20%	4%	1%
11-25 bps	7%	26%	75%	34%	5%	1%	0%	0%
26-50 bps	32%	60%	6%	3%	1%	1%	0%	0%
51-75 bps	30%	5%	1%	1%	0%	0%	0%	1%
76-100 bps	8%	1%	1%	0%	0%	0%	0%	0%
>100 bps	2%	1%	0%	0%	0%	1%	1%	0%
Do not service this size	19%	6%	4%	7%	19%	33%	46%	63%

Marketing and Service Models
Where do you find most of your new clients?
	2018	2017
Referrals from other professionals/Strategic relationships	66%	63%
Referrals from existing clients	24%	25%
Cold calling	2%	5%
Seminars	1%	0%
Webinars	1%	1%
Search engine optimization	1%	0%
Email marketing/Newsletters	0%	0%
Social media	0%	0%
Other	5%	7%

Which of the following success measures do you use with retirement plan clients?
	2018	2017
Participation rates	83%	84%
Deferral rates of various employee segments	77%	78%
External/Competitive benchmarking of plan design	69%	72%
61%	69%
% of participants meeting retirement income replacement ratio goals (i.e., will replace X% of income in retirement)	56%	58%
% of participants who increased deferral rates in the prior 12 months	52%	55%
% of participants saving to match	48%	52%
% of participants using advice tools/seminars offered through the plan	35%	37%
% of participants meeting projected monthly retirement income goals (i.e., $Y per month in retirement)	33%	32%
Employee satisfaction with plan (determined through survey)	26%	25%
Other	15%	8%
None-we have no formal plan success measures	3%	2%

Broker/Dealers and Custodians
Most common custodians for RIAS
	% of Advisers Using Each 2018	% of Advisers Using Each 2017
Schwab	20%	30%
Fidelity (NFS)	16%	30%
TD Ameritrade	10%	16%
Pershing, LLC	8%	12%
LPL Financial	7%	17%
Matrix	3%	10%
Wells Fargo	3%	9%
Vanguard	3%	8%
Wilmington Trust	3%	6%
UBS	3%	5%
J.P. Morgan	2%	3%
Global Retirement Partners	2%	0%
State Street	1%	8%
Prudential Financial	1%	4%
Pensionmark	1%	0%

Primary benefits received from custodians
	% of Advisers Using Each 2018	% of Advisers Using Each 2017
Trading platform	47%	55%
Online access to trust reporting	24%	38%
Robust trust and trading reports	24%	22%
Retirement specialists	22%	29%
Plan distribution processing (to plans)	16%	14%
Trading alerts	10%	13%
Other	13%	12%
Custodian adds no value	24%	17%

Adviser ratings of their custodians
	2018	2017
Excellent	24%	31%
Good	53%	47%
Satisfactory	22%	20%
Poor	1%	2%

Most common broker/dealers
	% of Advisers Using Each 2018	% of Advisers Using Each 2017
Morgan Stanley Smith Barney	19%	29%
LPL Financial	16%	19%
UBS Financial Services	8%	3%
Cetera	8%	0%
Pensionmark	6%	0%
Merrill Lynch	5%	7%
CapFinancial	3%	2%
NFP Securities, Inc.	2%	5%
Wells Fargo Advisors (First Clearing LLC)	1%	3%
Commonwealth Financial Networks	1%	2%
MML Investors	1%	2%
Raymond James Financial Services, Inc.	1%	2%

Primary benefits received from broker/dealers
	2018	2017
Compliance oversight	85%	70%
Technology/IT support	62%	54%
Wealth management support	55%	46%
Brand name recognition	52%	50%
Investment due diligence	52%	48%
Marketing support	45%	37%
Co-fiduciary support	44%	42%
Retirement plan expertise	40%	34%
Participant education materials/support	39%	29%
Retirement plan search	30%	17%
Retirement income projection tools	23%	18%
Lead generation/Referrals	19%	10%
Broker/dealer adds no value	7%	12%

Adviser ratings of their broker/dealers
	2018	2017
Excellent	46%	47%
Good	42%	27%
Satisfactory	9%	22%
Poor	3%	4%

Concerns and Expectations
What is your top concern facing your practice today?
	2018	2017
Fee compression	39%	40%
Practice management	29%	30%
Adding new clients	28%	32%
Competition/Practice differentiation	25%	28%
Staffing	25%	23%
Government regulation	23%	24%
Compliance/Fiduciary issues	22%	22%
Participant communication/education	20%	18%
Marketing	18%	15%
Client retention	14%	14%
Technology	13%	7%
Succession planning	12%	12%
Profitability	11%	21%
Plan sponsor communication/education	10%	8%
Fee disclosure/transparency	6%	7%
Overall economy	5%	4%

In terms of the number of investment options on your DC plan client lineups, have the number of funds changed in the past year?
	2018	2017
The number of funds on DC plan lineups have increased for many/most of my DC clients	10%	66%
The number of funds on DC plan lineups have stayed the same for many/most of my DC clients	65%	27%
The number of funds on DC plan lineups have decreased for many/most of my DC clients	25%	8%

How confident are you that most of your plan sponsor clients’ employees will achieve their retirement income goals by age 65?
	2018	2017
Very confident	8%	5%
Confident	27%	31%
Somewhat confident	44%	43%
Only a little confident	16%	16%
Not at all confident	4%	5%
Unsure	1%	0%

What do you predict will be the most significant growth area/strategy for your practice in the next 12 months?
	2018	2017
401(k) plans	51%	53%
Strategic partnerships	36%	32%
Fiduciary services	34%	40%
Referrals	30%	40%
Participant advice/education	27%	30%
Non-qualified deferred compensation plans	21%	16%
Plan/fee benchmarking	18%	17%
Other workplace benefits	16%	5%
Defined benefit plans	15%	16%
403(b) plans	13%	14%
Retirement income discussions	13%	7%
Rollovers	9%	9%
Health care plans	4%	1%
Retirement income products	4%	5%
Target-date funds	3%	7%
Fee disclosure	2%	5%
ETFs	1%	1%