Top Advisers Talk Current Client Service Trends

Sharing survey data with PLANADVISER from its third annual Defined Contribution Advisor Summit, J.P. Morgan suggests top advisers are feeling energized by the current market environment.

J.P. Morgan Asset Management recently hosted its third annual Defined Contribution Advisor Summit in New York, bringing together retirement advisers from across the country to discuss influential trends transforming the future of retirement. The closed-door forum encouraged advisers to share their collective insights on how best to serve defined contribution (DC) plan sponsors and participants.

The firm tells PLANADVISER there was a growing interest among the invited advisers around improving plan participant outcomes through continuing plan design innovation, with 77% of attending advisers noting their biggest concern for sponsors is not unmitigated fiduciary liability or runaway investment fees—but instead “participants not having saved enough.”

Solutions to this problem include well-known elements of aggressive plan design, advisers said, including auto-enrollment and auto-escalation, but also deeper thinking about how to best pick and position a qualified default investment alternative (QDIA) so that participants get engaged and stay engaged in their plan. In this area, 52% of attending advisers felt the biggest challenge in trying to get clients to implement plan changes, such as regular re-enrollments, was gaining consensus among committee members, while 39% felt the challenge was more aligned with participant backlash.

An important note is that anecdotally, advisers who have lead their clients down the road to doing more with auto-features consistently cite a surprising and encouraging lack of participant backlash. Most participants simply want to be shown the way to a successful retirement.

The discussion also focused on how advisers can help their plan sponsor clients navigate the ever-changing health care landscape. It’s an area that has not seen as much adviser activity, the firm notes, but this is changing, at least among the well-established group of advisers invited to the J.P. Morgan summit. Many advisers see opportunity in the space to apply their skills in fee comparison, requests for proposal processes, and the many other areas of overlap between health and retirement benefits. 

Sentiment was split on how far along sponsor clients are with rethinking employee health care, with 51% of attending advisers noting clients are either just starting to inquire about integrating retirement and health offerings or taking a holistic approach to the benefits package. The other 49% noted it was not yet part of the conversation with plan sponsors, but could be in the future.

A strong majority (89%) also felt plan sponsors were looking for partners that could advise on all areas of the plan and look at the plan holistically. But perhaps the most agreement came in the area of the ongoing fiduciary redefinition debate, and how this will impact investment fees and styles.  A vast majority of advisers in attendance (93%) believe the “death of active management” is greatly exaggerated, even as new fiduciary regulations and general industry trends have compressed fees and driven interest in index funds and lower-cost investments. Despite this pressure, there remains room for both active and passive investments in DC plans, the advisers said.

“We believe sharing knowledge helps support our goal of helping all Americans achieve a financially sound future, and we were excited to hear directly from the DC adviser community on current issues impacting their business,” notes Anne Lester, global head of retirement solutions and manager for the JPMorgan SmartRetirement suite of target-date funds. “Exchanging perspectives on issues from plan design and investments to effective processes for decision making and best practices for risk management allowed us to focus on how we—as retirement solutions providers and advisers—can offer solutions to best meet these needs and serve the DC market.”

More about J.P. Morgan Asset Management’s DC investment products and research is available here