2016 PLANADVISER Retirement Plan Adviser Survey

Advisers assess investment managers and recordkeepers

By Alison Cooke Mintzer See Archive >
2016 PLANADVISER Retirement Plan Adviser Survey
Art by David Jien

Although educating participants and helping plan sponsors craft the best possible plan design for their company may be two of the most important functions of a retirement plan adviser, aiding sponsors in their selection of investment options, not to mention the most appropriate recordkeeper for their plan, certainly are two other critical functions. The 2016 PLANADVISER Retirement Plan Adviser Survey, our 10th, examines the factors advisers consider when selecting these providers and discovers with which providers and investment managers advisers prefer to do business. In the next issue of PLANADVISER, we will present the survey’s second part, our annual Practice Benchmarking Survey, which examines how advisers structure their practices.

On the investment side, advisers may remind participants that past performance is not indicative of future results, but those professionals do not always follow that advice themselves, as performance continues to be a major factor in fund selection and recommendation. Although their primary consideration is relative performance—47% said, when selecting funds, they first evaluate their performance compared with the appropriate benchmarks—one wonders how that is being implemented when it comes to target-date funds (TDFs), for which there still is no industry standard benchmark. Performance is also the second most common consideration—specifically a fund’s average performance over the past five years, cited by 34.0% of advisers.

The third most frequently named variable for assessing or recommending funds is adviser support (55.8%), followed by brand (44.4%) and one-year performance (41.8%).As index funds and passive investments continue to be hot topics of discussion in light of the fund fees often cited in litigation, 73% of advisers, when asked to list the five fund families they most often recommend to plan sponsors, chose Vanguard as No. 1, down from 87% last year.

Active management is still largely valued, though, as the rest of the top five all have active management funds: American Funds, T. Rowe Price, J.P. Morgan and Fidelity. The 2016 list of advisers’ 10 favorite mutual funds moreover includes a mix of active, passive, target-date and international funds—showing the diversity in recommendations made to clients, and potentially showing a belief by advisers that a proper fund lineup is a mix of active and passive.

Another major consideration that advisers have when assessing investment managers is value for price. Perhaps, then, it is no surprise that Vanguard, known for its low-cost index funds, wins hands-down on this measure, receiving more than one-third of the votes (109), followed by American Funds, BlackRock, T. Rowe Price and MFS.

When evaluating recordkeepers, advisers once again prioritize value for price—at 42%, the first of the 14 top criteria they consider, followed by fee structure for plan (29%) and investment options available (12%). After that, the percentage of advisers that valued the items is less than 10% for each.

Most providers have some name recognition—for only a handful did any advisers say they “have never heard of” a particular company. However, despite that name recognition, 25% or more of the advisers said they had never worked with 15 out of the 29 providers named—showing ample opportunity for providers to grow their relationships with advisers.

Of note, although clear differences in rankings are visible in some of the categories, in many, one provider’s better rank may result from just a few votes, perhaps showing that advisers find a good percentage of the retirement plan industry recordkeeper and investment providers to be on equal par.


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Methodology: This August and September, approximately 15,000 advisers were asked to respond to the 2016 PLANADVISER Retirement Plan Adviser Survey, developed by the magazine’s editorial and research teams. Survey questions pertained to the size and scope of advisers’ qualified plan business, practice management, compensation and client service, as well as their assessments of investment managers, mutual funds and defined contribution (DC) providers. At the close of the survey, 601 complete responses had been received from retirement plan advisers. To qualify to supply opinions on mutual fund families and specific mutual funds, an adviser had to be personally involved in evaluating and recommending fund choices in an advisory capacity to qualified plan clients; 390 advisers met this criterion. To evaluate defined contribution providers, advisers had to answer affirmatively that, acting in an advisory role, they personally evaluate and recommend these providers for qualified plan clients; 369 advisers did so. In addition, an adviser needed to have worked with a defined contribution provider more than once for his favorability rating of that recordkeeper to count. For more information and additional research available, please contact