Research

DATA & RESEARCH | PLANADVISER April 2017

2017 PLANADVISER Adviser Value Survey

A survey of plan sponsors reveals what services from their retirement plan advisers they perceive to be beneficial.

By Alison Cooke Mintzer See Archive >

RESPONDENT PROFILE
DC Plan Assets
WITH ADVISERWITHOUT ADVISER
<$1MM6%15%
$1MM – $5MM20%24%
>$5MM – $10MM11%16%
>$10MM – $25MM14%12%
>$25MM – $50MM11%9%
>$50MM – $200MM17%10%
>$200MM – $500MM8%5%
>$500MM – $1B5%2%
>$1B8%6%
DC Plan Participants
WITH ADVISERWITHOUT ADVISER
<10032%48%
100 – 50027%24%
501 – 1,00011%7%
1,001 – 5,00017%13%
5,001 – 10,0006%2%
>10,0008%7%
DC Plan Type
WITH ADVISERWITHOUT ADVISER
401(k)89%84%
403(b)11%13%
45712%10%
Money purchase3%2%
Profit sharing22%19%
Employee Stock Ownership Plan4%5%
KSOP*1%1%
Nonqualified Deferred Compensation13%8%
Simplified Employee Pension0%0%
SIMPLE IRA^0%1%
Footnote: *Qualified retirement plan that combines a 401(k) with an ESOP. ^Savings incentive match plan for employees' individual retirement account.
EMPLOYER MATCH
Type(s) of Employer Contributions
WITH ADVISERWITHOUT ADVISER
Employer matching contribution*78%73%
Profit-sharing/Nonelective contribution52%50%
No employer contribution22%27%
Footnote: *I.e., 50% of first 6% of pay.
Match Formula
WITH ADVISERWITHOUT ADVISER
>100% match, to 6% of salary2%5%
100% match, to 6% of salary10%9%
51% – 99% match, to 6% of salary28%33%
50% match, to 6% of salary19%15%
<50% match, to 6% of salary6%6%
Other match formula35%32%
Frequency of Match or Contribution
WITH ADVISERWITHOUT ADVISER
Per pay period73%70%
Annually14%14%
Monthly2%2%
Biweekly (26 times a year)5%5%
Twice monthly (24 times a year)2%3%
Quarterly2%3%
Other1%3%
Match/Contribution Vesting
WITH ADVISERWITHOUT ADVISER
Immediately on enrollment35%37%
At 6 months1%1%
At 1 year3%6%
At 2 years5%5%
At 3 years13%13%
At 4 years5%2%
At 5 years21%17%
At >6 years1%2%
PLAN DESIGN
DC Plan Features Used
WITH ADVISERWITHOUT ADVISER
Employer match 78%73%
Auto-enrollment48%37%
Auto-deferral increases45%30%
Roth 69%58%
Safe harbor42%49%
Written IPS76%56%
Loan provision83%76%
Hardship withdrawal provision88%83%
Custom TDFs13%12%
Plan Eligibility
WITH ADVISERWITHOUT ADVISER
Immediately upon hire39%36%
Within 3 months28%26%
Within 4 – 11 months14%12%
After 1 year of employment19%24%
After >1 year of employment1%2%
INVESTMENTS
Investment Types Offered in DC Plans
WITH ADVISERWITHOUT ADVISER
Target-date funds79%75%
Target-risk funds39%40%
Balanced funds68%72%
Professionally managed accounts36%31%
Money market fund59%65%
Employer stock7%8%
Stable value fund64%53%
Real estate/Real estate investment trusts28%26%
Alternative investments5%6%
Socially responsible funds11%12%
Investment Vehicles Used
WITH ADVISERWITHOUT ADVISER
Mutual funds92%90%
Separate accounts21%20%
Collective investment trusts17%12%
ETFs (outside of brokerage window)8%11%
Self-directed brokerage window20%18%
Mutual fund window5%4%
Other5%7%
Frequency of Review of Investment Options
WITH ADVISERWITHOUT ADVISER
Quarterly44%23%
Twice a year18%12%
Annually29%43%
Every 1 – 2 years4%7%
Every >2 – 3 years1%4%
Every >3 years2%3%
Never 2%7%
FEES
Average Expense Ratio of DC Investment Options
WITH ADVISERWITHOUT ADVISER
<0.25% (<25 bps)11%12%
0.25% – 0.50% (25 – 50 bps)24%19%
0.51% – 0.75% (51 – 75 bps)18%18%
0.76% – 1.00% (76 – 100 bps)13%12%
1.01% – 1.50% (101 – 150 bps)7%5%
1.51% – 2.00% (151 – 200 bps)1%1%
2.01% – 2.50% (201 – 250 bps)0%0%
>2.50% (>250 bps)0%0%
Don't know25%34%
Frequency of Review of Actual Administrative Costs/Fees
WITH ADVISERWITHOUT ADVISER
Annually74%70%
Every 1 – 2 years11%13%
Every >2 – 3 years9%7%
Every >3 – 5 years2%2%
Every >5 years1%2%
Don’t know2%6%
OVERSIGHT
Frequency of Formal Evaluation of DC Provider
WITH ADVISERWITHOUT ADVISER
Annually49%54%
Every 1 – 2 years10%11%
Every >2 – 3 years12%10%
Every >3 – 5 years16%10%
Every >5 years7%6%
Don’t know6%10%
Length of Relationship With DC Provider
WITH ADVISERWITHOUT ADVISER
<1 year4%5%
1 – 3 years 13%9%
>3 – 5 years 13%9%
>5 – 7 years 14%11%
>7 years55%63%
Don’t know1%2%
Investment Committee for the DC Plan
WITH ADVISERWITHOUT ADVISER
Yes—employees only44%44%
Yes—only external to our company3%2%
Yes—a mix of internal and external34%14%
Yes—unsure of composition1%2%
No investment committee14%33%
Don’t know4%5%
DC Plan Metrics
WITH ADVISERWITHOUT ADVISER
Participation rate79%79%
Participant deferral rate7%7%
Percent of participants with loans15%12%
Average number of investment options offered22.522.3
Average number of investment options held5.35.1
Average account balance$87,323$93,486
Median account balance$67,896$72,300
ADVISER ROLES, RECOMMENDATIONS
Adviser Fiduciary Roles in Retirement Plans
20152016
3(38) fiduciary21%17%
3(21) fiduciary34%41%
Not a fiduciary26%15%
Don’t know20%28%

Methodology

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From early July through late September 2016, 4,218 defined contribution (DC) plan sponsors completed our 2016 PLANSPONSOR Defined Contribution Survey, which consisted of more than 60 questions pertaining to satisfaction with DC plan providers, plan design, plan monitoring/oversight, investment options, fee structures, results/outcomes and use of financial advisers for the plan. For purposes of the results published here, the survey responses were analyzed to compare DC plan sponsors that said they use retirement plan advisers with sponsors not using them. For more information about these results, or for further information about the PLANSPONSOR DC Survey, please contact surveys@strategic-i.com.