2018
PLANADVISER Retirement Plan Adviser Survey

A Commanding View

Our annual survey reveals advisers’ top choices in service providers

Two of the most important decisions that retirement plan advisers make for a plan are the selection of investments and the choice of the record-keeper. Retirement plan sponsors hire advisers to help them understand the recordkeeping and investment markets and to guide them through the process of selecting appropriate providers and investment options. It is therefore incumbent on specialist advisers to know which of each can best meet specific client needs. After all, how well the funds perform plays a critical role in how participants will fare. The recordkeeping platform is the backbone of the plan and can also offer value-added adviser services as well as participant tools and education.

The 2018 PLANADVISER Retirement Plan Adviser Survey, our 12th such survey, delves into the many factors that advisers consider when selecting these providers. It also reveals what companies they most like to work with and have found to excel in various subcategories of services.

No matter how much it is reiterated that past performance does not indicate future results, advisers continue to look in the rearview mirror when selecting funds, with performance remaining top of mind. The first criteria they consider when selecting a fund is how well it performed against its benchmark, cited by 44.0%. The second is how well it performed over the past five years, cited by 20.5%. Only 14.0% consider fee structure, which placed third.

Overall, the five fund families that plan advisers like most are, in descending order, Vanguard, American Funds, T. Rowe Price, Fidelity Investments and J.P. Morgan.

In terms of subcategories of vendor services, advisers say they receive the best adviser support and value-added services from J.P. Morgan, American Funds, BlackRock, American Century and Legg Mason, also in descending order. They also acknowledge Fidelity Investments, BlackRock, J.P. Morgan, American Century and T. Rowe Price as the top five firms for plan sponsor support and recognize them for their participant education materials.

Assessing Recordkeepers

On the recordkeeping side of the equa-tion, the two most important stan-dards that advisers consider when selecting a provider are value for price (cited as No. 1 by 46.8%) and fee struc-ture for the plan (cited as No. 2 by 27.3%). These have generally remained the same over the years, possibly suggesting that recordkeeping, in the eyes of advisers, has assumed a commodity-type status.

Knowing that reputation is a large part of why plan sponsors may, or may not, want to work with a particular recordkeeper, we also asked advisers to rank each recordkeeper according to their perception of it. The record-keepers that were perceived most often as “very favorable” are Empower Retirement (cited by 58%), Fidelity Investments (by 57%) and T. Rowe Price (by 43%).

While the recordkeeping market-place does seem to consolidate more each year, a wide variety of provider options still exists, and adviser responses to “Whom do you like to work with?” show that there is still room in the market.

Only three recordkeepers were chosen by more than half of respon-dents as being one the adviser had “worked with many times”: Fidelity Investments (cited by 77%), Empower Retirement (by 63%) and Principal Financial Group (by 59%).

Asked to rank recordkeepers on value for price, advisers chose Empower Retirement (22.6%), Ascensus (7.1%) and Fidelity Investments (6.5%) as the top three.

Art by Muhammad Mustafa

Top Criteria Used to Decide Which Funds Are Appropriate for Plans