A survey of small plan sponsors by Security Benefit conducted in October 2014 found the majority (76%) have used their adviser from one to 10 years. Thomas J. Granger, assistant vice president, sales director for qualified retirement plans at Security Benefit in Topeka, Kansas, told attendees of the National Tax-Deferred Savings Association (NTSA) 403(b) Summit that satisfaction levels with key adviser services ranged from 88% to 95%.

Ninety-five percent of respondents said their adviser’s compliance and regulatory services meet or exceed their expectations, while 88% said the same about investment management services and 90% said the same about plan sponsor and plan participant communication and education services. These plan sponsors’ advisers may feel confident their relationships with plan sponsors are solid and strong, Granger said.                 

However, the same survey found 74% of plan sponsors would consider or strongly consider switching to an adviser who could increase participants’ rates of return, 73% would consider switching to an adviser who could increase the plan’s overall investment returns, and 72% would consider switching to one who could lower plan costs by 25 or more basis points. “Satisfaction is not loyalty,” Granger noted.

He said small plan sponsors are focused on plan cost and investment performance and always looking for a “better deal.” They are busy with other aspects of their businesses, and many are looking for a 3(38) investment manager so they can get out of the business of selecting plan investments, Granger contended. In addition, small plan sponsors are not spending a lot of time with their plans and are often not aware of problems until someone points them out—such as a potential new adviser.

Granger told attendees, “If advisers are not proactively nurturing that relationship, plan sponsors may leave.” He suggests advisers spend time getting to know what their competition is doing and what their plan sponsor clients want.

Advisers should meet with plan sponsors at least quarterly, Granger suggested, and they should use these meetings to highlight the value they have brought to the plan—i.e. participation increases, investment returns and asset growth. They should benchmark sponsors’ retirement plans every three years, and survey plan sponsors annually about their own performance.

Granger noted that participant retirement readiness is the new focus; plan advisers should have a strategy for boosting retirement readiness, and if they don’t have time or tools to provide education, they should partner with a provider that can help.

“Ask questions to differentiate yourself,” Granger said. “The adviser is largely responsible for how sponsors feel about their plans.”