2019
PLANADVISER Practice Benchmarking Survey

From the Ground

Retirement plan advisers weigh in on the foundations of good practice management

As retirement plan adviser specialists draw up their business plans for 2020, the vast majority are planning for growth. A full three-quarters of those responding to our 2019 PLANADVISER Practice Benchmarking Survey said they expect 401(k) plans to spark most of that growth. Just 51% of advisers made that projection, last year. Whether the increase reflects optimism for the expansion of multiple employer plans (MEPs), or for something else that might drive plan spon-sors to seek their specialist expertise, is unclear. But it is likely that such growth will owe much to their building on current relationships, as 93% of new clients are found through referrals.

This year, we saw a large jump in advisers offering individual advice or wealth services—to 80% from 62% last year. And participant advice/education was cited by 29% of advisers as the most significant projected growth area for their practice next year. Health savings account (HSA) consulting services has also seen wide adop-tion. More than one-third (36%) of advisers surveyed said they currently offer such services, while another 47% said they plan to.

Of note this year was an increase in the number of advisers stating they are registered investment advisers (RIAs) only. While last year, 23% of advisers were solely RIAs and 27% were hybrid/dually registered advisers, this year those groups were 39% and 22%, respectively. Wirehouse and independent broker/dealers (B/Ds) each lost 3 percentage points, down to 25% and 9% in this year’s sample size. Also, about half of the adviser sample are affiliated with a defined contribution (DC) aggregator firm. These numbers would seem to align with our editorial coverage of movement in the advisory space.

One factor that has often been said to drive those transitions—whether the adviser pursues fee-for-service opportunities as an RIA, has joined an aggregator, or both—is the power of affiliation for expanding an adviser’s business and broad-ening the services he can offer.

When we asked advisers to evaluate the success of plan clients, we noted a marked increase this year in usage of multiple metrics. Nearly all (92%) advisers used participa-tion rates, and almost as many (90%) used deferral rates. But of particular note was the increase in advisers across cate-gories examining some additional metric, in their bench-marking process. For example, more than half of advisers now use percentage of participants “with ‘appropriate’ asset allocations,” or “saving to the company match”; 43% use percentage of those on track to meet retirement goals.

Brian O’Keefe, director of research and surveys for ISS Media—including PLANADVISER and sister publication PLANSPONSOR—says a preliminary look at the 2019 PLANSPONSOR Defined Contribution (DC) Survey similarly shows an increase in success-metric usage among plan sponsor respondents. However, he says, overall use is still far below that reported by plan advisers, and the increases are modest. While the data is still early, in terms of absolute percentages, advisers seem to be between 20% and 30% more committed to using various success measures than are plan sponsors.

It is unknown why the survey found the overall increase in the less basic metrics. Perhaps the findings point to advisers’ desire to know whether their plans are working—not just whether automatic enrollment is working to get people into the plan but, rather, whether participants are accumulating assets in a way that will help them retire.

The increase might also be linked to the evolution in education, which has advisers delivering more financial wellness messages to participants. As financial stress becomes a larger discussion topic, it is logical that plan sponsors and their advisers will want ever-improving accuracy when measuring the outcomes of their retirement programs. — PA

Art by Lars Leetaru