2012
Retirement Plan Adviser Survey

Advisers pick their favorite providers in our 2012 Retirement Plan Adviser Survey

For nearly 17 years, PLANADVISER’s sister publication, PLANSPONSOR, has published its annual Defined Contribution Survey, which has become the industry standard for measuring (among other things) plan sponsors’ satisfaction with their retirement plan providers. Not long after the inaugural issue of PLANADVISER in 2006, we created a similar survey for retirement plan advisers. Advisers often have a better—or at least a more comparative—perspective than their plan sponsor clients on the relative strength of products and services offered by providers. Advisers can, and usually do, work ­concurrently with many of them.

This year’s Retirement Plan Adviser Survey will be published in two parts, as always. In this issue, we examine advisers’ favored providers, on both the investment and recordkeeping sides. Our next issue will feature adviser practice structure and experience, with the intent of helping advisers learn from, and benchmark against, peers. This year, we were fortunate to receive complete survey responses from 602 retirement plan advisers, enabling us to present data that is representative of the plan adviser community as a whole.

On the investment side, criteria for selecting funds have shifted. This year, as in 2011, performance versus benchmarks was the top criterion for selecting appropriate funds (90.5% of advisers ranked this first, second or third of 11 categories); five-year return was the next most important criterion (77.5% ranked it in the top three), followed by plan fee-structure (61.4%). In 2011, style drift and manager tenure were the second and third most important criteria.

When asked to list the top five fund family recommendations for plan sponsors, advisers chose PIMCO (56.6%), American Funds (48.4%), Vanguard (44.3%), Fidelity (32.4%), T. Rowe Price (31.1%) and BlackRock (30.6%).

Selecting specific mutual funds for a plan sponsor can be a daunting task, with hundreds of funds and share classes to choose from. Like last year, however, PIMCO’s Total Return Fund was the most suggested fund by advisers for plan menus (45.4%), and American Funds EuroPacific Growth Fund again the second-most recommended fund (21.1%). T. Rowe Price’s target-date suite was the most popular target-date fund (16.2%) and the third most recommended overall.

Keeping Up

On the recordkeeper side, advisers consider value for price the most important criterion (55.1% ranking it first or second), followed by fee structure for the plan (46.8%) and investment options available (38.9%). 

When we asked advisers to rate recordkeepers in various product and service areas and in different client segments, the results were quite different from when we asked plan sponsors to rate their providers last year. Fidelity Investments ranked first in six of 16 categories; Principal Financial Group earned four first-place spots; and Great-West Retirement Services and John Hancock each garnered three first-place rankings from advisers.

Plan sponsors increasingly rely on advisers for help selecting and monitoring investment and recordkeeping providers, with advisers shouldering a fiduciary responsibility. While providers’ service and delivery to plan sponsors—and ultimately to plan participants—has always been of utmost importance, service to advisers has become as critical as ever. 

Methodology

In June and July, approximately 9,819 adviser subscribers to PLANADVISER were asked to respond to a 66-question survey, developed by the PLANADVISER editorial and research teams. The questions pertained to size and scope of the adviser’s qualified plan business, practice management, compensation and client service, and assessments of investment managers, mutual funds, and defined contribution (DC) providers. The results of the practice management questions will be highlighted in this year’s November/December edition of PLANADVISER.

At the close of the survey on July 16, a total of 602 retirement plan advisers had submitted responses. To provide 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 with qualified plan clients—219 advisers qualified.

To evaluate DC recordkeepers, advisers affirmed that they were personally involved in evaluating and recommending DC plan providers in an advisory capacity with qualified plan clients—320 advisers did so. Additionally, an adviser was required to have worked with a DC recordkeeper at least once in order for his favorability rating of that recordkeeper to contribute to the survey. For more information about this survey and for additional research, please contact surveys@assetinternational.com.

Top criteria used to decide which funds are appropriate for plans