RESEARCH | April 16, 2013

2013
Adviser Value Survey

Adviser-run plans excel in design, reviews and customizatio

Reported by PLANADVISER

Survey Data

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Survey Data

Respondent Profile
DC Plan Assets
	TOTAL	WITH ADVISER	WITHOUT ADVISER
<$1MM	702	65.5%	34.5%
$1MM – <$5MM	1,487	69.5%	30.5%
$5MM – <$10MM	826	69.5%	30.5%
$10MM – <$50MM	1,369	68.8%	31.2%
$50MM – <$200MM	800	69.4%	30.6%
$200MM – <$500MM	383	72.6%	27.4%
$500MM – $1B	244	68.4%	31.6%
>$1B	373	66.2%	33.8%

DC Plan Participants
	TOTAL	WITH ADVISER	WITHOUT ADVISER
<100	2,210	67.7%	32.3%
100 – 499	1,621	69.8%	30.2%
500 – 999	524	66.0%	34.0%
1,000 – 4,999	844	64.8%	35.2%
5,000 – 9,999	278	71.6%	28.4%
10,000 or more	406	59.9%	40.1%

DC Plan Type
	TOTAL	WITH ADVISER	WITHOUT ADVISER
401(k)	5,100	68.5%	31.5%
401(a)	297	62.3%	37.7%
ERISA 403(b)	519	62.6%	37.4%
Non-ERISA 403(b)	223	57.0%	43.0%
457	546	62.8%	37.2%
Money purchase	132	72.0%	28.0%
Profit-sharing	1,013	71.0%	29.0%
Employee stock option plan (ESOP)	222	65.3%	34.7%
Non-qualified deferred comp	714	65.1%	34.9%
SEP/SIMPLE IRA	26	96.2%	3.8%

Employer Match
Type(s) of Employer Contributions
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
Employer matching contribution (i.e., 50% of first 6% of pay)	61.3%	61.7%	-0.6%
Fixed match (non-safe harbor)	4.1%	4.4%	-9.4%
Safe harbor (traditional)	17.1%	15.2%	10.7%
Safe harbor (auto-enrollment)	3.3%	3.5%	-6.1%
Nonelective contribution	7.6%	8.6%	-12.9%
Profit-sharing contribution	25.8%	24.5%	4.8%
Other contribution	10.9%	11.8%	-8.2%
No employer contribution	8.7%	8.8%	-1.8%

Match Formula
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
>100% of 6% of salary	4.9%	6.4%	-28.7%
100% match on 6% of salary	14.8%	16.4%	-10.6%
Between 51% and 99% of 6% of salary	19.6%	18.5%	5.5%
50% match on 6% of salary	28.2%	27.8%	1.3%
<50% of 6% of salary	24.0%	22.6%	6.2%
Fixed-dollar contribution	8.4%	8.4%	0.8%

Frequency of Match or Contribution
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
Each pay period	72.1%	71.8%	0.4%
Monthly	6.6%	7.8%	-18.3%
Quarterly	3.2%	3.6%	-14.3%
Annually	15.8%	14.3%	9.5%
Other	2.3%	2.5%	-6.7%

Match/Contribution Vesting
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
Immediately on enrollment	29.9%	35.8%	-19.7%
6 months	0.9%	1.3%	-48.8%
1 year	5.2%	5.3%	-1.1%
2 years	4.0%	3.7%	8.5%
3 years	13.4%	13.9%	-4.2%
4 years	4.0%	2.2%	43.5%
5 years	23.8%	22.7%	4.7%
>5 years	18.8%	15.1%	19.9%

Plan Design
Implementation of DC Plan Features
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
Employer match or contribution	91.3%	91.2%	0.1%
Auto-enrollment	41.8%	41.4%	0.9%
Auto-deferral increases	29.3%	27.2%	7.1%
Roth 401(k)/403(b) provision	50.1%	43.9%	12.4%
Safe harbor	49.8%	48.6%	2.4%
Written IPS	69.8%	56.8%	18.7%
Loan provision	83.1%	81.3%	2.1%
Hardship withdrawal provision	91.2%	89.8%	1.5%
Catch-up contributions	97.4%	96.5%	1.0%
Custom target-date funds (TDFs)*	26.6%	20.9%	21.3%
Footnote: *Using or considering plan eligibility.

Plan Eligibility
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
Immediately upon hire	34.7%	38.2%	-10.2%
Within 3 months	27.5%	24.5%	10.9%
After 3 to 6 months	8.6%	7.0%	18.8%
After 6 months	29.2%	30.3%	-3.7%

Investments
Investment Types Offered in DC Plans
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
Target-date/Lifecycle fund	71.9%	72.9%	-1.3%
Risk-based lifestyle fund	30.0%	24.4%	18.9%
Index fund	73.2%	73.5%	-0.4%
Money market fund	69.2%	73.8%	-6.8%
Employer stock	7.7%	9.7%	-27.1%
Stable value fund	67.5%	61.0%	9.7%
In-plan guaranteed income	8.7%	9.5%	-8.7%
Out-of-plan guaranteed income	0.9%	1.2%	-38.7%
Self-directed brokerage	17.9%	20.5%	-14.2%
Mutual fund window	8.0%	8.9%	-11.9%
Real estate/REITs	21.2%	21.9%	-3.2%
Alternative investments	2.7%	2.6%	2.8%
Exchange-traded funds (ETFs)	1.0%	0.6%	32.2%

Investment Vehicles Used
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
Mutual funds	92.4%	90.2%	2.4%
Separate account	21.3%	25.5%	-19.7%
Managed account	32.4%	28.6%	11.9%
Commingled pool	7.1%	7.7%	-8.4%
Collective trust	12.2%	13.2%	-7.9%

Frequency of Review of Investment Options
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
Quarterly	43.0%	30.9%	28.2%
Twice a year	18.9%	19.4%	-2.3%
Annually	28.3%	30.8%	-8.9%
Every 1 to 2 years	2.5%	4.6%	-85.4%
Every 2 to 3 years	1.8%	2.1%	-14.6%
Every >3 years	1.2%	3.2%	-163.3%
Never	2.7%	6.8%	-154.3%

Fees
Average Expense Ratio of All the Investment Options in the DC Plan
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
<0.25% (<25 bps)	7.4%	8.4%	-12.5%
0.25% – .50% (25 – 50 bps)	17.7%	18.8%	-5.9%
0.51% – .75% (51 – 75 bps)	18.4%	21.6%	-17.6%
0.76% – 1% (76 – 100 bps)	18.4%	16.4%	11.1%
1.01% – 1.50% (101 – 150 bps)	10.4%	7.3%	29.7%
1.51% – 2.00% (151 – 200 bps)	1.0%	1.2%	-23.7%
2.01% – 2.50% (201 – 250 bps)	0.1%	0.4%	-243.7%
>2.50% (>250 bps)	0.0%	0.1%	-0.1%
Unsure	26.6%	25.9%	2.6%

Frequency of Review of Actual Admin Costs/Fees
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
Annually	73.3%	68.8%	6.1%
Every 1 to <2 years	8.9%	10.6%	-18.1%
Every 2 to <3 years	7.2%	6.9%	4.3%
Every 3 to 5 years	4.4%	4.0%	9.9%
Every >5 years	1.6%	2.8%	-70.2%
Never	4.5%	6.9%	-53.3%

Outcomes/Metrics
Plan sponsors that “agree” or “somewhat agree” with the following statements:
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
Recordkeeping services are a “commodity” (i.e., undifferentiated among providers)	31.9%	32.0%	-0.2%
Our organization has an obligation to help participants plan for retirement	21.1%	20.7%	2.1%
Most of our employees will achieve their retirement goals by age 65	73.7%	69.4%	5.9%
Our DC plan helps us attract/retain employees	71.7%	70.1%	2.1%
Our organization is comfortable with our provider’s response/approach to new fee disclosure requirements	85.4%	84.4%	1.3%

DC Plan Metrics
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
Participation rate	72.4%	73.1%	-1.0%
Participant deferral rate	6.0%	6.2%	-3.1%
% of participants maximizing match	29.0%	31.1%	-7.2%
Average account balance	$62,519	$64,630	-3.4%
Median account balance	$50,000	$50,000	0.0%
% of participants with loans	14.3%	13.9%	3.1%
Average loan balance	$7,937	$7,679	3.3%
Average # of inv options offered	17.7	17.3	1.8%
Average # of inv options held	4.9	4.5	8.4%

Success Measures Used
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
Participation rate	67.2%	61.1%	9.2%
Deferral rate of employee segments	30.0%	24.9%	17.2%
% of participants saving to match	19.7%	20.4%	-3.4%
Projected monthly income	3.6%	2.8%	23.1%
Income replacement ratio	5.4%	3.8%	28.6%
“Appropriate” asset allocations	11.8%	10.1%	14.3%
Employee satisfaction (surveys)	18.2%	16.8%	7.9%
External benchmarking of plan	21.0%	17.4%	17.4%
Lack any formal measures	26.0%	33.2%	-27.5%

Oversight
Frequency of Formal Evaluation of DC Provider
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
Annually	30.2%	28.3%	6.1%
Every 1 to <2 years	12.7%	10.8%	14.9%
Every 2 to <3 years	16.8%	14.2%	15.5%
Every 3 to 5 years	21.9%	19.4%	11.4%
Every >5 years	11.1%	14.3%	-28.5%
Never	7.3%	12.9%	-77.8%

Length of Relationship With DC Provider
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
<1 year	4.6%	2.7%	41.6%
1 year to <3 years	14.1%	9.1%	35.4%
3 years to <5 years	17.2%	13.8%	20.1%
5 years to 7 years	15.6%	13.2%	15.3%
>7 years	47.0%	59.0%	-25.6%
Do not know	1.4%	2.2%	-55.7%

Investment Committee for the DC Plan
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
Yes—employees only	52.6%	52.7%	-0.3%
Yes—only external to our company	1.3%	1.7%	-32.6%
Yes—a mix of internal and external	23.6%	16.7%	29.4%
Yes—unsure of composition	0.7%	1.0%	-45.7%
No investment committee	20.1%	26.7%	-32.8%
Do not know	1.7%	1.2%	29.8%

Adviser Roles, Services/Fee Structures
Adviser Fiduciary Roles in Retirement Plans
3(21) fiduciary only	14.5%
3(38) fiduciary only	3.5%
Acts as 3(21) and 3(38) fiduciary	15.2%
Not a fiduciary	25.3%
Plan sponsor does not know/Unsure	41.6%

Adviser Services Used by Plan Sponsors
Review of fund performance	86.7%
Present to investment committee or plan administrator	75.1%
Plan education	69.4%
Individual participant education	54.8%
Individual participant investment selection guidance	54.3%
IPS review and monitoring	48.4%

Adviser Fee Arrangements
% of plan assets (bps)	53.1%
Per participant	8.2%
Project-based	4.8%
Monthly/Annual retainer	26.0%
Performance: Investments	3.0%
Performance: Participation	0.6%
Other	11.7%

Recommendation Likelihood of Plan Sponsors
	ADVISER	PROVIDER
Extremely likely to recommend	59.7%	65.3%
Moderately likely to recommend	24.4%	24.0%
Somewhat likely to recommend	4.6%	3.9%
Neither recommend/recommend against	9.3%	4.0%
Somewhat likely to recommend against	0.7%	1.5%
Moderately likely to recommend against	0.6%	0.7%
Extremely likely to recommend against	0.7%	0.6%
Average score*	6.29	6.43