RESEARCH | December 23, 2013

2013
Practice Benchmarking Survey

2013 PLANADVISER Practice Benchmarking Survey: Evaluating your peer group to benchmark your practice

Reported by PLANADVISER

Survey Data

Respondent Profile
Total retirement plan assets under advisement
	2013
>$0–$100,000	1.5%
>$100,000–$1MM	4.4%
>$1MM–$5MM	4.4%
>$5MM–$10MM	4.6%
>$10MM–$20MM	7.3%
>$20MM–$50MM	11.3%
>$50MM–$100MM	12.1%
>$100MM	54.5%

Number of qualified plan clients
	2012	2013	CHANGE
<10	17.1%	18.2%	6.9%
10 to 20	17.5%	14.8%	-15.2%
21 to 40	19.7%	18.8%	-4.8%
41 to 60	14.4%	14.5%	0.5%
61 to 75	7.1%	5.9%	-16.8%
>75	24.2%	27.7%	14.7%

Adviser firm affiliation
	2012	2013	CHANGE
National full-service wirehouse	15.0%	15.3%	1.5%
Independent broker/dealer (B/D)	26.0%	24.2%	-6.9%
Regional broker/dealer	3.2%	4.7%	44.7%
Insurance or bank broker/dealer	8.2%	5.9%	-27.9%
Registered investment adviser (RIA)	19.7%	23.1%	17.7%
Dually registered (RIA and B/D)	17.2%	19.1%	11.4%
Other	10.7%	7.7%	-28.4%
An individual adviser practice	26.1%
A team practice (in one office location)	47.5%
A team practice (spread over multiple office locations)	26.4%
Yes	50.0%
No	27.6%
Sometimes	22.4%
Yes	80.9%
No	19.1%

Do you have a written business plan that governs your practice?
	2012	2013	CHANGE
Yes	58.4%	60.4%	3.4%
No	41.6%	39.8%	-4.3%

Are you a fiduciary to clients’ plans?
	2012	2013	CHANGE
Yes	26.4%	29.2%	10.8%
Yes – 3(21)	57.4%	57.0%	-0.7%
Yes – 3(38)	19.7%	22.9%	16.3%
No	27.6%	22.3%	-19.1%

Are you a fiduciary to plan participants?
	2012	2013	CHANGE
Yes	34.0%	33.5%	-1.6%
No	66.0%	66.5%	0.8%

Broker/Dealers and Custodians
Primary benefits received from broker/dealers
	2012	2013	CHANGE
Compliance oversight	62.6%	52.2%	-16.7%
Investment due diligence	28.9%	30.2%	4.5%
Brand name recognition	28.6%	26.3%	-8.2%
Marketing support	22.3%	23.3%	4.2%
Co-fiduciary support	20.4%	21.8%	6.8%
Lead generation	4.1%	5.4%	30.6%
Ret. plan industry expertise/tools	N/A	38.8%	N/A
Technology/IT support	N/A	30.4%	N/A
Other	19.2%	10.8%	-43.8%
B/D adds no value	N/A	14.0%	N/A

Most common custodians for RIAs
	% of RIAs using – 2012	% of RIAs using – 2013	CHANGE
Schwab	25.5%	26.6%	4.2%
Fidelity/NFS	18.1%	23.4%	29.3%
TD Ameritrade	12.8%	15.7%	23.2%
Pershing	12.1%	15.7%	30.1%
Matrix	N/A	11.4%	N/A
LPL	7.4%	11.1%	50.9%

Most common broker/dealers
	2012	2013	CHANGE
LPL	12.1%	13.2%	9.4%
Morgan Stanley Smith Barney	3.5%	5.8%	64.8%
UBS Financial Services	5.3%	4.4%	-16.7%
Merrill Lynch	6.3%	4.2%	-33.2%
Wells Fargo Advisors*	2.3%	3.6%	59.1%
NFP	4.0%	3.0%	-25.4%
Financial Telesis Inc.	3.3%	2.2%	-32.7%
Raymond James	3.3%	2.2%	-32.7%
Cambridge Investment Research	1.5%	2.2%	45.9%
Commonwealth	2.3%	1.6%	-29.3%
AXA Advisors	2.0%	1.0%	-50.3%
Financial Network (Cetera)	2.5%	0.8%	-68.2%
Excellent (consistently exceeds expectations)	33.7%
Good (consistently meets expectations)	42.9%
Satisfactory (usually meets expectations, sometimes does not)	17.8%
Poor (consistently falls below expectations)	5.6%
Footnote: *Wells Fargo Advisors (First Clearing LLC)

Marketing and Service Models
On average, how often do you communicate/meet with plan participants in the following ways?
	Monthly	Quarterly	Semi-Annually	Annually	As Needed
In-person group meetings	0.7%	16.1%	32.1%	28.0%	23.1%
In-person individual meetings	2.2%	12.6%	19.9%	19.3%	46.1%
Via email	16.0%	19.4%	4.3%	2.5%	57.8%
Via webcasts	5.1%	9.9%	7.1%	6.4%	71.4%
Other electronic method	5.9%	7.8%	3.0%	3.0%	80.3%

How often do you meet with plan sponsors to discuss the following?
	Monthly	Quarterly	Semi-Annually	Annually	As Needed
Investments	2.2%	12.6%	19.9%	19.3%	46.1%
Plan design/compliance	16.0%	19.4%	4.3%	2.5%	57.8%
Recordkeeper/TPA* selection	5.1%	9.9%	7.1%	6.4%	71.4%
Footnote: * Third-party administrator;

Where do you find most of your new clients?
	2012	2013	CHANGE
Advertising (newspaper, TV, online, etc.)	0.3%	0.0%	-100.0%
Cold calling	7.1%	8.0%	14.0%
Direct mail	0.3%	0.8%	227.4%
Email marketing/newsletters	1.5%	1.0%	-31.8%
Referrals from existing clients	23.2%	25.8%	11.2%
Referrals from other professionals/strategic relationships	59.7%	59.2%	-0.9%
Search engine optimization (SEO)	0.3%	0.0%	-100.0%
Seminars	2.0%	2.1%	2.3%
Social media(Twitter, Facebook, LinkedIn, etc.)	0.3%	0.2%	-18.1%
Webinars	0.3%	0.2%	-18.1%
Other	5.3%	2.7%	-49.3%

Plan services offered as part of retainer or annual service
	2012	2013	CHANGE
Ongoing investment monitoring	89.6%	94.0%	5.0%
Attendance at investment/retirement plan committee meetings	92.6%	92.3%	-0.3%
Investment policy statement design	88.5%	90.2%	1.9%
Manager search/fund replacements	88.3%	90.2%	2.1%
Fiduciary and fund governance	81.7%	88.9%	8.9%
Provider fee analysis	78.6%	87.0%	10.7%
Defined contribution (DC) plan design	76.3%	86.0%	12.6%
Benchmarking DC plan providers	76.8%	85.1%	10.8%
Compliance reviews	76.1%	84.9%	11.6%
Employee group meetings, ongoing	76.1%	84.2%	10.7%
Written svc contract/svc guarantee	76.8%	84.2%	9.5%
Enrollment meetings	78.4%	83.5%	6.6%
Vendor/Fee review or benchmark study	71.8%	78.6%	9.5%
Communication policy stmt design	69.5%	77.4%	11.5%
Employee meetings, one-on-one	66.2%	72.6%	9.8%
Asset allocation models	69.0%	69.9%	1.4%
Vendor search/Requests for proposals	62.3%	69.2%	11.1%
Individ participant investment advice	48.6%	49.2%	1.3%
Defined benefit (DB) plan design	37.7%	45.5%	20.9%
Nonqualified plan design	40.7%	37.1%	-8.9%
Private wealth/HCE^ services	25.2%	22.2%	-12.0%
Footnote: ^ Highly compensated employee

Fees/Revenue
Average annual charge for services to retirement plans, by plan size (BPS = basis points)
	$1MM	$5MM	$20MM	$50MM	$100MM	$250MM
<1 BP	4.4%	2.1%	2.5%	4.0%	8.4%	18.9%
1–5 BPS	2.3%	1.4%	2.5%	8.7%	37.0%	57.8%
6–10 BPS	1.4%	2.1%	12.8%	43.0%	41.2%	14.5%
11–25 BPS	8.4%	29.7%	65.8%	38.9%	10.7%	6.8%
26–50 BPS	40.2%	50.1%	12.8%	4.0%	1.1%	1.6%
51–75 BPS	24.4%	7.4%	1.6%	1.0%	0.8%	0.0%
76–100 BPS	13.5%	4.0%	0.5%	0.3%	0.8%	0.4%
>100 BPS	5.3%	1.7%	0.3%	0.0%	0.0%	0.0%

How fees are disclosed to plan sponsor clients
	2012	2013	CHANGE
Annual review	70.2%	71.1%	1.2%
Contract	64.6%	65.1%	0.7%
Fee disclosure statement	75.9%	76.1%	0.3%
Form ADV	40.0%	38.4%	-4.1%
Request for proposals (RFP)	24.9%	21.3%	-14.4%
Other	5.6%	5.6%	0.2%

How advisers are paid for qualified plan business
	2012	2013	CHANGE
Commissions/12b-1 fees	55.8%	51.4%	-7.8%
Fees based on assets	73.3%	76.4%	4.2%
Hard-dollar or flat fee*	51.1%	50.3%	-1.5%
Per participant	9.9%	9.8%	-1.4%
Per project	24.8%	21.3%	-14.2%
ERISAˆ budget/ERISA reimbursable	30.7%	31.5%	2.4%
Other	2.4%	2.3%	-2.6%
Footnote: *Regardless of asset size; ^Employee Retirement Income Security Act

Concerns and Expectations
What is your top concern facing your practice today?
	2012	2013	CHANGE
Adding new clients	36.7%	29.8%	-18.9%
Fee compression	7.6%	9.8%	29.0%
Practice management	6.3%	9.3%	47.5%
Government regulation	8.0%	9.1%	14.5%
Profitability	4.1%	6.4%	57.5%
Compliance/Fiduciary issues	9.2%	6.3%	-31.1%
Marketing	3.7%	5.6%	50.5%
Staffing	3.3%	5.6%	67.2%
Participant communication/education	3.5%	3.9%	10.4%
Overall economy	6.1%	2.9%	-53.0%
Client retention	3.7%	2.9%	-22.5%
Competition	3.0%	2.7%	-8.8%
Plan sponsor communication/education	1.7%	1.5%	-8.8%
Technology	1.1%	1.4%	21.6%
Fee disclosure/transparency	2.0%	0.7%	-66.8%
Other	N/A	2.1%	N/A

What is the exit strategy for your business?
	2012	2013	CHANGE
No exit strategy plans	52.7%	47.2%	-10.5%
Sell to partners/employees	31.6%	33.9%	7.2%
Sell to larger entity	7.8%	9.1%	16.4%
Participate in roll-up strategy	2.1%	2.6%	22.1%
Initial public offering (IPO)	0.2%	0.5%	168.5%
Other	5.6%	6.7%	21.5%

What do you predict will be the most significant growth area/strategy for your practice over the next 12 months (through July 2014)?
	2012	2013	CHANGE
401(k) plans	41.7%	30.2%	-27.5%
Referrals	6.7%	14.4%	114.5%
Fiduciary services	12.9%	12.9%	0.0%
Participant advice/education	4.9%	8.1%	67.7%
Plan/Fee benchmarking	11.6%	7.3%	-37.0%
403(b) plans	6.9%	5.4%	-21.4%
Rollovers	3.6%	5.4%	53.0%
Retirement income products	3.0%	4.2%	41.9%
Defined benefit plans	3.4%	3.7%	11.0%
Nonqualified plans	2.2%	1.9%	-16.7%
Fee disclosure	3.2%	1.2%	-62.6%