2014
Adviser Value Survey

Where retirement plan advisers add value

Plan sponsors of all sizes hire retirement plan advisers to guide them in their plan’s administration and to improve various aspects of the plan. While many advisers have a tremendous influence on the sponsors and plans they work with, research shows that, overall, advisers might not be improving plans as much as they intend.

The 2014 PLANADVISER Adviser Value Survey segments the annual PLANSPONSOR Defined Contribution (DC) Survey to compare plans that have advisers with plans that do not. The most recent survey, which evaluated 3,079 plans that use an adviser and 2,025 plans that do not, finds that those with the benefit of an adviser are better-designed, formally run, and carefully benchmarked and analyzed when measured against those that do not. Typically, they also offer more balanced asset-allocation choices in the investment menu. However, in few of these categories are plans with an adviser much better off than those without one; most statistical differences are merely a handful of percentage points—or fewer.

Plan Design

The survey comparison of plans suggests retirement plan advisers excel across the board at convincing their plan sponsor clients to adopt an outcome-oriented plan design. Automatic enrollment, which has proven time and again to significantly boost participation rates, is a practice at 41.7% of plans with an adviser and at 38.8% of plans without one. And auto-enrollment’s partner, automatic deferral-increases, is slightly more common among adviser plans (27.4%) than it is in plans lacking the guidance of these professionals (26.5%).

Retirement plan advisers are also more likely to convince their plan sponsor clients to offer a Roth option at their 401(k) or 403(b) plan: 54.3% of plans run by an adviser have these options, versus 49.4% of plans that are run independently.

Other plan design features that advisers bring to the table, although by slimmer percentage margins, are: a safe harbor provision, catch-up contributions for those 50 or older, and hardship withdrawals and loans.

Finally, plans with an adviser more often offer company matches: 69.9% of plans with an adviser have a company match, while 65.4% of plans without one do so. They are also more apt to make profit-sharing contributions (28.8% of plans with an adviser, 25.9% of plans without).

Art by Jillian Tamaki