RESEARCH | April 11, 2014

2014
Adviser Value Survey

Where retirement plan advisers add value

Reported by PLANADVISER | Art by Jillian Tamaki

Survey Data

PURCHASE REPRINT WANT MORE INFO?

Survey Data

RESPONDENT PROFILE
DC Plan Assets
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
<$1MM	8.7%	9.6%	-9.1%
$1MM–$5MM	24.3%	22.4%	8.6%
>$5MM–$10MM	12.6%	12.5%	0.9%
>$10MM–$25MM	15.7%	14.7%	6.9%
>$25MM–$50MM	10.7%	9.3%	15.5%
>$50MM–$200MM	13.7%	13.5%	1.9%
>$200MM–$500MM	6.6%	6.7%	-1.1%
>$500MM–$1B	3.1%	3.4%	-8.1%
>$1B	4.5%	8.0%	-43.9%

DC Plan Participants
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
<100	34.9%	36.2%	-3.6%
100–500	29.0%	26.7%	8.8%
501–1,000	10.3%	8.7%	18.8%
1,001–5,000	15.5%	14.8%	4.1%
5,001–10,000	4.7%	5.3%	-10.9%
10,001 or more	5.6%	8.3%	-32.7%

DC Plan Type
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
401(k)	88.6%	83.3%	6.4%
403(b)	10.4%	13.1%	-20.9%
457	9.0%	12.1%	-25.4%
Money purchase	2.7%	3.2%	-16.0%
Profit sharing	19.7%	18.5%	6.6%
ESOP	4.1%	4.2%	-3.3%
KSOP	0.3%	0.5%	-40.8%
NQDC	10.6%	11.2%	-5.8%
SEP	0.4%	0.3%	20.6%
SIMPLE IRA	0.5%	0.2%	84.2%

EMPLOYER MATCH
Type(s) of Employer Contributions
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
Employer matching contribution*	69.9%	65.4%	6.9%
Nonelective contribution	9.7%	12.4%	-22.1%
Profit-sharing contribution	28.8%	25.9%	11.3%
Other contribution	13.3%	15.4%	-13.7%
No employer contribution	9.9%	9.1%	8.6%
Footnote: *i.e., 50% of first 6% of pay

Match Formula
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
>100% match up to 6% of salary	7.2%	8.3%	-12.9%
100% match to 6% of salary	12.6%	11.6%	8.8%
51%–99% match to 6% of salary	30.1%	31.6%	-4.8%
50% match to 6% of salary	26.3%	28.4%	-7.1%
<50% match to 6% of salary	23.7%	20.0%	18.8%
Other match formula	0.0%	0.2%	-100.0%

Frequency of Match or Contribution
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
Each pay period	75.8%	78.5%	-3.4%
Monthly	4.8%	5.5%	-12.7%
Quarterly	3.0%	2.7%	12.7%
Annually	15.2%	12.6%	20.6%
Other	1.2%	0.8%	54.0%

Match/Contribution Vesting
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
Immediately on enrollment	31.2%	35.5%	-12.0%
At 6 months	0.6%	1.1%	-46.5%
At 1 year	5.1%	3.5%	44.8%
At 2 years	4.8%	5.0%	-3.7%
At 3 years	13.3%	14.6%	-8.9%
At 4 years	3.8%	3.6%	5.0%
At 5 years	24.9%	24.4%	2.0%
After 5 years	16.3%	12.3%	33.0%

PLAN DESIGN
Implementation of DC Plan Features
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
Employer match or contribution	90.9%	88.9%	2.2%
Auto-enrollment	41.7%	38.8%	7.5%
Auto-deferral increases	27.4%	26.5%	3.3%
Roth 401(k)/403(b) provision	54.3%	49.4%	10.0%
Safe harbor	51.3%	49.0%	4.8%
Written investment policy statement	71.8%	60.3%	19.1%
Loan provision	79.8%	78.9%	1.0%
Hardship withdrawal provision	87.9%	85.7%	2.5%
Catch-up contributions	96.4%	93.8%	2.8%
Custom target-date funds*	26.6%	19.7%	35.1%
Footnote: *Using or considering

Plan Eligibility
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
Immediately upon hire	35.1%	41.5%	-15.3%
<3 months	26.6%	22.9%	16.5%
3 to 6 months	9.3%	7.9%	17.1%
>6 months	28.9%	27.7%	4.5%

INVESTMENTS
Investment Types Offered in DC Plans
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
Target-date funds	72.6%	70.6%	2.9%
Target-risk funds	38.8%	34.0%	14.1%
Balanced funds	75.0%	71.7%	4.6%
Money market fund	66.7%	67.6%	-1.3%
Employer stock	6.6%	9.7%	-31.9%
Stable value fund	64.1%	61.9%	3.6%
Real estate/REITs	28.9%	27.3%	5.7%
Alternative investments	6.1%	4.7%	31.7%
Socially responsible funds	10.3%	11.1%	-7.0%
Self-directed brokerage	19.0%	20.5%	-7.3%
Mutual fund window	14.9%	14.7%	1.7%

Investment Vehicles Used
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
Mutual funds	94.8%	93.3%	1.7%
Separate accounts	24.0%	25.0%	-4.0%
Collective investment trusts	14.0%	15.0%	-6.9%
ETFs (outside of brokerage windows)	4.1%	3.0%	36.5%
Other	5.0%	7.7%	-35.5%

Frequency of Review of Investment Options
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
Monthly	0.7%	0.7%	1.7%
Quarterly	40.8%	32.2%	26.4%
Twice a year	17.5%	15.0%	16.5%
Annually	29.4%	34.6%	-15.1%
Every 1 to 2 years	4.3%	4.2%	2.5%
Every >2 to 3 years	2.9%	3.2%	-9.5%
Every >3 years	1.7%	2.7%	-36.6%
Never	2.7%	7.3%	-63.0%

FEES
Average Expense Ratio of DC Investment Options
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
<0.25% (<25 BPS)	7.3%	8.5%	-14.0%
0.25%–0.50% (25–50 BPS)	17.6%	19.6%	-10.3%
0.51%–0.75% (51–75 BPS)	17.8%	19.7%	-9.3%
0.76%–1.00% (76–100 BPS)	19.3%	16.7%	15.5%
1.01%–1.50% (101–150 BPS)	10.1%	7.0%	43.7%
1.51%–2.00% (151–200 BPS)	1.4%	1.1%	24.6%
2.01%–2.50% (201–250 BPS)	0.2%	0.3%	-35.2%
>2.50% (>250 BPS)	0.0%	0.2%	-100.0%
Do not know	26.3%	26.9%	-2.3%

Frequency of Review of Actual Administrative Fees
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
Annually	67.8%	64.2%	5.7%
Every 1 to 2 years	10.8%	10.1%	7.3%
Every >2 to 3 years	10.2%	9.4%	8.5%
Every >3 to 5 years	5.7%	7.4%	-22.5%
Every >5 years	2.6%	2.8%	-6.5%
Never	2.8%	6.1%	-54.4%

OVERSIGHT
Frequency of Formal Evaluation of DC Provider
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
Annually	31.0%	27.8%	11.7%
Every 1 to 2 years	11.9%	8.4%	42.3%
Every >2 to 3 years	15.3%	12.9%	18.7%
Every >3 to 5 years	21.5%	20.4%	5.2%
Every >5 years	11.5%	14.7%	-21.9%
Never	8.8%	15.9%	-44.5%

Length of Relationship With DC Provider
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
<1 year	5.6%	2.6%	112.8%
1 to 3 years	14.1%	9.0%	56.3%
>3 to 5 years	16.1%	11.4%	41.5%
>5 to 7 years	14.9%	14.0%	6.9%
>7 years	47.7%	60.9%	-21.7%
Do not know	1.6%	2.1%	-24.6%

Investment Committee for the DC Plan
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
Yes—employees only	51.9%	55.2%	-6.1%
Yes—only external to our company	1.7%	1.8%	-4.8%
Yes—a mix of internal and external	25.7%	15.5%	65.5%
Yes—unsure of composition	1.1%	1.3%	-14.1%
No investment committee	17.9%	24.4%	-26.5%
Do not know	1.7%	1.7%	-3.4%

DC Plan Metrics
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
Participation rate	76.5%	77.2%	-0.9%
Participant deferral rate	6.1%	6.1%	-1.0%
Avg account balance	$74,904	$77,947	-3.9%
Median account balance	$55,000	$58,000	-5.2%
% of participants w/ loans	14.7%	13.9%	5.6%
Avg number of inv options offered	20.8	21.2	-1.9%
Avg number of inv options held	5.70	5.67	0.5%

Success Measures Used
	WITH ADVISER	WITHOUT ADVISER	% DIFF W/ADVISER
Participation rate	70.7%	65.1%	8.6%
Deferrals of employee segments	36.6%	30.8%	18.9%
% of participants maxing match	29.4%	27.2%	8.3%
Projected monthly ret income	4.9%	3.6%	37.8%
Income replacement ratio	6.9%	4.9%	40.8%
“Appropriate” asset allocations	17.0%	13.2%	28.4%
% increasing deferrals	10.0%	8.0%	24.0%
% using advice/seminars	11.6%	9.5%	22.0%
Employee satisfaction (surveys)	21.7%	17.7%	22.6%
External plan design benchmarking	29.3%	20.7%	41.8%
No formal plan success measures	22.2%	31.2%	-29.0%

ADVISER ROLES, RECOMMENDATIONS
Adviser Fiduciary Roles in Retirement Plans
3(21) fiduciary only	16.7%
3(38) fiduciary only	5.3%
Both a 3(21) and a 3(38) fiduciary	15.9%
Not a fiduciary	28.1%
Do not know	34.0%

Likelihood of Recommending Adviser, DC Provider
	ADVISER	PROVIDER	% DIFF
Extremely likely to recommend	62.1%	65.9%	-5.8%
Moderately likely to recommend	23.2%	24.8%	-6.5%
Somewhat likely to recommend	6.5%	3.4%	91.2%
Neither likely to recommend nor recommend against	5.9%	3.4%	73.5%
Somewhat likely to recommend against	1.0%	1.1%	-9.1%
Moderately likely to recommend against	0.5%	0.7%	-28.6%
Extremely likely to recommend against	0.7%	0.7%	0.0%
Average score (7=extremely likely to recommend)	6.35	6.51	-2.5%