2019
PLANADVISER Micro Plan Survey

The micro plan market, which the 2019 PLANADVISER Micro Plan Survey defines as plans with under $5 million in assets, offers many opportunities for advisers. For one, they can help improve these plans, which lag behind larger plans in many key areas of design. Interesting is that 62%, looking at, for example, the $1 million to $5 million group, already work with an adviser—indicating that advisers should be more proactive.

Only 24% of these micro plans have an adviser who serves as a 3(21) fiduciary, yet this is true for 37% of plans overall. While the micro plans are pretty much in lockstep with larger plans when it comes to reviewing fund performance (94% do so vs. 96% of all plans) and offering plan investment selection guidance (91% vs. 93%), there are several areas where the micro plans fell short. These included evaluating provider fees (76% vs. 82%), benchmarking plan design (61% vs. 74%), creating and monitoring an investment policy statement (IPS) (59% vs. 71%), and helping to select providers (66% vs. 70%).

There are, however, areas where the micro plans outdid their larger counterparts, obviously because of the personal connections advisers can forge with the participants. Thus, micro plans are more likely to offer group participant education sessions compared with all plans (76% vs. 59% did so) and one-on-one participant education (76% vs. 57%).

The $1 million to $5 million micro plans also fell behind all plans when it came to measuring plan success; this applied in terms of participation rates (58% vs. 72%), deferral rates (39% vs. 58%), external benchmarking of plan design (16% vs. 26%), participants saving to match (14% vs. 23%), and appropriateness of participant asset allocations (6% vs. 14%). In fact, 34% of those micros reported having no formal plan success measures, whereas that was the case for only 21% of all plans. —Lee Barney

Art by JooHee Yoon