What drives plan sponsors’ loyalty to their advisors? According to Cogent’s recently released PlanScape survey of 1,500 plan sponsors of all sizes, the key is accessibility. Plans sponsors want to able to get in touch with their advisors and have them be accessible to participants. They also value their ability to design the plan as well as monitor investments and provider fees.
Less valued are advisory services to terminated employees, which is not shocking. But what is surprising is that plan sponsors do not value advisors’ help with employee education, updates on regulatory issues or guidance on their fiduciary responsibilities — suggesting that they rely more providers and TPAs for these services.
Fidelity and Vanguard continued to get top scores for brand equity, with Schwab replacing Principal in the third spot this year. Merrill Lynch, Ascensus and JP Morgan also made big jumps. Other interesting results:
• There was very little if any difference in plan sponsors’ understanding of fees in 2013 compared with the previous year, even with the new disclosure regs.
• While there was no statistically significant difference in the percentage of plans that are very likely to change record keepers — up from 4% to 6% — there was a substantial increase in those plans open to changing or considering a move, at 31%. This is up from 26% in 2012 and 21% in 2011.
• Top priorities for plan sponsors are regulatory compliance and improving their investment menus.
• Though satisfaction with record keepers remained high at 62%, satisfaction with intermediaries was higher, at 67%.
• There seems to be no sense of urgency to make changes to improve participant outcomes, including making alterations to automatic features.
• 19% of plans did not have an intermediary. Financial advisors served 48% of the entire market, with highs of 52% for small plans ($5-$20 million) and 36% for large plans ($100-$500 million). Benefits consultants served 21% and Investment consultants worked with 19%; TPAs were used in 15% of plans.
