Employees today are relying more on their employers and demanding more from them. As a result, many larger employers have raised the bar for their DC plans. The result: more pressure on plan advisors and providers to establish and maintain a proactive relationship. While plan sponsors are satisfied with their plan providers these days, few indicate that they are receiving a proactive level of service from them. The same can be said with regard to plan advisors and consultants, a new study by J.P. Morgan Asset Management found.
In an online survey of 796 plan sponsors, roughly three-quarters of respondents use an advisor/consultant; among those, about three-quarters are either very or extremely satisfied with their primary advisor. That’s the good news. However, less than 30% say that their advisor suggests new ideas and shares best practices to help the plan, or keeps them apprised of regulatory and other issues that may require changes to the plan. The percentage is even higher at larger plans: 41%.
Clearly, the J.P. Morgan study illustrates a significant opportunity for advisors/consultants to elevate their game. The report identifies five critical steps to a more proactive relationship:
• Keep plan sponsors apprised of developments, in terms of both regulatory changes and innovative features and services they should consider adopting.
• Help plan sponsors evaluate the potential impact of plan changes on participant savings and investing behavior — and ultimately on retirement outcomes.
• Provide expert advice on what distinguishes QDIA options, such as TDFs, and which QDIAs are most appropriate for their participants.
• Offer a plan sponsor a more holistic view of the cost-benefit trade-offs associated with improving the effectiveness of its plan.
• Assess the extent to which the various elements of the plan — design, investments, communications and administration — are coordinated and aligned in working toward plan goals.
This is the same study that got a significant amount of “play” earlier this week in the context of blaming “DC executives” — that is, plan sponsors — for impeding the adoption of auto-enroll and auto-escalation features. You can read one of those reports here.
