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What Sponsors Want From Their Advisors

A new survey finds that the vast majority of plan sponsors would recommend their advisor – but the reasons why they wouldn’t are telling.

The aptly named MassMutual Retirement Plan Referrals Study finds that 88% of plan sponsors would recommend their advisor, with 37% “very likely” to do so. Only 10% said they were unlikely to make a recommendation, according to the survey of 565 employers that sponsor retirement plans, including 449 that worked with an advisor and 116 that did not, with retirement plan recordkeeping assets ranging from less than $1 million to as much as $75 million.

Short ‘Falls’

That said, more than a third (35%) of sponsors surveyed have switched advisors in the past. Among sponsors who changed advisors, 41% did so because they judged their advisor as failing to provide adequate support. Other complaints about advisors included:

  • A lack of involvement or interest in the plan

  • Not being knowledgeable

  • Being difficult

  • Being unresponsive

Other reasons cited for switching advisors were:

  • 17% - Costs and fees

  • 15% - A change in the company’s management or ownership

  • 11% - Wanting better service

  • 7% - A better plan and/or investments

  • 6% - Poor performance and returns

What Sponsors Want

Nearly 6 in 10 (58%) sponsors find advisors through referrals, either by asking for a referral or receiving one unsolicited, the study finds. Just 10% of sponsors search for advisors online, according to the survey, but the top criteria for online advisor searches were:

  • 72% wanted an advisor who works with companies similar to theirs;

  • 47% looked for customer testimonials;

  • 43% gravitated to an effective website;

  • 41% focused on a good value proposition; and

  • 40% appreciated fees being clearly stated on the advisor’s website.

Only 29% wanted someone who is local in their area.

Nine in 10 (93%) sponsors assess the cost and benefits of working with an advisor as valuable, and just as many (94%) are satisfied overall with their advisor. Interestingly, the bigger the retirement plan in terms of assets, the more likely the sponsor is to give the advisor high marks.

Room for Growth?

Not all of the sponsors who responded to the study currently use an advisor. However, 43% of such sponsors would be open to working with an advisor during their scheduled plan review, and 35% said they would be open to doing so at any time, according to the survey.

The research was conducted in 2015 by Greenwald & Associates.