Are Advisors Actively Making a Passive Shift?

Amidst what seems the perennial debate of active versus passive options – are retirement plan advisors “voting” with their recommendations?

Well, according to a unique survey of more than 500 advisors who participated in the 2018 NAPA 401(k) SUMMIT Insider, the vast majority (78%) opted for the equivalent of “it depends,” more precisely “sometimes – depending on the situation” in terms of their active/passive recommendations.  However, 15% said “yes – nearly all the time,” while only 7% said “no – never.”

For those who were, we asked about the primary driver behind that decision. Perhaps not surprisingly, the most common response was a desire to reduce plan costs (34%), but the second-most cited (22%) was plan sponsor demand.

Advisors were pretty open-minded when it came to the notion of considering blended, or hybrid, target-date funds that had a combination of active and passive underlying investments; more than half (58%) already have, and 29% said they would consider that option.

About 1 in 10 (11%) indicated they would “possibly” consider that approach, and only 2% said they wouldn’t.

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