What Do Plan Sponsors Want?
NAPA Net recently reported on a study conducted for MassMutual Retirement Plan Referrals (Greenwald & Associates, 2015) that focused on reasons why plan sponsors recommend – or don’t recommend – their advisors.
The study included 565 employers that sponsor retirement plans – 449 of these worked with advisors and 116 that did not. Recordkeeping assets ranged between less than $1 million to as much as $75 million.
Of the group of 449:
- 88% of sponsors would recommend their advisors
- 75% were “very likely” to make a recommendation
- 10% said they were unlikely to recommend their advisor
- 94% judged advisor cost and benefits as valuable and were satisfied with their advisor overall.
- The study found that the larger the retirement plan’s assets were, the more likely the sponsor gave their advisor a high rating.
- 35% of those sponsors surveyed indicated they had switched advisors, and of this group, a full 41% said they did so because they believed the previous advisors were failing to provide acceptable support. Some of the other criticisms included:
- Insufficient interest or involvement in the plan
- Lack of knowledge
- Difficult to work with
- Other reasons for switching advisors were:
- Change in management/ownership
- Wanting improved service
- A better plan and/or investments
- Poor performance and returns
So What Do Sponsors Want?
58% of sponsors indicated they find advisors through referrals; by asking for one or getting an unsolicited one.
Only 10% of sponsors do an online search. Here are the top search criteria:
- 72% look for an advisor who works with companies like theirs
- 47% want to see customer testimonials
- 43% were drawn to an effective website
- 41% were motivated by a good value proposition
- 40% Liked sites where advisor’s fees were stated clearly
- 29% Wanted an advisor in their local area.
As pointed out above, almost 21% of the responding sponsors didn’t use an advisor. Yet:
- 43% of this group indicated they would be willing to work with an advisor for their scheduled plan review.
- 35% indicated they were willing to work with an advisor any time.
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