Large 401(k) Sponsors Want Expert Adviser
By Fred Schneyer – 04/17/2008
reprinted - Copyright 2008 -
A new Spectrem Group
survey of large 401(k) plan sponsors found the sponsors are
looking for advisers expert in a particular service and will
bring on more than one if they need to.
The Spectrem report about the online/phone poll of 150 plan
sponsors with 1,000 or more employees taken earlier this year
said that might mean the large employer might hire an investment
consultant (including one familiar with a particular asset
class) as well as a separate adviser with administrative
Nearly nine in 10 of the large plan sponsors said they have used
an outside adviser in making plan decisions. “As plan size
increases, sponsors find it necessary to use the services of
more than one individual/firm to advise on the retirement plan,”
Sprectrem researchers wrote. “This is to be expected since as a
plan gets in size, is more likely to purchase services on an
Two-third of plans relying on a single adviser use one
affiliated with their plan provider, the study found.
Among those using non-affiliated advisers, Spectrem said, nearly
half use a fee-paid employee benefit consultant, with the
remainder equally split between third-party administrators
(TPAs), fee-paid investment consultants, and brokers/financial
Nearly three-quarters of all large plan sponsors rely on their
advisers to examine their investment performance as well as
monitoring the plan to ensure it complies with all regulations.
About six in 10 sponsors look to their advisers to provide
investment education and a similar number are looking for their
adviser to provide one on one advice.
Some 43% of plan sponsors report that their adviser meets with
them on a quarterly basis to provide an in-depth review of the
plan. One third had an as-needed meeting with the remaining
sponsors saying that they meet with their adviser annually.
When asked what advisers serving large plans could do better,
sponsors mentioned – among other things – that advisers needed
to be more proactive and attentive to the client sponsor’s
“Some sponsors may have difficulty in bringing up unpleasant
topics such as breakdowns in service, thus, advisers and plan
providers should regularly request feedback on the level of
service that the sponsors are receiving and do what is necessary
to bring to light any problems and rectify them,” Spectrem wrote
in the report.
Large plan sponsors have quickly embraced and implemented the
automatic enrollment and investment advice features made
possible by the Pension Protection Act of 2006, Spectrem
Spectrem noted that few new plans are introduced at the top end
of the market and that providers have to fight for a piece of
the 10% of plans that switch each year.
provided for review and consideration only. Please consult legal and tax
practical advice pertaining to your business and personal situations.
This page was last reviewed and/or updated
Friday, July 03, 2015 05:21 PM