a Client’s
RetiRement
Pl an
It is difficult to quantify the services of a retirement
plan adviser. Is what an adviser offers in the numbers or in
the quality of service? Or both? Whatever the case may be,
advisers continue to grow their presence in the retirement
plan space: According to the 2008 Defined Contribution
Survey by PLANADVISER’s sister publication PLANSPONSOR,
the number of plans utilizing advisers has increased to
61.2%, an increase from 55.2% the year before. Not surpris
ingly, advisers are most in use at plans with less than $50
million in assets, though more than half of plans with more
than $50 million also report using an adviser.
The value of an adviser is not striking in areas one might
expect. Like the data from 2007, the difference in plan perfor
mance data is not obvious—but plans with advisers do show
some quantifiable differences. The area where the adviser
seems to add the most value is in due diligence responsibil
ities, such as evaluating the plan investments and provider
and in providing individualized advice to participants.
Advisers continue to make a small but notable differ
ence in regard to participation rates. Plans with an adviser
showed a higher average participation rate (74.7%) than
plans without an adviser (72.9%)—not much different from
industry norms.
Though the data are not staggering, it appears that plans
with an adviser are more diligent about monitoring the plan
provider and investments than plans without an adviser.
Nearly threefourths of plans with advisers have a written
investment policy statement (IPS), compared with 66.2% of
plans without. Plans with advisers also are more likely to
monitor investment options on a quarterly basis, with 33.6%
of plans with advisers conducting a formal review quarterly,
compared with 27.8% of plans without an adviser. Plans
with advisers also are better about monitoring the provider;
almost a third ( 31.8%) of plans with advisers say they
formally evaluate their defined contribution (DC) provider
annually, compared with less than a quarter ( 23.3%) of
plans with no adviser.
Advisers appear to be helping plan sponsors mitigate
some of their liability in their investment selections. Plans
with advisers are less likely to have employer stock options
( 7.6%, compared with 11.7% of plans without an adviser),
suggesting that advisers might be steering sponsors away
from the investment option that continues to drive plain
tiffs’ attorneys. Plans without advisers also are more likely
to offer selfdirected brokerage accounts ( 17.5%) than those
with an adviser ( 14.5%).
Offering retirement security is another area where fidu
ciaries feel increasing responsibility. Automatic enrollment
