PLANADVISER - March/April 2018 - 6

data points
The Adviser Difference
W
ith interest in managed
accounts growing (see " A QDIA
in Transition, " page 48), it is
worth analyzing whether plans that
have both an adviser and a managed
account have better outcomes-i.e.,
with regard to deferral rates and
average balances-than do plans
without an adviser. A look at the 2017
PLANSPONSOR Defined Contribution
(DC) Survey indicates that advisers
may be making an impact regarding
the use of managed accounts-which
is a positive validation, especially
because of the higher fees the accounts
generally command compared with
those for target-date funds (TDFs).
The percentage of plans using
managed accounts as the default is
still much smaller than that of plans
using TDFs. Still, nearly 10% (9.7%)
of plans without an adviser use a
managed account as the qualified
default investment alternative (QDIA),
whereas 7.7% of plans with an adviser
do so. It is only slightly more common
for plans to use a managed account as
the default when the adviser is a 3(38)
fiduciary-i.e., 9.2% of plans.
Advisers are making a difference,
albeit just a slight one, when it
comes to deferral rates for plans with
a managed account QDIA. The data
show that the average deferral rate
for non-advised plans with a managed
account is 6.7%. For such plans with
an adviser, the average deferral rate is
7.6%-8.9% when the adviser is a 3(38)
fiduciary and 7.1% when the adviser is
a 3(21).
The most significant difference
between plans with and without
adviser guidance is seen in the area of
default deferral rates. Likewise, looking
at plans defaulting into managed
accounts and having no adviser, 40.0%
use a default deferral rate of less than
4%. When these plans have an adviser,
only 28.6% employ such a low rate.
-Lee Barney
With adviser
3(38) fiduciary
3(21) fiduciary
Not a fiduciary
Don't know
No adviser
Deferral Rates
QDIA
With adviser
3(38) fiduciary
3(21) fiduciary
Not a fiduciary
Don't know
No adviser
Average Balance
QDIA
With adviser
3(38) fiduciary
3(21) fiduciary
Not a fiduciary
Don't know
No adviser
(Managed Account)
$95,032
$73,572
$105,804
$190,276
$13,611
$86,452
Default Deferral >4%
QDIA
With adviser
3(38) fiduciary
3(21) fiduciary
Not a fiduciary
Don't know
No adviser
(Managed Account)
39.1%
53.3%
25.0%
33.3%
0.0%
29.0%
Source: 2017 PLANSPONSOR Defined Contribution Survey
QDIA
(Other)
29.2%
24.3%
34.2%
27.5%
27.3%
29.1%
No Automatic
Enrollment/QDIA
NA*
NA
NA
NA
NA
NA
*NA = Not applicable
QDIA
(Other)
$100,464
$99,618
$105,542
$99,595
$98,881
$110,327
No Automatic
Enrollment/QDIA
$94,580
$105,095
$97,549
$96,529
$83,204
$96,964
(Managed Account)
7.6%
8.9%
7.1%
12.9%
3.9%
6.7%
QDIA
(Other)
6.8%
6.6%
7.2%
6.6%
6.2%
6.8%
No Automatic
Enrollment/QDIA
6.6%
6.7%
7.0%
6.5%
6.0%
6.7%
How experts influence the use of managed accounts as the QDIA
Advisers' Impact on Managed Accounts
QDIA
(Managed Account)
7.7%
9.2%
7.7%
7.1%
1.9%
9.7%
Offers
Managed Account
35.7%
33.5%
37.6%
31.8%
30.4%
35.2%
6 | planadviser.com march-april 2018
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PLANADVISER - March/April 2018

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