PLANADVISER - September/October 2020 - 18

research / 2020 PLANADVISER Retirement Plan Adviser Survey
Palmer noted that today's new products include active/
passive blended solutions and collective investment trust
(CIT) solutions, plus more asset class diversification. And he
said he expects more to come.
Although the survey indicates a competitive split
between TDFs that invest in active vs. passive funds, plan
sponsors, and their advisers, seem to be divided on the
strategies-e.g., one can argue that blends appeal only to
a niche market.
Once that decision is made, the preferences for fund
suites become clear from the data: Advisers desiring active
funds tend to choose either American Funds or T. Rowe
Price while advisers pursuing passive funds have a strong
preference for Vanguard, followed distantly by one of three
providers: Fidelity Investments, TIAA/Nuveen or BlackRock.
In other words, most money going into TDFs is channeled to
a few key brands.
The Effects of COVID-19 on TDFs
Daniel Oldroyd, portfolio manager and head of target-date
strategies at J.P. Morgan Asset Management, pointed out,
also at PANC, that investors essentially went through an
entire market cycle within less than a month this year. " In
the course of three weeks, the markets dropped approximately
30%, then assets rallied, " he said. " Now, we're conditioned
that a 1% move in a day is tiny, because of the sheer
amount of uncertainty. "
He compared this time to the Great Recession, when
warning bells went off in 2007 and the markets went
through a " slow-motion train wreck in 2008, " then started
to rally around March 2009. That cycle spanned three years,
so sponsors may be wondering how to judge their plans'
investment performance now. " I don't know if two weeks in
March and three weeks in April will merit the same impact
as discussions during the 2008/2009 crisis, " Oldroyd said.
Another section of the RPA Survey asked advisers for the
three most important criteria they use to evaluate/select/
monitor a target-date fund as the QDIA. The top three of 14
results were the fund's glide path construction, plan demographics/participant
needs, and pricing/fees. Comparing
this data with tips offered by Department of Labor (DOL) is
interesting in itself. One tip is to " inquire about whether a
custom or nonproprietary TDF would be a better fit for the
plan. " Another, not suggested in the survey, is to " develop
effective employee communications. "
Recordkeeping Partners
On the recordkeeping side of the industry, consolidation
continues-with some significant changes, such as
Principal Financial Group's acquisition of Wells Fargo's
recordkeeping business last year and Empower picking up
MassMutual's and Fifth Third Banks' retirement plan businesses,
respectively, in September. The list of providers
looking to work with retirement plan advisers is still
lengthy, as shown by the 53 recordkeepers participating in
the 2020 PLANADVISER Recordkeeping Services Guide.
Per the survey results, the most important standards
that advisers consider when selecting a provider changed
a bit this year. Like last year, value for price was the top
choice, but cited by fewer advisers this year-53% versus
63.1% last year. A new second choice arose: quality of
sponsor support (39%), perhaps a reflection of fielding this
survey in late summer after advisers helped sponsors navigate
the Coronavirus Aid, Relief and Economic Security
(CARES) Act and other COVID-19-era issues. Fee structure
for the plan, No. 3 last year, stayed at No. 3 but also had
fewer advisers selecting it-38% of respondents vs. 51.7%.
Last year's second most common choice, website tools for
participants, fell to fifth place this year. -PA
METHODOLOGY. The 2020 PLANADVISER Retirement Plan Adviser Survey was open for
response in September and received 472 replies. Survey questions captured adviser insights
on industry decision-drivers as well as assessments of investment managers, mutual funds
and defined contribution (DC) plan recordkeepers. Investment manager and mutual fund
ratings were derived from feedback from 299 advisers who were personally involved in
the evaluation and recommendation of investment options. DC recordkeeper evaluations
are based on responses from 359 advisers who personally evaluate and recommend
these providers for qualified plan clients. Top 10 lists reflect the percentage of respondents
who recognized the recordkeeper as having the " best service " in that category, based
on a count of respondents who had worked with the recordkeeper at least a few times.
Overall, advisers needed to have worked with a DC plan provider at least once to offer
feedback on it. Additional insight on the size and scope of advisers' qualified plan business,
practice management, compensation and client service strategies is available in
the 2020 PLANADVISER Practice Management/Benchmarking Survey, which was fielded
and published separately. For more information and additional research available, please
contact surveys@issmediasolutions.com.
Quartiles provide a relative comparison of how frequently the recordkeeper was cited as the
" best "
recordkeeper
in the corresponding market.
frequently); = 3rd quartile; = 2nd quartile; and =1st quartile (cited least frequently).
= 4th, or top, quartile (cited most
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