A report released Thursday by Transamerica Retirement Solutions found colleges and universities are a source of opportunity for advisors looking for new retirement business. The study found 42% of institutions use an advisor or consultant on their retirement plans, a figure expected to grow by 10% over the next year.
Transamerica analyzed schools that offer a 403(b) or Roth 403(b) plan to their employees and found schools are using advisors to help select investment options (58%), monitor those options (47%) and assist with plan design (42%). More than a third are using advisors to develop an investment policy for their retirement plan, and 33% are getting help with plan compliance.
"Advisors and consultants are powerful allies in retirement plan management," Brodie Wood, vice president and national practice leader of not-for-profit plans for Transamerica Retirement Solutions, said in a statement. "By increasing the use of advisors, higher education institutions can continue to effectively navigate the many changes taking place regarding retirement plans."
While having an advisor on site to assist participants is uncommon in the corporate world, visits from an on-site counselor are fairly standard at colleges and universities. Almost 60% of private institutions said they used an on-site participant counselor, as well as 58% of plans with fewer than 5,000 eligible participants. Sixty percent of schools that work with multiple vendors use an on-site counselor.
The survey also found that employees at higher education institutions are saving at a greater rate than average. A survey released in June by Vanguard found the average participant deferral rate was 7% in 2012. The average savings rate including employer contributions was 10.5%. The Transamerica study found the average deferral rate was 13.4%.
Transamerica will host a webinar Tuesday to discuss the findings of the study at length. Advisors can register by calling Transamerica at 888-401-5826.
Check out 403(b) Plans Are Ripe With Opportunity for Advisors on ThinkAdvisor.