Ask retirement plan sponsors which advisors provide them with the best support, and they’ll point to RIAs.
TD Ameritrade Institutional reported Tuesday that RIAs provide more support than other plan advisors or administrators, and are much likelier to offer educational services to plan sponsors:
- One-on-one participant advice: RIAs 50% vs 29%
- Fiduciary support: RIAs 43% vs 23%
- Plan sponsor education: RIAs 40% vs 27%
The report said RIAs were 64% likelier to offer general investment advice, 60% more likely to weigh in on plan selection and design, and 34% more likely to handle enrollment.
These findings came in a telephone survey of 242 public and private sector plan sponsors with at least 25 employees, conducted Sept. 28 through Oct. 6 by True North Market Insights.
Plan sponsors that used RIAs reported satisfaction with their services and found it easy to work with them. Ninety percent extolled their knowledge of potential plan investment options and for their assistance in meeting fiduciary requirements.
A big majority of sponsors were satisfied with RIAs when it came to selecting plan administrators and record-keeping vendors, and with giving investment advice to participants.
“RIAs excel with retirement plan sponsors because they serve them with the same investor-first approach they use with individual investors and families,” John Newman, managing director of retirement plan services at TD Ameritrade Institutional, said in a statement.
“RIAs are performing better than non-RIA competitors, but they cannot afford to get complacent. There’s always room to grow.”
Indeed, only 28% of plan sponsors surveyed said they used RIAs. A quarter of those that did not said an RIA had never approached them.
That means there is a significant opportunity for advisors to increase their share of the market over the next few years, according to TD Ameritrade.
It said RIAs offered an open-architecture approach when recommending investments for clients, and offered the same approach for retirement plan solutions.
This could be attractive to the man plan sponsors that may be in the market for a plan provider.
The survey found that 60% of plan sponsors would consider switching plan providers over the next year, and that they were most likely to change providers to reduce plan fees or gain access to more diverse investment alternatives.
“An open-architecture investment platform and fiduciary advice are hallmarks of the independent RIA, which is held to a fiduciary standard,” Newman said.
“Plan sponsors are open to considering new approaches, so independent RIAs need to get more vocal about the strength of their offerings and how they can help.”
Retirement Plans Under Review
The survey found that evaluating current investment choices and encouraging greater plan participation were plan sponsors’ chief goals in the coming year.