Financial advisors working with defined contribution plans may not be providing the services that plan sponsors want. According to a new study from Wells Fargo Asset Management, there is often a disconnect between what plan sponsors want and what advisors are confident about providing.
For example, 70% of advisors surveyed found that following through on regulatory and compliance issues is among the most challenging issues they face – which isn’t surprising given the new Labor Department fiduciary rule – but this focus is a priority for plan sponsors. Also, almost 60% of advisors surveyed found that understanding participant behavior was challenging but that too is a priority for plan sponsors.
Wells Fargo surveyed 250 financial advisors, with 38% working with plans under $20 million and 62% with plans over $20 million, and compared their responses to those of plan sponsors surveyed in 2015 in what it calls “The Science of Satisfaction” series.
The biggest disconnects uncovered in the survey pertained to what advisors believe add value to their relationship with plan sponsors and what the sponsors believe. On a scale of 1 to 10, the number one value for plan sponsors was effective communications, and the number two value was engagement with the plans.
For advisors, the comparable rankings were numbers six and 10, respectively. More than half of the advisors surveyed found it hard to provide effective communication with easily understood explanations, and a third found that showing engagement with a plan to be challenging.