Plan sponsors’ loyalty to their retirement service providers is slightly down year-over-year, presenting an opportunity for advisers to advocate for their clients.

Fifty-seven percent of plan sponsors with decision-making authority for an employer’s retirement plan are “loyal” to their provider, down from 61% in 2014, the survey of more than 11,000 plan sponsors by research and consulting firm Chatham Partners, found.

The plan sponsors were also less likely to endorse their retirement plan provider, with 60% saying they would endorse their provider, compared to 66% in 2014. Twelve percent said they would be a “detractor” of the plan provider, compared to 9% in 2014. The percentages are based on a proprietary algorithm developed by Chatham Partners.

Employers are now responsible for more oversight and administration of their plans, at a time when their resources are being pulled in a number of different directions, says Alex Assaley, lead adviser at AFS 401(k) Retirement Services in Bethesda, Md.

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Additionally, plan sponsors are becoming increasingly concerned with exposure, so the results are not surprising, says Chatham Partners’ CEO Peter Starr. All fiduciaries see is “more risk, more risk, more risk,” Starr says. “So, who do they turn to for this type of help? The retirement plan providers they selected,” of which there are approximately 40 in the United States.

Since they are turning to the providers, they are “becoming tougher clients,” Starr explains. “They now know what they want to know. …. They are a tougher grader. The grading curve has increased.”

However, he says retirement plan providers have also gotten better at anticipating the needs of plan sponsors and are beginning to offer better products. “A large number of them have really invested in better tools, better partnerships, better advice,” he says. “All that good stuff.”

“What you have,” he adds, “is two thermometers. One is the increasing risk plan sponsors feel they have. The other is the addressing of this by retirement plan providers in giving them better tools.”

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These results should be a call to action, he says. For plan providers, “if you want to establish a stronger, more stable relation and … client loyalty, it is going to be a tougher road than it has been up to this,” he says.

Adviser’s role

An adviser is the arbitrator to all these issues. “They are the ones that are arbitrating that relationship in many instances,” Starr says. “They advocate for their clients and plan sponsors to say to retirement plan providers these tools need to better, or the investment products need to better priced.”
As the arbitrator, they have a huge impact because that is how perceptions are formulated, Starr says. Assaley, the plan adviser, agrees. “The role of an adviser is to advocate for the client and … oversee all aspects for the plans committee,” he says.

Assaley’ s company focuses on working hand-in-hand with both parties to set goals and maintain open lines of communication, as well as promises and expectations that the client is getting the help they need when it comes to oversight and administration. “Roles they have today, five to 10 years ago weren’t as prevalent,” he adds.

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