Compared to other plan advisors, RIAs offer
more investment advice to participants, more support and more
education to plan fiduciaries
Independent registered investment advisors ("RIAs") provide
retirement plan sponsors with greater support than other plan
advisors, and by a wide margin. Indeed, RIAs provide support at
roughly two times the rate of other advisors or plan
administrators, and are twice as likely to offer education services
to plan sponsors, according to the TD Ameritrade Institutional1
2015 Plan Sponsor Sentiment Survey.
This higher level of support extends to plan participants as
well: RIAs offer individual advice to participants at nearly twice
the rate of other retirement plan advisors or service providers.
They are also 64 percent more likely to offer investment advice to
the plan sponsor. RIAs are 60 percent more likely to advise on plan
selection and design, and 34 percent more likely to offer plan
sponsors support with participant enrollment.
No wonder plan sponsors that use RIAs say they are pleased with
their services and find it easy to work with them. Ninety percent
give RIAs top marks for their knowledge of potential plan
investment options and for their assistance in meeting fiduciary
requirements. More than eight in 10 are satisfied with RIAs when it
comes 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," said John Newman, Managing Director,
Retirement Plan Services, TD Ameritrade Institutional. "RIAs are
performing better than non-RIA competitors, but they cannot afford
to get complacent. There's always room to grow.”
An Opportunity for Open Architecture
Despite a deep bench of services and support, RIAs are used by
28 percent of the plan sponsors surveyed. That means there is a
significant opportunity for advisors to increase their share of the
market over the next few years.
RIAs offer an open-architecture approach when it comes to
recommending investments for clients. They offer the same approach
for retirement plan solutions, and that could be attractive to plan
sponsors shopping around for a plan provider.
The survey found that 60 percent of plan sponsors would consider
switching plan providers over the next year, and that sponsors are
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," said Newman. "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
Improving the participant experience is top of mind for plan
sponsors, which state that evaluating current investment choices
and encouraging greater plan participation are their main goals for
the upcoming year.
Plan sponsors are most concerned about the diversity of their
investment line up, possibly for good reason. According to the
survey, most retirement plans offer mutual funds, despite enhanced
products and service offerings making headlines. Survey respondents
report that only 27 percent of their retirement plans offer target
date or lifecycle funds, and just 15 percent include
exchange-traded funds (ETFs). Only one in four plans surveyed has
auto-enrollment and 15 percent offer self-directed brokerage
accounts (SBDAs).
Plan sponsors also recognize that current and would-be
participants want individual help on investing. In fact, 44 percent
of plan sponsors characterize participants as hungry for one-on-one
advice from a financial advisor, particularly when it comes to
planning for and investing in retirement, yet only 27 percent
currently offer participants one-on-one investment advice.
“When plan sponsors consider the design of their retirement
plans, it's clear that two things are paramount: creating the most
effective investment menu and offering skilled investment advice to
their participants,” said Newman. "Frankly, RIAs are uniquely
positioned to deliver both."
More Education Needed on Fiduciary Rules and
Regulations
Plan sponsors rank fiduciary education as one of the most
important services they receive from their plan advisors, right
alongside performance reporting and participant investment advice.
The survey found there is a wide knowledge gap among plan sponsors
when it comes to understanding how changing regulatory requirements
may impact their role as fiduciaries.
- Fee Disclosure. Sixty-two
percent do not fully understand the implication of the 2012
Department of Labor (DOL) rules on fee disclosure. Plan sponsors
using RIAs are already receiving updates and education on this
issue from their advisors at twice the rate of those who do not use
RIAs. In fact, 30 percent of plan sponsors that do not use a RIA
say they have not received any communications on fee disclosure
requirements.
- Fiduciary Compliance. Plan
sponsors report being similarly unaware of the DOL's proposed new
rule on fiduciary compliance. More than half say they do not have
enough information, while an additional 15 percent say they have
never heard of the proposed rule.
- Tibble vs. Edison. Although 70
percent may not know the details of the U.S. Supreme Court's
decision on investment and fee monitoring, plan sponsors believe
that their plan offerings should be in the best interests of
participants. But even though seven out of 10 sponsors benchmark
the fees and performance of funds offered in their retirement plans
at least once a year, more than half were unsure about whether
their plan’s mutual fund options are in the least expensive share
class available to their plan.
"A lot is changing for employer-sponsored retirement plans, so
it's not surprising that plan sponsors need more guidance and
services for themselves and for their participants," said Newman.
"Now more than ever, RIAs are poised to shine for plan sponsors –
they are hard-wired to deliver fiduciary support and investment
advice in a way that other providers are not."
To Learn More
Plan sponsors and RIAs interested in learning more about
opportunities in the retirement plan market can get more
information by clicking here.
About the Survey
The results of TD Ameritrade Institutional's first-ever Plan
Sponsor Sentiment Survey are based on responses from a 15-minute
telephone survey of retirement plan sponsors nationwide conducted
by True North Market Insights on behalf TD Ameritrade
Institutional, a subsidiary of TD Ameritrade Holding Corporation.
From September 28 through October 6, 2015, 242 plan sponsors with
at least 25 employees from the public and private sectors were
asked about their views on their retirement plans, their need for
services and support, and related regulatory issues. Survey
participants self-identified as the primary or shared decision
maker for their organization's retirement plan offering. TD
Ameritrade Institutional was not identified as the sponsor of the
survey. The margin of error in this survey is +/- 6%.
True North and TD Ameritrade are separate, unaffiliated
companies and are not responsible for each other's products and
services.
About TD Ameritrade InstitutionalTD Ameritrade
Institutional is a leading provider of comprehensive brokerage and
custody services to more than 5,000 fee-based, independent
registered investment advisors (RIAs) and their clients. Our
advanced technology platform, coupled with personal support from
our dedicated service teams, allows investment advisors to run
their practices more efficiently and effectively while optimizing
time with clients. TD Ameritrade Institutional is a division of TD
Ameritrade, Inc., a brokerage subsidiary of TD Ameritrade Holding
Corporation.
About TD Ameritrade Holding CorporationMillions of
investors and independent registered investment advisors (RIAs)
turn to TD Ameritrade’s (NYSE:AMTD) technology, people and
education to make investing and trading easier to understand and
do. Online or over the phone, in a branch or with an independent
RIA, first-timer or sophisticated trader, our clients want to take
control and we help them decide how: We’ve been bringing Wall
Street to Main Street for 40 years. An official sponsor of the 2016
U.S. Olympic and Paralympic Teams, as well as an official sponsor
of the National Football League, TD Ameritrade has time and again
been recognized as a leader in investment services. Please visit TD
Ameritrade’s newsroom or www.amtd.com for more information.
1 TD Ameritrade Institutional is a division of TD Ameritrade,
Inc., a brokerage subsidiary of TD Ameritrade Holding
Corporation.
Brokerage services provided by TD Ameritrade, Inc., member FINRA
(www.FINRA.org) / SIPC (www.SIPC.org)
Retirement plan services are offered by TD Ameritrade Trust
Company, a non-depository trust company that acts as a custodian
and/or directed trustee and is not a member of FINRA or SIPC. TD
Ameritrade Trust Company is a subsidiary of TD Ameritrade Holding
Corporation.
Source: TD Ameritrade Holding Corporation
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151208005249/en/
TD AmeritradeJoseph A. Giannone, 201-369-8705Communications +
Public Affairsjoseph.giannone@tdameritrade.com
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