Retirement Services Intermediaries 7

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Retirement Services Intermediaries 7

One Landmark Square ∆ Stamford, Connecticut 06901 203.487.2000 Fax 203.353.1166 www.brightworkpartners.com

As 401(k) distribution continues to evolve toward greater professionali-zation, greater concentration in the hands of specialists and as advisors focus on themselves providing fiduciary investment services, so too has the RSI inquiry taken new forms. Among the new or expanded topics

in RSI 7:

Tracking the specific services

advisors provide to plan sponsors (13 items) and the extent to which advisors view each service as a key part of their value

proposition

Understanding the relative

importance of various metrics advisors use to evaluate the success of their plans

Sorting out broker of record

changes (only) versus (also) switching primary investment providers

Tracking the apparent

displacement of the traditional TPA interface service model by a fully unbundled TPA/trading platform/RIA product

Developing a better

understanding of hybrid or dually-registered advisors and their emerging prominence in the channel

Trended Metrics

RSI 7 builds on key descriptive

metrics to characterize advisors’ practices including:

Other retirement products sold

Number and size of 401(k) cases sold

Service model and investment

product platforms used by case size

Compensation structure and

fiduciary status

Business development initiatives including provider partnerships

Preferred fee collection methods Track within the channel

Overall 401(k) assets and years in the business

Whether placing more or less emphasis on 401(k) in the future

Providers used

Provider Selection Criteria

As always in RSI studies, the central

inquiry is an exhaustive build-out of what advisors look for in a provider and how they rate the providers they use on these dimensions. This supports both a robust advisor segmentation and a richly detailed evaluation of the strengths and weaknesses of the providers they work with. Tested in this cycle:

Being highly responsive to requests from you, the advisor

Providing flawless service to your plan sponsor clients

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Retirement Services Intermediaries 7

One Landmark Square ∆ Stamford, Connecticut 06901 203.487.2000 Fax 203.353.1166 www.brightworkpartners.com

Making available an attractive selection of collective investment trusts and exchange-traded funds

Offering highly effective programs to help participants make the most of their 401(k)s

Offering effective retirement income solutions within the 401(k) plan

Assisting you in generating IRA rollover business from participants leaving the 401(k) plans you advise

Offering you the ability to create custom target date funds or asset allocation portfolios for your plans

Offering an open architecture investment platform

Offering optional third party fiduciary investment services including section 3(21) and 3(38) services

Offering robust due diligence investment selection, monitoring and reporting services

Offering net revenue pricing to plans of almost any size

Accommodating multiple advisor compensation methods including paying commissions, adding wrap fees and collecting billed fees for you

Having relatively low total costs including investment costs and costs to the plan sponsor

Having a responsive inside sales support desk and RFP team

Having knowledgeable and professional retirement plan wholesalers

Having a stellar brand and outstanding reputation

Other Provider-specific Findings

Additionally, RSI 7 delivers the

following evaluations for each provider:

Whether advisors expect to use the provider more or less in the future

What size case they consider the provider’s “sweet spot” (new)

Whether the provider makes it

easy to sell their products, is advisor-friendly and offers

superior value for the price (new)

Providers Evaluated

Based on channel penetration in RSI 6, we expect to report provider-level

findings in RSI 7 for ADP, American Funds, AUL, Charles Schwab, Fidelity, Great-West, Hartford, ING, John Hancock, Lincoln, MassMutual, Nationwide, Principal, Prudential and Transamerica. All findings are

reported to all clients.

Methodology and Subscription Details

This research will be conducted by telephone throughout the year among approximately 600 advisors who derive significant income from 401(k) plans. Interim findings will be reported mid-2012 with final results at year-end. Deliverables include point-of-view presentations and comprehensive interpretative decks.

Contacts:

Merl W. Baker

mbaker@brightworkpartners.com

Ronald L. Bush

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Retirement Services

Intermediaries (RSI 6)

Waves 1 through 4

October 2011

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2

Table of Contents

Question

Number

Page

Number

-

Critical Industry Trends

8

-

Key Competitor Findings

10

-

Methodology

15

Practice Characteristics

17

1

Share of 401(k) Income

18

-

Share of Key Variables by 401(k) Share of Income

19

-

Summary of Advisor Characteristics

21

-

Channel

23

-

Share of Key Variables by Channel

25

47

Market Value of 401(k) AUM

27

2

Cross Sell from 401(k) Practice

28

3

Retirement Products Sold

39

4

Emphasis on 403(b) Plans

41

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Table of Contents

(cont’d)

Question

Number

Page

Number

28

Service Model Recommended Most Frequently

46

52

Advisor Compensation Method

48

53

Fee Collection Preference

55

36

Advisor as Fiduciary

59

37

Formal Agreements

64

37

Have Formal Agreements

65

38

Agreement Specifies Fees

69

39

Special Effort

74

40

Minimum Balance

76

41

IRA Rollovers

77

39, 40, 41

Trend: IRA Rollovers

79

55

Interest in Guaranteed Income Features

80

29

Write 401(k) Business as a RIA

87

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4

Table of Contents

(cont’d)

Question

Number

Page

Number

Number and Types of Plans Sold

93

30

Plans Sold

94

30 - 34

Plans Sold

95

35

Plans Wrote as a RIA

99

30 - 34

Investments (% of cases sold)

101

30 - 34

Service Model (% of cases sold)

109

Advisor Segment Summaries

117

401(k) Share of Income

118

Service Model Used Most Frequently

122

Wrote Business as a RIA

130

Primary Affiliation

142

Considers Self a Fiduciary

164

Compensation Method

172

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Table of Contents

(cont’d)

Question

Number

Page

Number

Case Sizes Sold

193

Gender

201

Channel Penetration

214

5, 6, 7

Number of Providers

215

5, 6, 7

Provider Designated One of Top Three

216

9, 12, 15

Average Percentage of Cases Placed

264

9, 12, 15

Shelf Space by Provider

265

5, 6, 7

Cross Penetration by Provider

288

11, 14, 17

Usage by Provider Priority

306

11, 14, 17

Provider Usage by Case Size

307

11, 14, 17

Provider Used for Smaller Cases

309

11, 14, 17

Provider Used for Larger Cases

310

11, 14, 17

Provider Used for Cases of Almost Any Size

311

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6

Table of Contents

(cont’d)

Question

Number

Page

Number

Provider Selection Criteria

319

18

Importance of Provider Selection Criteria

320

Performance Metrics and Likely Future Use

375

19, 20, 21

Provider Ratings

376

10,13,16

Proportion of Future Placements by Provider

393

22, 23, 24

Provider Personalities

396

Summary Profiles and Ratings by Provider

399

ADP

400

American Funds

405

AUL

424

Charles Schwab

430

Fidelity

436

Great-West

464

Hartford

478

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Table of Contents

(cont’d)

Question

Number

Page

Number

ING

492

John Hancock

507

Lincoln National

526

MassMutual

539

Nationwide

551

OppenheimerFunds

566

Principal

572

Prudential

591

Transamerica

597

Appendices

611

Retirement Services Intermediaries field dates

612

Provider Rating Bases

613

Figure

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