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
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
Retirement Services
Intermediaries (RSI 6)
Waves 1 through 4
October 2011
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
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
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
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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