The Citigroup report found that the two leading considerations RIAs have when they choose a custodian are its service (29%) and technology (23%) capabilities. They also look at a custodian's costs (17%) and its mutual fund offerings (12%), take into account its brand (11%), and consider its ability to get them client referrals (8%).
As for custodian service levels, 82% of surveyed RIAs say they're serviced by a small team of four to five people, and 11% are serviced by a single individual. Just 7% are routed to a call center. Among RIAs with assets of more than $1 billion, 20% are serviced by a single representative and none are routed to a call center.
The Citigroup survey contacted more than 100 RIAs across the spectrum with an estimated 25,000 clients and $60 billion in total assets.
Pension Tension
Pension plans remain a factor in the nation's retirement income landscape, but they're taking a hit like most other investment vehicles and threaten to put a major hurt on the balance sheets of corporate America.
According to a recent report from the Center for Retirement Research, the value of equities in retirement plans plunged $3.8 trillion for the year ended October 9, 2008. Of that decline, half came from defined-contribution plans and the other half from defined-benefit plans. As of the end of 2007, defined-benefit plans represented 18% of all U.S. retirement assets.
The report, The Financial Crisis And Private Defined Benefit Plans, says that the number of underfunded plans has increased. In mid-November, after the report came out, about 300 leading companies and business groups asked Congress to suspend parts of the Pension Protection Act of 2006 designed to guarantee that the companies have enough funds to meet their pension requirements. The business lobby contends these mandates are straining their finances and might force them to cut jobs to conserve cash during the economic downturn.
The act requires defined-benefit plan sponsors to eliminate any unfunded liabilities over a seven-year period. The Center for Retirement Research found that based on the current depressed state of equities, plan sponsors next year will need to boost their pension plan contributions by $90 billion to meet their funding mandates.