Regulations are sure to lummox up the situation even further. Under the Department of Labor’s proposed rule for retirement advice, advisors would be required to act in the clients’ best interest, which means more disclosure of their activities and an expansion of the kinds of transactions that need to be covered by a fiduciary’s more virtuous oversight.
The study suggests that tighter fiduciary standards would harm smaller plans because advisors may have to switch to a fee model from a commission model.
“Serving as a fiduciary would simply take too much of advisors’ time to be effective in their other responsibilities as an advisor,” the study says.
An advisor’s ability to educate employees is also a big deal to plan sponsors.
“The majority would like an advisor to educate employees on the retirement plan benefits as well as the importance of contributing to the plan,” says the study. “Sponsors who work with an advisor prefer more frequent education than they are currently receiving.”
“We had about 13 percent of respondents say they were dissatisfied with employee education,” said Sarsynski. “That would certainly be a red flag.”
For their part, advisors feel that they have a problem getting the plan sponsors to goad employees into education sessions. “Advisors find it difficult to motivate sponsors to schedule a time where they can come in and conduct group or one-on-one meetings.”
Customer service was also part of the “winning combination” outlined by MassMutual. By “good service,” respondents meant that advisors are responsive to plan sponsor needs and get back to them immediately with solutions. Also, plan sponsors expect their advisors to be problem solvers.
The answers in the survey changed somewhat depending on whether the plan sponsor had an advisor and the size of the plan. Smaller plans of less than $25 million were more cost-conscious, as were advisors with no plans.