Plan executives' top reason for hiring a consultant for their defined contribution plan is concern over their fiduciary duties, said a Fidelity Investments and e-Rewards survey released Wednesday.
Although roughly 67% of plan sponsors surveyed said they understand their fiduciary responsibilities, 38% said they are concerned about their fiduciary duties, up from 24% last year.
Additionally, 69% said a consultant's willingness to take on fiduciary duties was important.
Although the majority of survey respondents (72%) said they were satisfied with their consultants, up from 70% last year, a record 23% of respondents said they are actively seeking new consultants, up from 17% in 2015.
About half of respondents (49%) said the need for a more knowledgeable consultant who can assist in a variety areas was their top reason for changing consultants. Areas where more knowledge is desired is assistance with fiduciary duties, minimizing costs, improving plan performance, monitoring investment options and providing regulatory updates.
The survey also asked plan executives about plan design and investment changes over the past two years, with 87% responding that they have made investment menu changes over the period and 86% responding that they have made plan design changes. Replacing an underperforming fund was the most popular investment change. Implementing auto enrollment was the most popular plan design change.
Still, a record 88% of plan executives reported having participants who delay retirement due to lack of savings, the survey found, up from 86% last year.
“Advisers who specialize in the retirement plan market are delivering increasingly greater value, offering services that allow them to operate as a fiduciary, as well as building scalable ways to manage investment menus and serve their plan sponsor clients,” said Jordan Burgess, head of specialist field sales, defined contribution investment only at Fidelity Institutional Asset Management, in a news release. “While plan sponsors are more satisfied than ever, they are also starting to expect more from their advisers, with many of them intensifying their search for even more knowledgeable advisors.”
Mr. Burgess acknowledged that the Labor Department's new fiduciary rule gives “specialist plan advisers the opportunity to raise the game.”
“If they are successful at demonstrating their knowledge, these plan advisers could potentially expand their share of the market and become even more competitive,” Mr. Burgess said.
Independent market research firm e-Rewards, on behalf of Fidelity, surveyed 976 defined contribution plan executives in February, some of which are Fidelity clients.
