ADVISOR CX

Over 100 employers responded, representing a cross-section of plan sizes by assets. For analysis purposes, results are segmented into small (<$10M in assets), medium ($10M – $50M), and large (>$50M) plan

In addition, responses are segmented by plans with retirement plan advisors that act as 3(21) or 3(28) fiduciaries compared to those with non-fiduciary advisors.

Quantitative questions were rated on a 7-point scale in which ‘7’ represents “Very Satisfied”, and ‘1’ represents “Very Dissatisfied”.

Overall, results indicate that plan sponsors are generally satisfied with their retirement plan advisors, with 81% of plan sponsors surveyed rating their overall satisfaction with their advisor a ‘7’ or ‘6’ on a 7-point scale. Plan sponsors also provide strong ratings (79-81% top 2 box score) for advisors’ quality of contact, ability to help manage plan sponsor success, and fiduciary support. However, support in managing participant success emerged as an opportunity for improvement, with a relatively lower top 2 box score of 73%.

An important indicator of success for any business is the loyalty of its customers. Through Chatham’s proprietary loyalty algorithm, it is possible to identify clients that are at-risk of leaving, as well as those who can be used for positive reference. Based on this study’s results, a large portion of plan sponsors are “neutral” toward their retirement plan advisor, and approximately 1 in every 5 respondents are classified as “at-risk” accounts. This leaves only 22% of respondents who are considered “loyal” clients. It would be in the best interest of advisory firms to assess their current book of business and strive to ensure their most profitable and strategically important customers are “loyal”, while taking steps to address concerns of identified “at-risk” accounts.

The Promotability Score acts as a simple barometer for how one firm is doing versus another or versus the industry as a whole. With the results of this study, Chatham Partners has developed a unique baseline Promotability Score for retirement plan advisors that can be used for comparison to other advisory firms. 64% of the surveyed plan sponsors are determined to be promoters, while 15% are detractors, translating to a Promotability Score of 49.

Plan sponsors’ scores indicate that there is room for improvement when it comes to retirement plan advisors’ provision of holistic service. A deeper dive into the components that make-up the Client Service Rating reveals that sponsors are generally satisfied with the frequency and quality of contact (81%), advisor fiduciary support (80%), and support managing plan sponsor success (79%). However, advisor support in managing participant success is viewed less favorably, as this area receives a comparatively low 73% top 2 box score.

Ideally, an aggregate top 2 box score would be in the 80%+ range to be considered strong. Regardless, the industry Client Service Rating of 78% is the benchmark against which individual advisory firms can measure their own service effectiveness.

Results are mixed when ratings for brand attributes are assessed. Advisors receive stronger marks for service related attributes such as treating clients as important, ease of doing business, and range of services offered, with top 2 box scores of 79% or higher for these measures. Conversely, ratings are notably lower for measures associated with innovative and proactive partnership, as scores for ‘is innovative’ and ‘proactively offers new ideas and solutions’ are in the middling range, and below levels that ensure deep satisfaction or loyalty.

Correlation analysis was utilized to identify attributes most highly correlated to overall satisfaction with retirement plan advisors. The frequency and quality of contact, which includes in-person meetings and other correspondence (phone calls, emails, updates, etc.), is the most highly correlated to overall satisfaction and received a strong 81% top 2 box rating.

Financial advice and support in managing plan sponsor success are also highly correlated to plan sponsors’ overall satisfaction with their advisors and receive strong top 2 box ratings. However, managing participant success – which has high relative importance to plan sponsors – came in under 80% top 2 box, and emerges as a place advisors could improve services.

While, as a whole, the market has a positive view of advisors (81% top 2 box score), this sentiment is relatively weaker among plan sponsors with mid-size retirement plans and those with advisors that do not act as a fiduciary.

For advisory firms that service mid-size plans and / or choose not to act as a fiduciary, there is an opportunity to differentiate themselves from their peers in the same segment by making targeted efforts to address shortfalls perceived by this client base.

Small and large plan sponsors and those with advisors that act as a fiduciary were most satisfied with the contact they receive, while mid-size plan sponsors and those with non-fiduciary advisors provide comparatively lower scores. In particular, mid-size plan sponsors appeared to be less satisfied with the advisor’s level of preparation for in-person meetings as well as the frequency and quality of other correspondence. Plan sponsors with non-fiduciary advisors were less satisfied with the value of and advisor’s preparation for in-person meetings.

Plan sponsor services are fundamental to an advisory firm’s core product offering. To analyze satisfaction in managing plan sponsor success, we asked employers to evaluate the quality, value, preparation, and frequency of their advisors’ reviews of investments, fees and expenses, and plan design.

The top 2 box score for plan sponsors’ satisfaction with advisor support in managing plan sponsor success is 79%. Similar to other areas of the survey, mid-size plan advisors and non-fiduciary retirement plan advisors receive lower scores than the industry as a whole. Among the components of managing plan sponsor success, mid-size and large plan sponsors provide considerably higher ratings than small plan sponsors for satisfaction with investment menu reviews, while mid-size sponsors provide the lowest ratings for satisfaction with plan fees and expense reviews, as well as plan design review.

Plan sponsors express a high level of confidence in the fiduciary support provided by their advisors, with 80% rating their overall satisfaction with advisor fiduciary support in a top 2 box. As expected, there is a considerable difference in perceptions of advisor fiduciary support between plan sponsors with advisors who are acting as fiduciaries and those with advisors who are not. Nevertheless, strong ratings are given for the frequency and quality of plan sponsor fiduciary responsibility review across all segments.

Interestingly, plan sponsors who utilize a non-fiduciary advisor are less satisfied with their fiduciary support, yet are more comfortable with their understanding of their fiduciary responsibilities and their comfort in fulfilling those responsibilities.

Support in managing participant success is a critical component of an advisor’s offering. While findings track closely when segmented by fiduciary and non-fiduciary advisors, satisfaction varies among plan sizes. Specifically, small plan sponsors are more satisfied with the advisor support they receive in managing participant success relative to large and mid-size plan sponsors, likely due to having fewer participants who can receive more personalized support.

Among the specific participant services, plan sponsors display the highest relative levels of satisfaction with the financial advice provided by their plan advisors, while education and enrollment meetings and financial planning services receive slightly lower ratings.

At a more granular level, small plan sponsors are more satisfied with education / enrollment meetings and financial planning, while large plan sponsors are more satisfied with financial advice. Further, large plan sponsors provide the highest relative ratings for preparedness reviews, while mid-size plan sponsors give the lowest relative scores for this area.

When segmented by plan size, the composite Client Service Rating further emphasizes that small- and large-market plan sponsors are most satisfied. Advisors earn top 2 box scores exceeding 80% for their client service effectiveness among small- and large plan sponsors and only 73% among the mid-size plan segment. In addition, advisors acting as fiduciaries receive a higher Client Service Rating rating than advisors who are not.