New Study Finds RIAs Have What Retirement Plan Sponsors Want: More

Compared to other plan advisors, RIAs offer more investment advice to participants, more support and more education to plan fiduciaries

JERSEY CITY, N.J.--()--Independent registered investment advisors ("RIAs") provide retirement plan sponsors with greater support than other plan advisors, and by a wide margin. Indeed, RIAs provide support at roughly two times the rate of other advisors or plan administrators, and are twice as likely to offer education services to plan sponsors, according to the TD Ameritrade Institutional1 2015 Plan Sponsor Sentiment Survey.

This higher level of support extends to plan participants as well: RIAs offer individual advice to participants at nearly twice the rate of other retirement plan advisors or service providers. They are also 64 percent more likely to offer investment advice to the plan sponsor. RIAs are 60 percent more likely to advise on plan selection and design, and 34 percent more likely to offer plan sponsors support with participant enrollment.

No wonder plan sponsors that use RIAs say they are pleased with their services and find it easy to work with them. Ninety percent give RIAs top marks for their knowledge of potential plan investment options and for their assistance in meeting fiduciary requirements. More than eight in 10 are satisfied with RIAs when it comes to selecting plan administrators and record-keeping vendors, and with giving investment advice to participants.

"RIAs excel with retirement plan sponsors because they serve them with the same investor-first approach they use with individual investors and families," said John Newman, Managing Director, Retirement Plan Services, TD Ameritrade Institutional. "RIAs are performing better than non-RIA competitors, but they cannot afford to get complacent. There's always room to grow.”

An Opportunity for Open Architecture

Despite a deep bench of services and support, RIAs are used by 28 percent of the plan sponsors surveyed. That means there is a significant opportunity for advisors to increase their share of the market over the next few years.

RIAs offer an open-architecture approach when it comes to recommending investments for clients. They offer the same approach for retirement plan solutions, and that could be attractive to plan sponsors shopping around for a plan provider.

The survey found that 60 percent of plan sponsors would consider switching plan providers over the next year, and that sponsors are most likely to change providers to reduce plan fees or gain access to more diverse investment alternatives.

"An open-architecture investment platform and fiduciary advice are hallmarks of the independent RIA, which is held to a fiduciary standard," said Newman. "Plan sponsors are open to considering new approaches, so independent RIAs need to get more vocal about the strength of their offerings and how they can help."

Retirement Plans Under Review

Improving the participant experience is top of mind for plan sponsors, which state that evaluating current investment choices and encouraging greater plan participation are their main goals for the upcoming year.

Plan sponsors are most concerned about the diversity of their investment line up, possibly for good reason. According to the survey, most retirement plans offer mutual funds, despite enhanced products and service offerings making headlines. Survey respondents report that only 27 percent of their retirement plans offer target date or lifecycle funds, and just 15 percent include exchange-traded funds (ETFs). Only one in four plans surveyed has auto-enrollment and 15 percent offer self-directed brokerage accounts (SBDAs).

Plan sponsors also recognize that current and would-be participants want individual help on investing. In fact, 44 percent of plan sponsors characterize participants as hungry for one-on-one advice from a financial advisor, particularly when it comes to planning for and investing in retirement, yet only 27 percent currently offer participants one-on-one investment advice.

“When plan sponsors consider the design of their retirement plans, it's clear that two things are paramount: creating the most effective investment menu and offering skilled investment advice to their participants,” said Newman. "Frankly, RIAs are uniquely positioned to deliver both."

More Education Needed on Fiduciary Rules and Regulations

Plan sponsors rank fiduciary education as one of the most important services they receive from their plan advisors, right alongside performance reporting and participant investment advice. The survey found there is a wide knowledge gap among plan sponsors when it comes to understanding how changing regulatory requirements may impact their role as fiduciaries.

  • Fee Disclosure. Sixty-two percent do not fully understand the implication of the 2012 Department of Labor (DOL) rules on fee disclosure. Plan sponsors using RIAs are already receiving updates and education on this issue from their advisors at twice the rate of those who do not use RIAs. In fact, 30 percent of plan sponsors that do not use a RIA say they have not received any communications on fee disclosure requirements.
  • Fiduciary Compliance. Plan sponsors report being similarly unaware of the DOL's proposed new rule on fiduciary compliance. More than half say they do not have enough information, while an additional 15 percent say they have never heard of the proposed rule.
  • Tibble vs. Edison. Although 70 percent may not know the details of the U.S. Supreme Court's decision on investment and fee monitoring, plan sponsors believe that their plan offerings should be in the best interests of participants. But even though seven out of 10 sponsors benchmark the fees and performance of funds offered in their retirement plans at least once a year, more than half were unsure about whether their plan’s mutual fund options are in the least expensive share class available to their plan.

"A lot is changing for employer-sponsored retirement plans, so it's not surprising that plan sponsors need more guidance and services for themselves and for their participants," said Newman. "Now more than ever, RIAs are poised to shine for plan sponsors – they are hard-wired to deliver fiduciary support and investment advice in a way that other providers are not."

To Learn More

Plan sponsors and RIAs interested in learning more about opportunities in the retirement plan market can get more information by clicking here.

About the Survey

The results of TD Ameritrade Institutional's first-ever Plan Sponsor Sentiment Survey are based on responses from a 15-minute telephone survey of retirement plan sponsors nationwide conducted by True North Market Insights on behalf TD Ameritrade Institutional, a subsidiary of TD Ameritrade Holding Corporation. From September 28 through October 6, 2015, 242 plan sponsors with at least 25 employees from the public and private sectors were asked about their views on their retirement plans, their need for services and support, and related regulatory issues. Survey participants self-identified as the primary or shared decision maker for their organization's retirement plan offering. TD Ameritrade Institutional was not identified as the sponsor of the survey. The margin of error in this survey is +/- 6%.

True North and TD Ameritrade are separate, unaffiliated companies and are not responsible for each other's products and services.

About TD Ameritrade Institutional
TD Ameritrade Institutional is a leading provider of comprehensive brokerage and custody services to more than 5,000 fee-based, independent registered investment advisors (RIAs) and their clients. Our advanced technology platform, coupled with personal support from our dedicated service teams, allows investment advisors to run their practices more efficiently and effectively while optimizing time with clients. TD Ameritrade Institutional is a division of TD Ameritrade, Inc., a brokerage subsidiary of TD Ameritrade Holding Corporation.

About TD Ameritrade Holding Corporation
Millions of investors and independent registered investment advisors (RIAs) turn to TD Ameritrade’s (NYSE:AMTD) technology, people and education to make investing and trading easier to understand and do. Online or over the phone, in a branch or with an independent RIA, first-timer or sophisticated trader, our clients want to take control and we help them decide how: We’ve been bringing Wall Street to Main Street for 40 years. An official sponsor of the 2016 U.S. Olympic and Paralympic Teams, as well as an official sponsor of the National Football League, TD Ameritrade has time and again been recognized as a leader in investment services. Please visit TD Ameritrade’s newsroom or for more information.

1 TD Ameritrade Institutional is a division of TD Ameritrade, Inc., a brokerage subsidiary of TD Ameritrade Holding Corporation.

Brokerage services provided by TD Ameritrade, Inc., member FINRA ( / SIPC (

Retirement plan services are offered by TD Ameritrade Trust Company, a non-depository trust company that acts as a custodian and/or directed trustee and is not a member of FINRA or SIPC. TD Ameritrade Trust Company is a subsidiary of TD Ameritrade Holding Corporation.

Source: TD Ameritrade Holding Corporation


TD Ameritrade
Joseph A. Giannone, 201-369-8705
Communications + Public Affairs


TD Ameritrade
Joseph A. Giannone, 201-369-8705
Communications + Public Affairs