Majority of plan sponsors find advisors through referrals, study shows,
creating new opportunities for advisors to build their practices
SPRINGFIELD, Mass. – A new study from Massachusetts Mutual Life Insurance Co. (MassMutual) finds good news for financial advisors who want to build their retirement plan practices: nearly nine in 10 employers that sponsor a retirement plan would recommend their financial advisor to another employer.
“Overwhelmingly, retirement plan sponsors are pleased with the support they receive from their financial advisor and are more than willing to tell other employers,” said Tom Foster, national spokesperson and practice management leader for MassMutual’s retirement plan services. “It’s a great opportunity for advisors who want to build their retirement practices.”
The MassMutual Retirement Plan Referrals Study finds that 88 percent of plan sponsors would recommend their advisor, with 37 percent “very likely” to do so. Only 10 percent said they were unlikely to make a recommendation, according to the study.
The study polled 565 employers that sponsor retirement plans, including 449 that worked with an advisor and 116 that did not, with retirement plan recordkeeping assets ranging from less than $1 million to as much as $75 million. The research was conducted in 2015 by Greenwald & Associates
What Sponsors Want
Nearly six in 10 (58 percent) sponsors find advisors through referrals, either by asking for a referral or receiving one unsolicited, the study shows. Although only 10 percent of sponsors search for advisors online, the study finds, those who do provide insights into what employers want most from an advisor. The top criteria for online advisor searches were:
- 72 percent wanted an advisor who works with companies similar to theirs;
- 47 percent looked for customer testimonials;
- 43 percent gravitated to an effective website;
- 41 percent focused on a good value proposition;
- 40 percent appreciated fees being clearly stated on the advisor’s website; and
- 29 percent wanted someone who is local in their area.
Overall, satisfaction with advisors runs high. Nine in 10 sponsors assess the cost and benefits of working with an advisor as valuable (93 percent) and are satisfied overall with their advisor (94 percent), according to the study. The bigger the retirement plan in terms of assets, the more likely the sponsor is to give the advisor high marks.
However, the good vibrations can quickly turn bumpy as the study finds that 35 percent of sponsors have switched advisors in the past. Among sponsors who changed advisors, 41 percent did so because they judged their advisor as failing to provide adequate support. Complaints about advisors included a lack of involvement or interest in the plan, not being knowledgeable, being difficult or being unresponsive, according to the study.
Other reasons for switching advisors were costs and fees (17 percent), a change in the company’s management or ownership (15 percent), wanting better service (11 percent), a better plan and/or investments (7 percent) and poor performance and returns (6 percent).
Not all of the sponsors who responded to the study currently use an advisor. However, 43 percent of such sponsors would be open to working with an advisor during their scheduled plan review and 35 percent said they would be open to doing so at any time, according to the study.
“The retirement plan business is all about solving problems,” Foster said. “Advisors who are attentive and responsive, keep up with the regulatory environment, and work closely with sponsors to help their employees become retirement ready have tremendous opportunities to grow in the retirement plans marketplace.”
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MassMutual is a leading mutual life insurance company that is run for the benefit of its members and participating policyowners. MassMutual offers a wide range of financial products and services, including life insurance, disability income insurance, long term care insurance, annuities, retirement plans and other employee benefits. For more information, visit www.massmutual.com.
MassMutual Financial Group is a marketing name for Massachusetts Mutual Life Insurance Company (MassMutual) and its affiliated companies and sales representatives.