Advisors who provide services to 401(k) and other defined contribution plan sponsors can boost client loyalty through greater plan support and oversight, according to a study by market intelligence firm Cogent Research.
The study found that almost one in three bank advisors (32%) work with plan sponsors in some capacity, including helping with investment selection and educating plan participants, Linda York, research director at Cogent Research, said in an e-mail message.
More than half (54%) of all defined contribution plan sponsors report working with financial advisors across all channels, and four in 10 sponsors rely exclusively on their advisors for various aspects of their plan administration and design, the research found.
While sponsors are generally happy with their advisors, giving them high client satisfaction scores, they stop short of referring them to their peers. One way advisors can push sponsors over this hump is by being accessible to the plan sponsors and participants, consulting on general plan design, and monitoring and offering recommendations on plan investment options.
A secondary contributor to client loyalty is in the area of plan oversight, according to the study. Factors that drive client loyalty in this area include monitoring other consultants to the plan, monitoring plan provider fees, and aiding in the plan provider selection process.
In micro plans with less than $5 million in assets, however, plan oversight is just as important as plan support, the research found.
The study, titled “Retirement Landscape,” was conducted in September 2011 among 523 advisors with at least 5% of assets under management dedicated to 401(k) plans. The advisors had a minimum of $5 million in assets under management.