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Plan Sponsors Want These 3 Services From New Advisors, Fidelity Says

Plan sponsors are seeking new plan advisors

A new Fidelity survey finds that a record-high number of plan sponsors are searching for new advisors. The study, now in its 13th edition, found that 47% of sponsors were seeking new advisors, up from 34% in 2021. Sponsors noted that advisors play an important role in attracting and retaining talent – and sponsors demand specific services and skills from new plan advisors. Here’s what advisors should take away from the Fidelity study.

What Fidelity’s ‘Plan Sponsor Attitudes Study’ Says

Plan sponsors are seeking new plan advisorsPlan sponsors are hunting for new advisors at a higher rate in 2022 than in previous years, according to Fidelity’s recent Plan Sponsor Attitudes Study. “Although advisor satisfaction reached its highest level in five years (76%), sponsors actively seeking a new advisor also hit record highs (47%) compared to 2021 (34%),” according to Fidelity.

Fidelity conducted the online survey of 1,285 plan sponsors in March 2022. Plans represented by the survey respondents had 25 participants and assets of at least $3 million.

Some of the top reasons for scoping fresh advisor services include these perceived needs:

  • Improved employee communication and education
  • A superior investment lineup
  • Better skills with handling recordkeeper servicing issues

“In fact, plan sponsors are seeking more advisor expertise in many areas, and when asked, proactive suggestions for improving plan performance was the most notable request (51%),” Fidelity says.

Additionally, advisors are reaching out to plan sponsors more frequently, Fidelity says. Solicitations from advisors more than doubled in 2022.

How Plan Sponsors Work With Advisors

Plan sponsors are seeking new plan advisorsPlan sponsors collaborate with advisors to streamline and improve the offerings, costs and performance associated with employee investment plans. A plan sponsor is generally a third-party organization such as an employer who sets up a retirement (or healthcare) plan for its employees.

Sponsors will often hire plan advisors to make recommendations related to the investments in the plan. Employers may ask advisors to help reduce investment costs, offer employee education or keep ahead of regulatory hurdles.

While plan advisors have many of the same skills and competencies a wealth manager or individual financial advisor might have, they primarily work with large organizations to implement their employee investment plans.

What Plan Advisors Should Know

Professionals in the space should take note that many plan sponsors are eyeing the competition and reviewing the benefits a fresh-faced plan advisor can offer to improve their investment strategy and retain employees.

According to the survey, the offerings that perked up plan sponsors’ ears the most were these:

  1. Knowledge of 401(k) plans
  2. Lower costs
  3. Assistance with fiduciary responsibilities

“Plan sponsors are continuously seeking more expertise from their plan advisors year-over-year to help them in a more diversified capacity and are not afraid to look elsewhere if a competing advisor offers a better experience,” said Liz Pathe, head of defined contribution investment only sales at Fidelity Institutional, in a statement.

Pathe adds, “With such strong activity this year, it increases the expectations and pressures surrounding this space.”

Tips for Growing Your Financial Advisory Business

  • Let us be your organic growth partner. If you are looking to grow your financial advisory business, check out SmartAsset’s SmartAdvisor platform. We match certified financial advisors with right-fit clients across the U.S.
  • Expand your radius. SmartAsset’s recent survey shows that many advisors expect to continue meeting with clients remotely following COVID-19. Consider broadening your search and working with investors who are more comfortable with holding virtual meetings or spacing out in-person meetings.

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