Retirement plan sponsors might not always distinguish one retirement plan from another, especially because the industry has effectively turned the products into commodities.
But they do remember the consultants.
For that reason, according to Anova Consulting Group, retirement plan sponsors say client service has now become one of the top reasons for choosing a new retirement plan provider over a rival firm. The Brookline, Mass.-based research firm, release findings from a survey of more than 300 plan sponsors with assets of more than $25 million under administration.
When Anova began looking in to plan sponsor preferences in the late 1990s, it found that a plan provider’s brand recognition, selection of funds and fees were uppermost in the minds of plan sponsors when sifting through options.
But it took just 10 years for plans to adopt changes like open architectures, and compressed fees, almost evening out those differences among plan providers, Rich Schroder, president of Anova Consulting Group said in an interview. Everything is almost the same, that is, except the final presentation.
Plan sponsors were just 12% more likely to refer to client service as a factor in their initial search criteria, but 33% were more likely to cite it as a top reason for the final decision, according to the findings.
“They know they’ll be working with these people on a daily basis. They want to make sure you are doing your job well,” Schroder said of plan sponsors’ thinking. He added, “They are kicking the tires on the service team.”