Investment monitoring: attitude shift redux

The advisory service that sponsors value most highly is help with investment selection and monitoring — this finding first appeared in Voya’s 2016 survey and was reaffirmed in 2018. A look at the data beneath the headline reveals attitude shifts across a range of factors, which suggest that sponsors are placing greater importance on advisor support for this top-priority concern.

In our last blog, we highlighted the shifting importance of factors driving sponsors’ decisions to change investment options, noting that advisor recommendations were becoming more important. Similar shifts appear to be occurring with respect to help with investment monitoring. The bar graph below illustrates the shifts since 2016 in sponsors affirming that their advisors have recommended or discussed with them particular investment factors.

graph showing 2016 vs. 2018 differences uncovered in the survey
Source: Voya Investment Management

 

The findings illustrated here correspond to the shifts noted in the change of investment options blog: while performance factors and third-party ratings continue to top the list, their importance has decreased slightly. While key factors are similar across plan segments, larger plans are more likely to note specialized measures have been discussed. There’s good news in this for advisors: sponsors’ lower recall of particular metrics suggests they may be content to leave those details to the expert. Taken with the other findings, the fact that more sponsors responded “not sure” suggests that they are giving greater weight to advisor guidance.

With authority comes responsibility: sponsors are relying more on their advisors, so it’s incumbent upon advisors to upgrade the quality of their guidance. Both sponsors and advisors continue to rely heavily upon performance measures to evaluate investment choices and less upon statistical gauges of risk-adjusted return or value added. Advisors tend to assign greater importance to statistical metrics than sponsors do; nonetheless, advisors need to make greater use of these tools to enhance their potential to add value to client relationships.

 

Call to action: tap into the power of consistency

Investment options used in plan menus must help participants confront the many uncertainties and volatility inherent in the market that can often prompt suboptimal actions. Voya’s Consistency Lens™ methodology can help. Although “past performance is not a guarantee of future results,” we believe a fund manager’s track record may offer important signals to identify which strategies may help clients best position their portfolios for a smoother ride along the retirement investing path. This proprietary methodology ranks funds on six returns-based factors that have proven to drive risk and return. This new way of evaluating investments can mean better retirement outcomes for clients and a differentiated way to enhance your value proposition.

Survey of the Retirement Landscape: Insights from Current Research

Voya Investment Management recently released the second edition of its survey of retirement plan sponsors and plan advisors, to identify and better understand the current service needs of sponsors and help DC-focused advisors better align their offerings and priorities to meet those needs. Though some perceptions have changed since the initial survey in 2016, views on a few key issues have evolved and several new issues have arisen. We present key findings of the study in this series of insights. For all the research results, read Survey of the Retirement Landscape: Challenges and Opportunities for Advisors.

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