Investment selection: attitude shift on the radar

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.

The radar graph below illustrates the shifts since 2016 in sponsors’ main reasons for changing plan investment options. The center of the radar is the zero point; factors get more important as the line rises toward the outer band. The availability of lower cost options, the most important driver, sits at twelve o’clock; factors become less important as you read clockwise around the radar.

Key drivers to change plan investments

Source: Voya Investment Management

The changing shape of the radar scan between 2016 and 2018 points to a shift among sponsors: they are coming to rely more upon advisor guidance. The most obvious sign of this is the increase in the percentage of respondents who cite advisor recommendations as a key driver of investment option changes. Other shifts point in the same direction: while performance remains among the top three factors, its importance has decreased, as have changes in an investment provider’s rating or reputation. On the other hand, a material change in the manager’s investment approach has become more important; arguably, this raises the need for an advisor’s expertise. Drilling down to the sponsor-segment level, smaller plans tend to focus more on the availability of lower-cost options and advisor recommendations, whereas midsize and larger plans tend to focus more on performance and shifts in a provider’s reputation or approach.

At the same time, however, sponsors have become more cost-sensitive; besides topping the list of investment-change drivers in 2016 and 2018, cost concerns inform responses to many questions in the survey. As with other findings, the data in this exhibit underscore the importance for advisors to clearly communicate the value they add to their plan sponsor relationships.

Call to action: Articulate your value

Before your next client meeting, draw up an inventory of the services that you provide to each sponsor, and assess yourself on how closely your services focus on those top three sponsor priorities.

When you meet with your clients, use your inventory as a checklist to gauge the effectiveness of the services you provide and to remind the sponsor that you provide them. You can use the meeting as an opportunity to discuss the value you add for the fees received, and as a way to learn whether the client’s needs have changed.

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.