Reasons Behind the Migration

Not that the study evidence isn't reason enough for plan sponsors to be migrating, but there are a number of reasons why so much business is heading back into the market. Linda York, vice president of Market Strategies' syndicated research division, is lead author of the Cogent Reports study. She said plan sponsors are waking up to the realities uncovered by fee disclosure regulations enacted in 2012.

What surprised her most in the company's study was the formal review initiation beyond the regulatory requirement aspect. "We implied through the question there's a process. The aspect that was really surprising was that of those who were ready to initialize the review, how many of them were ready to move to another provider. This is a stated intention and it's eleven percent. That's much higher than we've ever seen before," she said.

As a whole, plan sponsors have started focusing on the fees and investment options that are associated with 401(k) plans. The stagnation and complacency over existing structures and relationships are now being viewed in new light. That creates a perfect storm where every single relationship in the DC chain is now under some form of scrutiny. "Imagine yourself as a plan sponsor in a small company. If you stay where you are, you have to rationalize it [the price]," said York.

Another factor contributing to migration is client satisfaction in the small business sector, said York. Two-thirds of small businesses surveyed said they are satisfied with their current retirement plan provider. That's comparatively lower than their larger counterparts, who express 75-percent satisfaction overall, she said.

Andrew Scherer, director of defined contributions for Russell Investments, points to the freezing of defined benefit plans as another reason plan sponsors are seeking new retirement plan providers. Mature companies, he says, are trying to get out from under the mounting costs of such plans.

Also, he sees organic growth in the small and mid-markets creating a larger need for DC plans. Plus, more plan sponsors are looking at their plans to ensure they're doing everything they can to position participants for retirement.

Beefing Up to Capitalize

That's where the opportunities lie for retirement advisors to win new retirement plan business, Scherer said. For advisors looking to capitalize on the opportunities, DC plans are good selling points. The Healthcare Benefits Trends report revealed that nearly 32 percent of those surveyed felt that DC plans and exchanges would lead employees to a better understanding of benefit costs, and nearly 18 percent of these same respondents say a DC plan would allow employees to make more cost-conscious benefits decisions.

York said there's opportunity in that attitude. Retirement advisors can appeal to the plan sponsors by offering a regular method of evaluating their current situation, she said."Go through how their current plan is structured. Doing some benchmarking – you against similar plans and companies."

Help plan sponsors look at the quality of the offerings, she says, including the fees, the service quality, and the options available. Smaller plan sponsors are not equipped to conduct a meaningful comparison. Fees matter, she said, but service is another primary factor in the plan sponsor's decision.

That's where retirement advisors can gain the most traction, according to the experts. Scherer said advisors should be helping plan sponsors by making sure they're meeting regulatory requirements and doing what they can to best serve plan participants. An advisor can help coach plan design, he said. What investments are being offered? How are you educating participants?"Coach them on the core features. Ask 'How are you structuring the investment menu for your participants?'"

There's also an opportunity to demonstrate value by creating partnerships that serve the plan sponsor, he said. Scherer advises retirement advisors to leverage the capabilities of other partners. Money managers, financial advisors, and record keepers all teaming for the benefit of the plan sponsor, he says, will send the message that the plan sponsor is not alone.

Keeping Current Clients

For current clients, Scherer suggests advisors engage in a planning session with the plan sponsor. His company uses a client engagement roadmap that creates a two-year horizon view of the retirement plan benefits broken into eight quarters. "The advisor can sit with the plan sponsor, look out over two years and say 'Here's what we want to get done in each quarter.' It helps keep the client organizes, and it demonstrates the advisor's value and makes it more visible," he said.

"You don't want to get into a binary situation where the plan sponsor is maybe looking at a particular month and thinking that month didn't perform well and that's a reflection on you," said Scherer. "The advisor always wants to be in the position where they're saying 'Look at all the work I'm doing here for you.'"