Higher education retirement plan sponsors are looking to plan advisors to improve retirement readiness—and to make plans into employee recruitment and retention tools.

So says a survey from Transamerica Retirement Solutions LLC, which found that higher ed institutions rely on a plan advisor or consultant to help with investment selection, investment monitoring, and plan compliance.

Eighty-one percent of institutions with advisors tend to have an investment policy statement in place (considered an industry best practice, although it’s not required under the Employee Retirement Income Security Act), compared to just 56 percent for plan sponsors that do not have an advisor. Smaller institutions of 5,000 or fewer participants tend to often rely on their advisor for an even broader range of services, such as acting as a plan fiduciary or assisting with plan design changes.

So that could be a good thing, since 403(b)s could have some catching up to on fiduciary best practices. Just 60 percent of sponsors are reviewing investments in plans. That’s according to the Plan Sponsor Council of America’s annual review of 403(b)s.

And they’re not necessarily issuing frequent requests for proposal (RFPs) to make sure their plans’ fees are competitive; just 40 percent do so, and 40 percent said they don’t do that at all.

On the other hand, 403(b)s offer far more in the way of annuitized assets that will provide participants with lifetime income.

Twenty-seven percent of 403(b) assets are held in variable annuities, and another 26 percent in fixed annuities. Still, 403(b)s used to be “completely annuitized,” before their slow but steady shift to mutual funds.

The PSCA report also found that sponsors rely heavily on recordkeepers more than any other source to deliver investment advice and education, with 73 percent offering fund descriptions.

In addition, 60 percent of sponsors say recordkeepers help participants with how to invest savings and 54 percent of sponsors say providers help participants with how much to invest in each investment option.

Instant Insights /

Higher ed institutions use plan advisors to boost retirement results

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