Whatever ultimately becomes of the Labor Department’s fiduciaryrule, its impact on how plan sponsors evaluate their advisors has already been felt.

According to Fidelity’s 2017 Plan Sponsor Attitudes study,nearly four in 10 employers are actively looking for a new plan advisor.

“The stakes for plan advisors have been raised,” said JordanBurgess, head of specialist field sales for Fidelity InstitutionalAsset Management. “Clearly the DOL’s rule has driven a significantlevel of focus on how sponsors evaluate advisors.”

Fidelity is projecting that $1.3 trillion of the $4.9 trilliondefined contribution market is “in motion,” and will continue to beuntil 2020.

This year’s report, the eighth installment of Fidelity’s survey,shows a decline in sponsors’ satisfaction with their planadvisors.

Of the more than 1,000 plans surveyed -- some with Fidelity asrecord-keeper, some not -- 65 percent of plan decision makersreport being satisfied with their advisors.

That figure is down from 74 percent last year, though Burgessstill regards the overall satisfaction rate as high.

In an interview with BenefitsPRO, Burgess said the drop insatisfaction levels, and the increase in sponsors actively lookingfor a new advisor, is explained by two factors: sponsors’ awarenessof the fiduciary rule and the role of specialist planadvisors.

“With the DOL rule coming, this year the specialist advisormattered more than ever before,” said Burgess, who describesspecialists as those who derive at least 75 percent of theirrevenue from servicing defined contribution plans.

Fidelity’s survey of sponsors does not break out which plans areserved by specialist advisors.

But it does show that 70 percent of sponsors were approached byplan advisors last year; 55 percent of plan decision makersconfirmed that recent solicitations from advisors are motivatingpotential changes.

Plan specialists are driving those solicitations, said Burgess,and in turn placing more scrutiny on the services delivered bynon-specialist advisors.

“Specialists are ratcheting up the game on all advisors,” hesaid. “Non-specialist advisors are being measured against a higherbar.”

Leveraging the fiduciary rule

Half of surveyed sponsors expect the fiduciary rule to have a significant impact onhow they manage their plan, according to Fidelity.

Another 35 percent report being less confident of theirfiduciary responsibilities under the rule. And 60 percent cited theimportance of plan advisors willing to assume formal fiduciaryduties.

Sponsors say the top three likely actions they expect to take inlight of the fiduciary rule are examinations of plan costs,replacing investment options, and hiring a plan fiduciary.

“Good specialist advisors are benchmarking record keeping costsannually to work those costs down,” said Burgess. “They are alsotaking a hard look at investment menus, and searching for the bestshare classes.”

This year’s report shows a record pace of changes to plan designand investment menus.

In the past two years, 92 percent of sponsors have made changesto plan design, led by implementing automatic enrollment.

And 93 percent of sponsors have changed investment menus todrive better plan outcomes. Adding target-date funds, replacingunderperforming funds, and adding index funds and lower-cost classshares of mutual funds were the top actions taken.

While nearly 30 percent of sponsors added an index fund, Burgesssays lower-cost actively managed funds are also finding a place incontemporary investment menus.

Advisors’ challenge: prove value

In one view of this year’s results, plan specialists helped buoysponsors’ approval of plan advisors, even as more came undergreater scrutiny.

The study shows that 37 percent of sponsors said concern overtheir fiduciary responsibilities was the top reason for hiring aplan advisor, more than any other reason and an all-time high inthe survey’s history.

Burgess says that fact is undoubtedly explained by the fiduciaryrule. In bringing further scrutiny to plan advisors, Burgess says alot of plan specialists have been able to prove their value toexisting clients.

Still, gaps remain among plan specialists as to how thoroughlythey are communicating their value to plans and participants.

Of the nearly 40 percent of sponsors who are actively seeking anew advisor, Burgess thinks some portion of those plans are gettingtop services, but that too often sponsors are not aware of it.

Burgess cited the experience of one plan specialist who recentlylost a client. When the principal explained the services the newadvisor was pledging to provide, they were in line with what hadalready been delivered.

“Documentation of services is not being communicated enough. Thebest advisors are keeping score, and coming up with better ways tocommunicate the value they are delivering,” said Burgess. “But thatcan be a challenge even for good advisors.”

Overall, the trends in this year’s report bode well for sponsorsand plan participants, thinks Burgess, who underscored the qualityof record-keepers, asset managers, and plan advisors throughout theretirement industry.

“Plan sponsors are benefiting from a tremendous amount oftransparency,” said Burgess. “That is very healthy, and we thinkgood for everybody.”

Plan advisors may be the cohort most challenged by the furthertransparency in the defined contribution space.

“It puts a lot more pressure on plan advisors to prove the valueof their services,” said Burgess.