Competition fierce in 401(k) recruiting

Strengthening the client relationship is key to growing revenue in the 401(k) business, according to Fidelity Investments of Boston’s latest research. Fidelity found that advisers who make a focused effort on serving existing clients can potentially grow their revenue by an estimated 40% over 10 years, compared to advisers who do not follow this strategy. The report included data from two independent surveys of 395 plan sponsors who use an adviser and another survey of 415 advisers who sell 401(k) plans. Competition from other advisers was cited as the top challenge to growth. In fact, a full 93% of plan sponsors said they are solicited at least once a year by other advisers. Nearly 60% said they are solicited at least three times a year. While 53% of the plan sponsors reported they are satisfied or very satisfied with their adviser, the report found there is room for improvement. About 175 of those surveyed said they were looking for a new adviser. The more satisfied the plan sponsors are, the longer they stay. Very satisfied respondents said they expect to stay in the relationship for more than 11 years, while those least satisfied estimate a maximum of 2.6 years. The report also found that plan sponsors are more concerned about their adviser’s support and knowledge than fees when it comes to deciding whether to stay with an adviser. Advisers can get a copy of the report at advisor.fidelity.com. The report also provides insights and an action plan to help advisers grow their business. Fidelity had custodied assets of $3.3 trillion, including managed assets of more than $1.5 trillion, as of Feb. 29.