Fiduciary Duty and Investment Advice: Attitudes of Plan Sponsors

This AARP survey of employers that sponsor retirement savings plans (“plan sponsors”) examines a range of issues related to investment advice available to plan participants from the financial institutions that provide their plan (the “DC provider”). It reveals widespread support for holding advice to a “fiduciary” standard; that is, requiring advice offered by DC providers to individual plan participants to be in the best interest of the participants.    

Some of the survey’s key findings are as follows:

• Nearly nine in ten (89%) plan sponsors say that they would favor (68% “strongly,” 21% “somewhat”) requiring DC providers to give advice that is in the best interest of plan participants.  
• Nearly as many plan sponsors (88%) favor requiring DC providers to clearly explain to plan participants if the provider’s advice is not obligated to be in the participant’s best interest (59% “strongly” favor, 29% “somewhat” favor). 
• Despite the large share of plan sponsors who favor requiring DC provider advice to be in the best interest of plan participants, an equally large share (91%) of plan sponsors trust (completely or somewhat) their DC provider to offer investment advice that is in the best interest of plan participants.
• Over three in four (77%) plan sponsors agree (strongly or somewhat) that it is important for DC plan participants to receive investment advice from an independent advisor who does not make money from the plan’s investments.  

In order to collect the data presented in this report, AARP contracted with PLANSPONSOR to add a set of survey questions about investment advice to the 2013 edition of the PLANSPONSOR Annual Defined Contribution (DC) Survey.  The survey was administered online from late June 2013 through mid-September 2013.  The findings are based on the responses of 3,010  employers (plan sponsors) that offer one or more defined contribution plans, such as a 401(k), 403(b), 457, or other such plan.

For more information, please contact S. Kathi Brown at skbrown@aarp.org.  Members of the media should contact AARP’s Media Relations Department at (202) 434-2560.