This week, we are recognizing the winners of the 2021 Financial Advisor IQ Service Awards, and diving into the areas where advisors say product partners can make the most impact. Check out www.financialadvisoriq.com/serviceawards for more information and the full list of winners.

Recordkeepers are in an arms race to differentiate themselves from peers with participant tools and client service standards that help them stand out. Advisors who serve DC plans are watching — and this year’s Financial Advisor IQ Service Awards are an indication that their efforts are being noticed.

In fact, the 903 advisors who voted on the Service Awards cite participant tools as by far the most important service they get from recordkeepers. In fact, 74% of respondents cited these tools as “very important” or “crucial.”

Recordkeepers’ work has always leaned towards technology-dependent operations, such as processing employee enrollments, managing participants’ investments and providing account statements. But DC plan advisors want features that help them help sponsors and participants engage with their plans, the results indicate.

In response, recordkeepers are rolling out features that make it easier for participants to model retirement income based on their balances. Other tools include financial planning components that let employees set retirement savings goals and track progress toward those goals. And some recordkeepers are even offering the ability to help participants build separate emergency savings accounts.

Some plan sponsors strive to help staffers address their entire financial picture beyond the DC plan and look to plan advisors for counsel. Recordkeepers that can help develop sponsors’ “financial wellness” programs create an opportunity for plan advisors — some advisors complement their plan-servicing revenue with the fees they earn for providing additional education and advice to participants.

Advisors say client service and support is the second most important function recordkeepers can provide, cited by 66% of advisors. This not only includes quick responses to questions and requests, but expanded access to support through well-designed websites and apps that allow account changes on mobile phones.

The Department of Labor has made cybersecurity among DC plans more of a priority this year, and the Securities and Exchange Commission recently said it’s developing a proposal to hold companies more accountable for cybersecurity and other digital risks.

And plan sponsors are looking to their DC partners for assurances and support. In fact, 60% of advisors say they consider a recordkeeper’s capabilities in cybersecurity and protecting participants’ data as very important or crucial.

Price comes in fourth place among DC advisors recordkeeper concerns, cited by 47% of FA-IQ Service Award respondents. Besides the fees that recordkeepers charge, plan advisors continue to work with sponsors to shift plan investment options to lower-cost vehicles, such as collective investment trusts and institutional fund share classes.

Plan advisors will no doubt keep an eye on the continuing consolidation that’s shrinking the numbers of recordkeepers. For example, Empower Retirement, which bought MassMutual’s retirement services business in 2020, announced earlier this year that it is buying Prudential Financial’s retirement recordkeeping business. And Ascensus agreed earlier this year to buy the recordkeeping business of Truist Bank. As recordkeeper mergers gradually continue, more of the surviving companies will have the economies of scale to offer the high-value services that advisors prioritize.

No mention of retirement is complete without a nod to the litigation that sometimes emerges over DC plans. Advisors and sponsors alike need counsel they can trust to help them navigate shifting regulations that affect DC plans.