With five generations working together for the first time and roughly 75% of the U.S. workforce under age 55,1 the way we think about retirement plans continues to evolve. Employers today are challenged to deliver retirement solutions to attract and retain talent across diverse life stages and varying needs—a project that requires robust plan features, support, education, outreach, and human interaction.
The stakes are high as 401(k) plan providers and sponsors seek solutions capable of helping participants contextualize retirement preparation across many ages and circumstances, and access to professional financial guidance is becoming a key differentiator.
Generally, financial planning begins as a conversation between an advisor or Certified Financial Planner® and an individual, yet the barrier to entry can be high: Many advisors require minimum investments, and just 15% of Gen Z and 35% of Millennials work with a Financial Advisor to plan for retirement or manage their retirement assets.2 That’s where retirement plan sponsors and workplace benefits come in.
Improving plan outcomes and individual retirement readiness requires a more holistic perspective both at the plan and individual level—with guidance on saving and investing strategy, asset allocation and more. Consider the example of Social Security: The timing of when to claim Social Security can affect the amount received, and with 37% of men and 42% of women today receiving half of their retirement income from Social Security,3 it’s crucial to plan carefully.
Both organizations and individuals are increasingly prioritizing retirement planning assistance, often from human advisors: In our recent State of the Workplace research, we found that employees rank assistance with retirement preparation, financial planning and goals-based retirement investment planning as their top in-demand benefits. What’s more, retirement plan participants value guidance even more highly compared to the general employee population: Employees who participate in their company 401(k)s are more likely to say they need financial investment planning support (77% vs. 68%), and retirement planning assistance itself is so important to retirement participants that 63% say it is a top or high priority when choosing where to work.4
According to PwC, only about a third of the U.S. workforce thinks their own retirement savings plan is on track.5 That means nearly two in three employees may be struggling with key decisions such as when to retire, how to manage assets and accounts, when to claim Social Security, how to navigate healthcare costs, what asset allocation may be appropriate at each life stage, and so on.
Deep impact: Retirement participants are feeling the pressure
Sponsoring a retirement plan means operating in the best interest of your plan participants, which includes listening to their feedback and providing relevant tools and resources. With so many struggling with retirement planning, one way to help relieve pressure and address ongoing demand for guidance is to outsource with Financial Advisors through your benefits providers.
Holistic guidance from a trained financial professional helps place crucial decisions in context as plan sponsors and individual retirement participants navigate strategies to help maximize workplace benefits, balance various goals, and reduce retirement risks such as insufficient savings, excess withdrawal, behavioral investing mistakes, longer lifespans, inflation, and more. Additionally, many workplace benefits providers may also offer opportunities for participants to access more personalized guidance by consulting one-on-one with a financial coach or advisor, who can help them develop a more comprehensive individual financial plan that encompasses their outside assets and various financial goals, beyond and including retirement.
Casting a wider net: Financial guidance support also benefits plan sponsors
Along with addressing participant planning needs, Financial Advisors also provide direct support for plan sponsors in terms of overseeing investment management, fiduciary, and administrative responsibilities. In fact, our data shows that investment oversight often causes anxiety for plan sponsors and is the number one reason they consider advisory services.6
In our study of plan sponsors, we found consensus that financial planning and professional guidance provide tangible benefits for company retirement plans: 87% of plan sponsors say their company as a whole has better plan outcomes when a Financial Advisor is available for consult through the workplace retirement plan, including higher employee participation (86%) and more eligible employees being on-track for retirement (86%). Behind the scenes, a Financial Advisor can also help plan sponsors find greater confidence by making recommendations, performing needs assessments and provider searches, helping field employee questions, providing investment guidance, and alleviating administrative pressures.6
No matter an employee’s life stage or your company’s current retirement plan setup, one theme remains constant: Reaching retirement readiness requires thoughtful planning, early and often. Financial guidance and workplace retirement plans are becoming increasingly interconnected. Consider what resources you have available to help employees build deeper connections between their workplace retirement plans and a more holistic, 360-view of their financial wellness—supported by financial professionals. Being able to meet employee needs and expectations around retirement guidance will continue to play a key role in talent attraction and retention.
1. Value of a Financial Advisor | Morgan Stanley at Work 2022
2. Retirement for Five Generations | Morgan Stanley at Work, 2023
3. The Cerulli Edge: US Retirement Edition 3Q, 2023, #68
4. National Council on Aging, Get the Facts on Economic Security for Seniors (ncoa.org) (February 2024)
5. State of the Workplace Study 2024 | Morgan Stanley at Work, 2024
6. PwC, Retirement in America: Time to rethink and retool: PwC 2021
Tom Conlon is the Co-Head of Retirement Solutions at Morgan Stanley. Tom and his team focus their time on helping financial advisors grow their retirement business with their wealth management practices. Focusing on client needs and matching solutions to meet the extensive demands of a modern business, his team helps advisors position Morgan Stanley for employer and employee retirement needs. Tom joined Morgan Stanley in July of 2019.
