Despite a challenging economic and jobs market, plan sponsors are still prioritizing 401k plan design, according to new research from Morgan Stanley at Work.
Rather than just focusing on the 401k plan, the research says more employers are emphasizing the need for broader plans that host a range of features to meet the needs of their workforce, as the economic climate becomes more complex, and companies strive to increase recruitment and retention. Recent studies have found American workers feel more stressed and anxious about the current market environment and look to their employer and financial advisors for help regarding their concerns.
The Morgan Stanley research names specific features, like 401k plans with a financial advisor, Roth plans and company matches, as more attractive with higher enrollment rates. For example, of those plan sponsors who reported full employee participation, 80% worked with a financial advisor. Additionally, plan sponsors reported 23% of companies also offer a Roth 401k, followed by automatic enrollment (20%) and profit sharing (18%), to help encourage enrollment.
“The 401(k) plan has been around for decades and is largely the most popular workplace benefit to help employees build their retirement nest egg,” said Anthony Bunnell, head of retirement for Morgan Stanley at Work, in a statement. “The dynamics of today’s economy have changed, with employers and employees alike juggling numerous competing financial needs. So, it’s not surprising that plans with financial advisors are associated with more engaged employees, as a financial advisor can play a central role not just in managing the plan, but in helping employees navigate the markets and invest in their future.”
Unsurprisingly, automatic features were found to significantly help increase participation. In the research, employers identified automatic escalation (43%), automatic employer contribution (40%), and automatic enrollment (37%) as plan features with the highest employee participation rates.
Not only are plan sponsors considering what types of benefits they should offer to participants, they are also eyeing how these features are presented and tailored. The research found that a majority of plan sponsors (87%) believe providers are sharing engaging participant retirement and financial education. However, they say content should be even more engaging and based on individual financial stages (44%), delivered through digital tools (39%), and specifically tailored to life events (36%).
The research surveyed 710 individuals responsible for selecting or managing their company’s 401(k) plan. More findings on the study can be found here.
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Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
