The vast majority of retirement plan advisors—81%—are already discussing retirement income strategies with participants, according to BlackRock’s 2024 Read on Retirement: Advisor Outlook, released this week.
“It is not enough to offer retirement income solutions; participants also demand greater education to help sift through the complexity.”
Rob Crothers, BlackRock Head of U.S. Retirement
Amid changing market conditions and persistent concerns around outliving savings, the new research finds retirement income solutions are a focus area for retirement plan advisors. With more than eight in 10 retirement plan advisors discussing retirement income with DC clients, interest in retirement income continues to grow as 82% of plan advisors say they currently recommend a retirement income solution or are likely to recommend one in the next 12 months.
Advisors are looking to implement these solutions as employers are increasingly concerned about their employees’ long-term retirement preparedness. BlackRock’s 2024 Read on Retirement survey found that only 58% of plan sponsors believe participants are on track with their retirement savings, down from 64% in 2023. Despite the importance of retirement income, retirement plan advisors report their top barriers to greater adoption are communicating a clear benefit in terms of improved outcomes (44%) and providing clear participant education and communications (42%).
“The findings underscore that it is not enough to offer retirement income solutions; participants also demand greater education to help sift through the complexity,” said Rob Crothers, BlackRock’s Head of U.S. Retirement. “This is why BlackRock has paired a digital experience, MyLifePath with LifePath Paycheck, our investment solution providing access to guaranteed income through a target date fund. MyLifePath is designed to help educate participants on how today’s contributions can translate into income in retirement.”
The 2024 BlackRock Read on Retirement survey, executed by independent research company Escalent, provides insights from a research study of over 450 large defined contribution plan sponsors, 300 retirement plan advisors, 1,300 workplace retirement plan savers, 1,300 independent savers and 300 retired workplace savers in the U.S.
More advisor focus areas
The survey also stressed that retirement plan advisors are focused on implementing active and income strategies, and streamlining their practice management, including incorporating AI-powered tools.
“In these uncertain market conditions, retirement plan advisors are looking for solutions that will help more Americans achieve better retirement outcomes. Our research demonstrates the importance of access to affordable solutions and education, areas that are vital to providers and participants alike,” said Carrie Schroen, head of BlackRock’s U.S. Defined Contribution Intermediary Business.
Over half (55%) of plan advisors believe that active managers can consistently outperform the market. They cite three primary ways active management can add value to plans: access to more investments (59%), protection against loss (47%) and sector choices (44%).
When conducting due diligence on active investments, advisors say access to a cost-effective strategy is the most important factor (71%). Diversification (66%) and manager expertise (60%) are also ranked as important factors.
Plan advisors view client servicing and meeting participant education needs as areas that are important to their growth. Over half (55%) mention they differentiate their practice from their peers through their expertise in meeting participants’ needs and education, including advice and retirement readiness.
There is still opportunity, however, for advisors to develop education programs for clients. Despite being an area retirement plan advisors identify as being a differentiating factor, less than half (48%) are currently offering financial wellness plans.
The data also shows a spike in interest around adopting AI to streamline practice management. Advisors see client servicing and business development as use cases for AI in their practice. While only 9% of retirement plan advisors are currently using AI-powered tools, 53% report being likely to use them in the next 12 months.
SEE ALSO:
• BlackRock’s LifePath Paycheck Now Available in DC Plans
• Vestwell and TIAA Introduce Lifetime Income Offering
• Retirement Plans Still Lag in Digital Experience: J.D. Power
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
