An analysis of Bureau of Labor Statistics data by PwC found that of the more than 120 million private sector workers in the United States, just over half are participating in a retirement savings plan. A third don’t have access to a plan, while 16% have access but aren’t participating. That leaves a potential $5 trillion in retirement assets that are up for grabs, PwC estimates.
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As expense ratios and recordkeeping fees continue to fall, retirement planning firms are looking for new ways to compete while serving clients, according to the PwC report.
“Firms that are unable to challenge their status quo are likely to find it harder to gain market share and face eroding competitive differentiation as their offerings become commoditized,” PwC wrote.
Retirement advisors need to adapt to participants’ changing needs, according to the firm. Today’s participants have unique needs competing for their attention, such as debt management and how to turn retirement savings into income. Financial wellness tools and new ways of accessing retirement plans, such as pooled employer plans, provide retirement advisors with opportunities to meet clients’ needs and grow their business.
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PwC found that the median retirement balance for near retirees would likely leave them with less than $1,000 a month over a 15-year retirement. With ever increasing life expectancies, that leaves many retirees with much too little to live on.
Meanwhile, retirement planning is part of an expanding ecosystem of benefits. Firms that can extend their offerings, including looking beyond just the defined contribution plan, can potentially capture and retain more assets.
The report stressed the importance of offering a variety of products that address participants needs at each life stage. Retirement advisors are tasked not just with helping people save and invest, but preparing them for retirement.
“Those that can deliver on these deeper sets of connected interests between financial planning, insurance and healthcare have an opportunity to deliver for their retirement participant, and their own growth agenda,” according to the report.
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