Plan sponsors are eager to give their participants more support in financial planning, as 78% said they will add or enhance these services in their plan offerings, according to Prudential. The “2020 Plan Sponsor Pulse Survey: The DC Landscape,” released Tuesday, found 74% of sponsors expect to offer in-plan financial planning programs.
“With the reliance on DC plans such as a 401(k) for retirement today, the need for financial advice has taken on greater importance,” Harry Dalessio, head of Prudential’s Institutional Retirement Plan Services, said in a statement.
Sponsors are also exploring ways to help participants turn retirement savings into income, Prudential found. Three-quarters said they were considering adding or enhancing retirement readiness education and preparation, and 73% of sponsors were considering in-plan retirement income options.
“That’s why managed advice platforms, which combine portfolio management with personal retirement strategies are an attractive evolution for defined contribution plans,” Dalessio said. “By automatically rebalancing asset allocations to become more conservative as employees approach retirement, these platforms help to protect those workers closest to retirement during volatile markets.”
Sponsors’ top reason for offering retirement plans in the first place is to improve employees’ overall financial wellness, according to the survey. Eighty-six percent of sponsors said this was the most important reason for a plan. Most sponsors(94%) offer some kind of financial wellness program or tools, particularly online financial planning webinars (43%).
Related: Americans to Prioritize Health & Wellness over Finances in 2021?
Other popular financial wellness tools include:
- Digital calculators (41%)
- Online financial product platform (34%)
- Debit and credit counseling (34%)
Attracting and retaining talent, and engaging employees, were also critical reasons for offering a retirement plan, the survey found.
When it comes to selecting a provider, costs are important, but sponsors are also thinking about the experience and outcome for participants. An equal share of sponsors (83%) said the cost to participants and the investment options on offer were top factors in selecting a provider. Eighty-two percent cited the cost to plan sponsors, and 81% said they availability of retirement income products was a top factor.
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Danielle Andrus works as an editor for the Financial Planning Association (FPA).