The preference Gen Z has to conduct most financial business online is viewed by both financial professionals (55%) and retirement plan sponsors (47%) as the top retirement industry disruptor from this generation.
That’s according to the Principal “Future of Retirement Survey,” released today, which identifies the leading disruptors to the retirement industry that employers and financial professionals believe will reshape plans, services, and solutions by 2030.
An aging workforce, Generation Z, the growing demand for personalized investment advice, and financial wellness are all top of mind for more than 250 plan sponsors and 200 financial professionals that responded to the survey. Each are viewed as priorities in the next 5-7 years to help address the widening retirement gap that is approaching $4 trillion in the U.S.
76% of plan sponsors agreed the expectations of Millennial and Gen Z investors will be the driving change in retirement markets by 2030
“Understanding the evolving needs of participants and employers is critical to building relevant and meaningful retirement plans, solutions, and advice,” said Chris Littlefield, president of Retirement and Income Solutions at Principal. “Whether it’s more customized products, holistic guidance, or mobile-friendly, digital tools and resources, we will continue to leverage our relationships with financial professionals and strategic partners to help innovate and enhance the customer experience.”
The survey found 76% of plan sponsors agreed the expectations of Millennial and Gen Z investors will be the driving change in retirement markets by 2030. The majority of small businesses (74%) and large employers (84%) agree Millennial and Gen Z investors’ expectations will be the driving change in retirement markets by the end of the decade.
Employers are often choosing retirement plans to help meet the needs of five generations of Americans. More of Gen Z will enter the labor market in the next 5-7 years while the number of people aged 75 and older in the workforce is expected to grow 96.6% by 2030. To support an aging workforce, three out of four plan sponsors and financial professionals agree participants should have the ability to make recurring withdrawals from their employer-sponsored retirement savings as they take a phased approach to retirement.
“Choosing to retire is no longer a single-step life decision. Many individuals approaching 60-65 years of age need or prefer a phased retirement, working part-time to get relief from the 40-hour work week without fear of outliving their nest eggs,” Littlefield said.
Personalization is paramount
One growing expectation to better serve participants is an ability to provide individualized advice, the survey found. More than 70% of both plan sponsors and financial professionals agreed personalized investment portfolios and managed account services will be common offerings within defined contribution plans by 2030.
To offer more holistic and personal guidance, 78% of plan sponsors and 77% of financial professionals also agreed there will be a shift from improving the enrollment process for employees to improving the retirement process, which can include services such as advice, retirement planning, and creating retirement income.
Financial wellness programs are also expected to emerge as an additional plan resource to further personalize the participant experience by 2030, with 85% of plan sponsors and 90% of financial professionals agreeing plan sponsors will increase the adoption of them.
Outside of retirement savings programs, plan sponsors believe the top five financial wellness benefits that should be offered include helping participants establish a budget and financial plan, retirement income planning, credit card and debt counseling, healthcare planning for early retirees, and investment education.
For more insights into the Principal Future of Retirement Survey, visit www.principal.com.
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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.
