Want to be Highly Valued by Plan Sponsors? Improve Participant Outcomes!
The data is clear, according to Fidelity Investments’ 16th annual Plan Sponsor Attitudes Study, released today: when plan sponsors believe their employees are on track for retirement, their satisfaction with their retirement plan advisors soars. That belief is firmly rooted in advisors working to improve participant outcomes.
Fidelity’s annual study, which surveyed over 1,100 employers offering retirement plans using a wide variety of recordkeepers, found that sponsors’ satisfaction with advisors is strongly linked to participants’ retirement readiness. To confirm this, you need to look no further than 74% of sponsors who felt participants are saving enough for retirement reported high satisfaction with their advisors versus 58% for those who felt participants are not.
“Advisors have an opportunity to help plan sponsors cut through the noise, navigate change and ultimately help determine the best offerings for their plan participants,” said Christopher Alpaugh, head of Defined Contributions Investment Only Sales Group at Fidelity Investments.
More than nine in 10 (92%) plan sponsors say they work with an advisor or consultant, which is up from last year but down from 2023, when 94% said the same. But 36% of plan sponsors report planning to conduct an advisor search, with the top reasons for doing so listed in the graphic at right.
For the fourth year in a row, plan sponsors surveyed said their top concern is whether their plan is effectively preparing their participants for retirement financially. This includes areas such as increased savings rates, higher participation rates and improvements to employee asset allocation.
They want their advisors to provide content and education about financial planning (38%), financial wellness (35%), retirement income (28%), and more in the next 12 months. Additionally, when considering overall employee engagement, about one-third (30%) of plan sponsors cited targeted education meetings for newer employees.
More than two-thirds (69%) of plan sponsors who implemented financial wellness programs said the programs were very impactful. However, only around half (54%) of employees are currently enrolled in financial wellness programs. The findings reveal efforts to increase impact of these programs: 93% of sponsors have implemented a financial wellness program—with 60% of those implementing a program within the last year.
Sponsors’ changing needs
Advisors can add value by helping plan sponsors understand and adjust plan designs to meet participants’ changing needs. Half of sponsors say the pace of change in retirement plans is exhausting and causes employee burnout.
As plan sponsors looked ahead to pending SECURE 2.0 legislation, 94% of participants made at least one non-mandatory change, signifying a shift in focus for sponsors from compliance to enhancement.
Additionally, plan sponsors continue to navigate new products and investment menu options. Last year, plan sponsors selected the following investment products as relevant for their plans:
• 53%: Retirement income products
• 48%: Managed accounts
• 43%: Collective Investment Trusts (CITs)
• 37%: New target date funds
• 31%: Pooled Employer Plans (PEPs)
• 20%: Health Savings Accounts (HSAs)
As plan sponsors continue to navigate a dynamic environment, they will likely look to their advisors to play a key role in providing expertise and insights to help them develop a tailored retirement benefit best fit to meet their employees’ needs.
“We’re seeing plan sponsors seek more engagement from their advisors to impact participant saving and engagement, especially through financial planning and wellness programs,” said Alpaugh. “With investment menu options and compliance policies quickly evolving, it’s not surprising that sponsors are leaning on their advisors to be the steady hand helping keep participant success in focus.”
Retirement readiness
The study revealed that fewer plan sponsors (67%) agree their participants are saving enough money for retirement compared to four years prior (68% in 2021 rising to 82% in 2024).
Sponsors said that their plan participants are finding it increasingly difficult to save more for retirement due to the following reasons:
• 30%: living expenses
• 18%: health care costs
• 11%: education expenses/loans
• 10%: lack of education
• 10%: lack of discipline
• 10%: distrust of financial markets
• 9%: indecision/inaction
Fidelity’s 16th annual Plan Sponsor Attitudes Study conducted in January was an online survey of 1,144 plan sponsors on behalf of Fidelity, which was not identified as the survey sponsor. It included plans with at least 25 participants and $3 million in assets, from start-ups to plans with more than $250 million in assets.
Additional information on the survey, as well as resources and tools—including fund analytics and details on investment options—can be found at go.fidelity.com/attitudes.
SEE ALSO:
• Average 401(k) Balances Back to Reaching Record Highs in Q2: Fidelity
• Workers Feel On-Track with Retirement Savings But Plan Sponsors Disagree: BlackRock
• Plan Sponsors Embrace Proactive Strategies for Better Participant Outcomes
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.
