In news that will probably come as no surprise to advisors, small-business plan sponsors who work with a financial advisor are more likely to be satisfied with their 401(k) plan than those who don’t, a Guardian survey found. Nearly half of small businesses don't have a retirement plan, but many are interested in starting one.
All around, the survey, released by the Guardian Life Insurance Co. on Monday, paints a picture of ripe opportunity for advisors.
The study found 61% of plan sponsors who work with an advisor on their plan reported being “very satisfied,” compared with 40% who don’t have an advisor. Sponsors are pretty satisfied with their 401(k) plans in general. Ninety-eight percent said they were very or somewhat satisfied with their plan.
The survey was conducted by Brightwork Partners for Guardian in November and December among more than 450 senior executives. Respondents were responsible for employee benefit plans at firms with between 25 and 249 employees.
The survey found 46% of respondents don’t offer a retirement plan, mostly because it is too expensive. However, 58% of those who don’t offer a plan said they were interested in setting one up sometime in the next three years.
Advisors interested in grabbing some of that business should focus on educating their sponsor clients, as there are a couple of areas where they are confused. The survey found 30% of respondents who don’t currently offer a plan aren’t sure which type is best for their firm.
Fiduciary responsibilities are another source of confusion, with nearly 20% of plan sponsors saying they are unhappy with the level of fiduciary support they’ve received. Another third of respondents weren’t even aware they were the fiduciary to the plan.
As with overall satisfaction level, sponsors who work with an advisor were more knowledgeable about fiduciary responsibilities and other plan requirements than those who don’t have an advisor.
“While most plan sponsors are satisfied, there are still areas where employers and employees need help. Small-plan sponsors are increasingly realizing the value of working with third-party support services and financial professionals for outsourced solutions that help save time and mitigate fiduciary risks,” Dubitsky said. “This, and the fact that many non-sponsors are extremely confused by their options in the 401(k) market, reinforces what we have seen at Guardian for a long time – there are more and better opportunities for financial professionals in the small-plan retirement market than ever before.”
As for what specifically sponsors are satisfied with, the survey found 90% believe their plan is successful in recruiting and retaining talented employees, allowing the firm to offer competitive benefits and, most important, helping their employees save for an adequate retirement income.
About the same percentage agree that their plan works well for their employees. About 90% say their 401(k) plan has helped make saving easier for participants.
“Nothing in our history has helped promote retirement savings more than workplace defined contribution plans, and this study tells us that the vast majority of small business owners who offer 401(k) plans are satisfied with both the plan itself and their plan providers,” Doug Dubitsky, vice president at Guardian Retirement Solutions, said in a statement. “Even for small businesses, 401(k) plans are delivering what they were designed to do.”