Opportunities abound for financial advisors who want to work with employer-sponsored retirement plans.
That’s the main takeaway in Fidelity’s latest “Plan Sponsor Attitudes Survey,” which found that although plan sponsor satisfaction with their advisors has steadily increased over the past six years, 38 percent of plan sponsors are less-than-satisfied or not satisfied with their advisor. Ten percent of plan sponsors say they are actively looking to switch advisors.
Fidelity surveyed 937 plan sponsors who use a variety of record-keepers. Plan sizes ranged from 25 to 10,000 participants and Fidelity was not identified as the survey sponsor.
The number of plans using an advisor jumped 9 percentage points to 84 percent this year. Fifty-eight percent of those surveyed said they need an advisor’s help to plan investments; 53 percent want a better understanding of how well the plan is working for employees; 48 percent were concerned about their fiduciary obligations and 31 percent said they have less time to devote to the plan.
A staggering 42 percent of plan sponsors said they are not confident they understand their fiduciary responsibilities.
Retirement readiness was a big concern, with nearly 60 percent of plan sponsors saying their employees don’t save enough money for retirement. The big reasons why they don’t save? Current living expenses are too high and higher health care costs.
Sixty-six percent of plan sponsors said that some, quite a few or all employees are delaying retirement. The number of workers expecting to retire after age 65 has increased from 11 percent to 37 percent and the average account balance of participants between the ages of 65 and 70 was only $140,000.
Many plan sponsors have tinkered with their plan design in recent years to try and improve participant retirement outcomes. Fidelity’s survey found that 88 percent of employees participate in a workplace retirement plan if auto-enrollment is offered, but of the plans that offer auto-increase, only 13 percent of enrolled employees participate.
In the past two years, 72 percent of plans made a plan design change. They either started offering auto-enrollment, Roth 401(k) contributions, Lifecycle or target-date default options or auto-escalation. In the future, 55 percent of plans sponsors would like to add some of these design changes to their own plans.