New technology is quickly turning the 401(k) world into a different kind of ballgame, and it’s up to advisors to learn the new rules, Vestwell says in a new report.
The vast majority of 401(k) plans are run on outdated record-keeping technology built in the 1980s, leading to high costs, administrative headaches and rigid plan designs for millions of plan sponsors, according to Vestwell.
It also creates a barrier to entry for those in the small-business space who lack the financial or administrative resources to support a quality plan. In fact, there are over 30 million small businesses in the U.S., yet only 600,000 401(k) plans in total.
The friction that small businesses experience along with the momentum from substantial funding from big banks and private equity firms is quickly leading to a retirement revolution.
Every aspect of the industry is changing, and technology is at the core of it all. Employers depend on payroll integrations to keep their plans running smoothly, and participants expect the same experience with their 401(k) plan as they do with their online banking.
Advisors are feeling increasing pressure to deliver on clients’ heightened expectations. According to Vestwell’s latest survey, 85% of advisors place a greater emphasis on the technology used to run their business as a result of the past year.
Vestwell conducted the survey over the summer among some 500 advisors, all of whom manage at least one company-sponsored retirement plan.
Here’s a look at several new ways in which the push for tech-forward solutions has manifested itself.