What plan sponsors want is not what plan advisors think they want: Survey
Vestwell's surveys of plan sponsors and advisors found common concerns & differing views. But that's not all.
Advisors and sponsors have some common priorities in the retirement planning industry, with reducing fiduciary risk and cutting the administrative burden at the top of the list.
So finds a survey from Vestwell of key sentiments of advisors and plan sponsors as they relate to selling, adopting, and maintaining plans.
Among the survey’s findings is advisors’ biggest priority between now and the end of the year: growing their client base, according to 57 percent of respondents.
But nearly 30 percent say they’re having a tough time finding new opportunities. Other issues that make it difficult for them to reach this year’s goals include displacing incumbents (25 percent) and managing scale (23 percent).
When considering plan sponsors, more than 35 percent of advisors say that the biggest mistake sponsors make is not understanding what they’re paying for when it comes to their retirement plans.
In addition, more than 97 percent are focused on cutting clients’ administrative burden—100 percent of sponsors, for their part, said that was important to them—and just under 97 percent of advisors also emphasize the importance of minimizing their clients’ fiduciary risk.
And 96 percent of advisors say that saving sponsors money on plans is also of major importance.
Sponsors do have specific pain points when administering a retirement plan: 37 percent say filings, taxes, and compliance activities are their biggest headaches.
But even more—a whopping 98 percent—found being competitively priced, offering flexible investment options, maximizing their tax benefits and minimizing fiduciary risk important.
Says the report, “One may think that when it comes to offering a retirement plan, saving sponsors money and maximizing tax benefits would be an advisors’ top selling points. However, likely stemming from the traditionally cumbersome and confusing aspects of 401(k)s, advisors view minimizing fiduciary risk and administrative burden as even more important factors in helping clients select a retirement plan.”
Interestingly, when it comes to increasing employee engagement, that’s actually pretty far down sponsors’ list when it comes to how important it is in choosing a plan platform. Sponsors are far more concerned with their own problems vis-à-vis fiduciary risk and administrative burden than they are with getting employees involved.
One respondent warned that advisors “need to engage their clients in conversations based on needs rather than selling plans based off perception.”
Sponsors are also less worried about fiduciary responsibility than they should be, according to the survey. “In today’s litigious environment, it’s critical that advisors educate clients on their fiduciary obligations,” warns Allison Brecher, general counsel, Vestwell, in the report.
Brecher adds, “Even by naming a fiduciary other than themselves, plan sponsors do not offload risk in its entirety…but it’s still an effective way to mitigate exposure and avoid costly mistakes.”
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