Advisors and plan sponsors share common perspectives on certain aspects of retirement plan support and delivery, such as participant challenges and the most effective forms of participant outreach. Where differences exist, however, advisors tend to have greater conviction than sponsors about the effectiveness of support. These differences include:
- Acknowledgment of the advisor’s role as a fiduciary and support beyond investment selection and monitoring
- Advisor’s value-added impact
- Influence of advisor on participant behavior
These differences point to business risks for advisors and raise crucial questions:
- How can advisors better communicate the value of their services?
- Can advisors educate sponsors to better understand their own interests?
- How should advisors focus on services that sponsors most value?
Sponsors most want advisors to help them with investment selection and monitoring, reducing fees and expenses and ensuring participants are appropriately invested. With the attention on fees and transparency, expect to get more questions from clients on how you’re adding value to their plans.
Evolving Sponsor Attitudes
Without being prompted, sponsors offered different rankings of the most significant challenges they face. Though the numbers of responses were small, and therefore may not indicate trends, Table 1 suggests a potential evolution of sponsor attitudes since 2016. Sponsors’ concerns are arranged in descending order by frequency of citation, and thus ranking, in 2018.
Sponsor priorities seem not to have shifted much. For example, increasing plan participation was a top concern in 2016 and remains so in 2018. By contrast, “plan details” — short for “details related to the plan such as options, fees, match, investments, performance” — may have become more important than two years ago. Cybersecurity, an emerging issue that scored low in other areas of the survey, made it onto the unprompted challenges list as well.
Source: Voya Investment Management. Sponsors: In your own words, what are the most significant challenges you face as a retirement plan sponsor?
The survey found several discrepancies that may be important to advisors as they attune their mix of services to sponsors. For example, advisors ranked increasing plan participation as their fourth priority, but sponsors ranked it number one. Conversely, fiduciary/compliance issues — the top priority for advisors in both 2016 and 2018 — slipped to fourth place among sponsors, suggesting there may be less demand for this service than advisors believe. On the other hand, advisors are in sync with sponsors about the importance of educating plan participants.
At the time of the survey, sponsors ranked market volatility in fifth place, whereas advisors ranked it tenth; this concern almost certainly will rank higher today, given recent downturns in the financial markets.
Survey of the Retirement Landscape: Insights from Current Research
Voya Investment Management recently released the second edition of its survey of retirement plan sponsors and plan advisors, to identify and better understand the current service needs of sponsors and help DC-focused advisors better align their offerings and priorities to meet those needs. Though some perceptions have changed since the initial survey in 2016, views on a few key issues have evolved and several new issues have arisen. We present key findings of the study in this series of insights. For all the research results, read Survey of the Retirement Landscape: Challenges and Opportunities for Advisors.
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