Survey of the Retirement Landscape: Challenges and Opportunities for Defined Contribution Specialists

Welcome to the third edition of Voya Investment Management’s (Voya IM) survey of retirement plan sponsors and DC specialists. The survey seeks to help DC specialists better understand the needs of their clients and prospects — what products and services do sponsors want, what needs are unmet and where are business opportunities emerging? This latest survey was conducted from mid-February to early March 2021.

Over the last two years, the world has experienced profound changes, some of which are reflected in the survey findings. During 2019, then prevailing late-cycle economic conditions defined the investing framework for retirement plans and others — prospects of either a soft economic landing or a recession, and the likelihood that future returns on most financial assets would fall below average. These overarching challenges made it difficult to imagine solutions to increase support for financial wellness, retirement income and special needs planning, despite growing recognition of the importance of those issues.

The outlook was brightening by January 2020; but then in February came the Covid-19 pandemic, which as of mid-year 2021 had killed nearly four million people worldwide.¹ Restrictive measures taken to contain the spread of the virus pulled the emergency brake on the global economy; whole industries, such as entertainment, hospitality and travel, came to screeching halts. For many people, that meant lost jobs and struggles to obtain food, housing and other essential needs. It also raised issues of social equity — who had to risk Covid infection by going to work and who didn’t. By March, the financial markets had fallen into a tailspin. Massive government support, in the form of direct payments to individuals, programs to help companies keep people employed and other forms of indirect support helped many people stave off financial ruin.

Ultimately, aggressive fiscal stimulus and monetary policy pulled the economy out of its tailspin and propelled the financial markets to a stunning recovery. With the development of vaccines in the fall, finally the world began to turn the tables on the pandemic. Economic progress has closely paralleled progress in getting populations vaccinated. At the same time, the uneven effects of the downturn and recovery put social justice issues into the forefront of national awareness. Attention to social justice concerns, we believe, has appeared in the survey findings, which reflect greater sensitivity among plan sponsors to issues of diversity and equal access to plan benefits.

The survey was expanded in 2021 to include Covid-19 related experiences; attitudes towards and usage of environmental, social and governance (ESG) investment options; as well as the importance and usage of retirement income options, features and tools. Even though many people have managed to weather the storm, they say they have gotten off track with their retirement plans. Despite these acknowledged setbacks, sponsors and DC specialists alike see plan participants as more retirement ready than they did in 2018 (Figure 1).

Figure 1. Percent of respondents who agree that plan participants are very/somewhat prepared for retirement

Source: Voya Investment Management.

Views on plan participants’ levels of retirement readiness have fluctuated over the years since the first survey; in the 2018 survey, we hypothesized that these fluctuations broadly corresponded with the ups and downs of the financial markets. That observation still seems to hold ― in the 2021 survey, following a year of extraordinary gains in the financial markets, 24% of sponsors said that participants are “very” prepared for retirement versus 13% in 2018; by contrast, only 10% indicated that participants are not prepared, versus 24% in 2018. DC specialists continue to have less optimistic views but nonetheless also tend to overestimate participants’ retirement readiness. 

A recent survey conducted by the Insured Retirement Institute found that 51% of workers aged 40 and over have less than $50,000 saved for retirement, 57% are saving less than 10% of their income and only 44% think they’ll have income to last throughout their retirement.² How does one square sponsors’ and specialists’ views with the findings that many participants are off track? Our hypothesis is that respondents tend to assess retirement readiness more positively during periods of strong financial market performance, such as we have seen in 2021.

Plan sponsors and DC specialists continue to share views on many aspects of retirement plan support and service delivery, with similar perspectives on priorities in the coming years. Consistent with prior surveys, the 2021 refresh found that where differences exist, they indicate DC specialists feel their services add greater value than plan sponsors recognize. Many, though not all, of these differences are greater among smaller plan sponsors, who tend to be less engaged with the specialist than sponsors of larger plans, who tend to be more aware of what the specialist brings to the table.

The latest survey update was conducted in March 2021, as the United States appeared to be gaining the upper hand on the Covid-19 pandemic, though not yet completely able to resume normal activities. A concern for many respondents was the need to “get back on track,” which usually meant some kind of “post-Covid realignment.” Also, Covid-19 amplified trends that already were underway, e.g., a heightened focus on plan design and competitive review of plan service contracts.

Covid-19 impacts on plans

Though most plan participants reported staying the course, only one in five plan sponsors felt that Covid-19 had none of the listed impacts on their plans. Sponsors and DC specialists agreed that an increase in hardship withdrawals was the most common Covid-19 impact on plans (Figure 2). By contrast, DC specialists rated several factors — reducing or suspending the company match, increased hardship withdrawals and increased plan loan activity — as more impactful than did plan sponsors. Covid-19 impacts were generally consistent across plan-size segments, though smaller plans were somewhat more likely to report having seen none of the listed impacts. 

Figure 2. Covid-19 impacts on plan and benefits

Source: Voya Investment Management.

Current service offerings

Sponsors and DC specialists generally agree on the kinds of plan support offered, though as in past survey results, sponsors seem less likely to recognize the services provided by specialists. Figure 3, which is sorted by percent of sponsor recognition, illustrates these discrepancies.

Figure 3. DC specialists say they provide more services than plan sponsors recognize

Source: Voya Investment Management. DC specialist responses combine “all plans” and “most plans” answers. 
* Slight rewording: in 2018, attribute read “Investment-related fiduciary services.”

Receiving assistance with investment selection and monitoring is the support area plan sponsors most frequently mention, followed closely by guidance on plan design and features. With the added specification of 3(38) fiduciary services, sponsors were significantly less likely to indicate fiduciary services as a leading area of support. Specialists were more likely than sponsors to mention that they provide all types of support to plans. Though not illustrated in Figure 3, larger plans indicated greater support for plan design and guidance on other types of retirement plans. Smaller plans were the least likely to note DC specialist 3(38) fiduciary support or help with choosing a qualified default investment alternative (QDIA). The discrepancies in Figure 3 could manifest themselves as confusion among sponsors about what they are paying specialists for, and points to a need for DC specialists to communicate better about the services they provide to sponsors. For ideas on how to do this, please see the Call to Action section below.

The 2021 survey revealed that sponsors do recognize increased support when it comes to retirement income options, healthcare spending accounts (HSAs), investment re-enrollment, reducing plan leakage and replacing mutual fund options with collective investment trusts (CITs). Plan sponsors indicate heightened importance for most plan activities; most notably, ensuring that the plan is consistent with regulations, that participants are appropriately invested, increasing participation/contribution levels and helping participants transition to retirement.

Plan costs and fees

With sponsors paying increasing attention to plan design issues since 2018, it stands to reason that plan costs and DC specialists’ compensation would get more focus as well. Unsurprisingly, the 2021 survey found even greater fee sensitivity than in 2018. Though DC specialists still think sponsors focus on absolute costs without considering the value added, there are encouraging signs that plan sponsors are taking a broader perspective: for example, the 2021 survey found upticks in sponsor recognition that DC specialists help keep plan costs reasonable, and that DC specialist compensation is commensurate with the support provided (Figure 4).

Figure 4. Agreement with pricing and fee sentiments

Source: Voya Investment Management, sorted by 2021 data.

Consistent with the context of increasing attention to plan issues, the responses to cost and fee questions were higher across the board in 2021 than in prior years. Also encouraging is that sponsors are more likely to say they understand the DC specialist’s compensation and fee disclosures. Answers that merit watchfulness include greater incidence of changing investment options and a higher probability of looking for a new plan DC specialist, as a result of higher focus on fees. Ensuring reasonable plan fees remains the key regulatory concern for plan sponsors, followed by complying with DOL fiduciary standards. 

Desired attributes of DC specialists

A change noted in this year’s survey is that sponsors are paying more attention to plan design issues; since 2018, guidance on plan design and features is the second most frequently cited DC specialist support area (Figure 5). Despite plan sponsors’ recent, heightened attention to these concerns, DC specialists again said that they provide more guidance than sponsors acknowledge. As in 2018, sponsors told us they are looking to specialists for a broad spectrum of advice, and want higher levels of expertise, which again underscores the need to make sponsors aware of all that specialists do ― for ideas on how to accomplish this, see “Articulate your value” in the Call to Action section below.

Figure 5. Specialist support/benefit attributes most frequently cited by plan sponsors

Source: Voya Investment Management. 
* Slight rewording: in 2018, attribute read “Investment-related fiduciary services.”

Plan sponsors and DC specialists broadly align on important attributes for selecting a specialist, with one notable exception: specialists more often say that plan sponsors value participant education and communication, though sponsors are less likely to cite this as an important criterion. Sponsors’ desired attributes have evolved since the survey began in 2016. The desire for regulatory/fiduciary education has risen, even as investment-related 3(38) fiduciary services has declined. Guidance on plan design and other plan types has risen; on the other hand, selecting/managing service providers has declined. Support of participant financial wellness has become established as a desired service. By contrast, the desire for participant education/communication has declined; it may be that other service providers such as plan administrators are providing more of these services.

As in previous iterations of the survey, sponsors chose investment selection and monitoring as their most desired service from advisers in 2021. Also, sponsors again told us they look to specialists for a broad spectrum of advice, and want higher levels of expertise — which is of particular importance in selecting and monitoring investments. To add value, specialists need a rigorous methodology for gauging the suitability of plan investments. For ideas on how to develop such a methodology, see “Tap into the power of consistency” in the Call to Action section below.

Plan sponsor involvement with investment selection

Similar to prior years, the majority of plan sponsors and DC specialists indicate they have high to moderate involvement in the investment selection process. Sponsors are more likely to rate their involvement as high; DC specialists are more likely to rate plan sponsor involvement as moderate. These differences may correspond to the differences in sponsor engagement across plan sizes.

DC specialists as investment fiduciaries

The 2021 survey found elevated fiduciary concerns among plan sponsors, a consequence of increased ERISA lawsuits in 2020. Also, the 2021 survey clarified a question from earlier surveys, about whether plan specialists provide fiduciary services, by asking if they serve as section 3(38) fiduciaries. With this added specification, sponsors and DC specialists alike less frequently indicated that this key role is performed by DC specialists; most often they indicated that sponsors maintained fiduciary responsibility with respect to investment selection. (Figure 6). 

Figure 6. Does your DC specialist serve as an investment fiduciary?

Source: Voya Investment Management. The survey question was asked more generally before 2021. 

About a quarter of plan sponsors say their DC specialists have 3(38) fiduciary responsibilities, followed by third parties. Fewer than one-in-ten sponsors are not sure who has fiduciary responsibility, a fairly stable metric across surveys. Though not illustrated in the figure, the survey found no differences by plan size in perception of who provides 3(38) fiduciary services. DC specialists generally agree that sponsors are the most likely to have fiduciary responsibility for their plans, but tend to overstate sponsors’ need for help understanding those obligations.

Perhaps in recognition of their fiduciary responsibilities, sponsors of larger plans are more likely than sponsors of mid-size or smaller plans to say they are increasingly focused on plan participant outcomes. Yet they also say they believe passive investments relieve them of fiduciary responsibility, which is not true ― this points to a continuing need for DC specialists to educate plan sponsors about their fiduciary obligations.

Fund selection criteria

When asked which investment selection factors their specialist had discussed with them, the majority of plan sponsors cited annualized return (Figure 7). Sponsors also cited other investment selection factors, but significantly less frequently. The generally low recall of discussion about the more technical metrics suggests that sponsors may see these factors as the purview of the specialist. 

Figure 7. Sponsors: DC specialist has recommended or discussed investment factor

Source: Voya Investment Management, factors sorted by 2021 data.

By contrast, DC specialists indicate that annualized performance, historical rolling returns and third-party recommendations are the most important factors in selecting investments. Most sponsors say that specialists have discussed annualized performance with them but fewer mention historical returns; even fewer say the specialist has discussed third-party recommendations. For thoughts on how to bridge these gaps, read Voya’s publication, Applying a Consistency Lens™ to Fund Evaluations. The brochure is available on voyainvestments.com in the Practice Management section.

Reasons to change investment options

With sponsors paying more attention to plan design issues since 2018, interest in assistance with investment selection and monitoring has risen. The drivers of decisions to change plan investments have shifted slightly over time but tend to be grouped consistently (Figure 8).

Figure 8. Factors that drive changes to plan investment options, 2016–2021

Source: Voya Investment Management, factors sorted by 2021 data.

For sponsors, the leading catalyst for changing the plan’s investment options are the availability of new investments, lower cost and DC specialist recommendations; these factors slightly outrank performance. Smaller and mid-sized plans focus more heavily on the availability of new investment options; further, smaller plans are more likely to look for lower cost options. Larger plans are most concerned with the performance of their existing investment choices. It’s interesting to note that investment performance was the top priority for plan sponsors only in 2016; since then, they have given greater weight to new or lower cost investment options. By contrast, DC specialists have tended to prioritize performance, and to be generally less enthusiastic about new investment options, though sensitive to the issue of cost. Sponsors’ answers to questions about manager changes suggest that they perceive these concerns to be more the specialist’s purview.

As plan sponsors increasingly focus on participant outcomes, other plan options such as managed accounts and CITs may become more salient. In the 2021 survey update, sponsors indicated that managed accounts are the most critical plan option, among a list that also included planning calculators, financial wellness programs, managed payouts, in-plan guaranteed income for life products and longevity insurance. 

Use of target date funds (TDFs)

Many industry professionals now see TDFs as “foundational” components of a retirement plan, and less of a forefront concern. Yet, mid-sized plans have significantly increased their use of TDFs since 2018, from 56% to 74%, in line with larger plans (Figure 9). Smaller plans now stand alone with lower usage levels at about 53%. In aggregate, nearly six in ten sponsors include TDFs in their plans, unchanged from 2018. Does this level represent market saturation? Not quite, perhaps: of the aggregate four in ten sponsors whose plans do not currently offer TDFs, two of five say they’d prefer to include them, up from one of three in 2019 and one of four in 2016.

Figure 9. Percent of retirement plans that include TDFs 

Source: Voya Investment Management.

Retirement income options

A majority of sponsors and DC specialists agree that the SECURE Act has encouraged plans to adopt a focus on retirement income. Offering a retirement income solution can complement financial wellness programs such as online tools and calculators, education on retirement income planning and education on investing. While plans to offer retirement income options are on the table, these options are not yet widely available (Figure 10). About half of respondents say they currently offer a managed payout option; other options are less widely offered, though many sponsors intend to offer them within several years.

Figure 10. Sponsors currently offering or planning to offer a retirement income option 

Source: Voya Investment Management.

In a separate survey, Voya found that 91% of Americans considered a guaranteed source of income in retirement to be important, in order to avoid outliving their savings 
(see Figure 12 below). To explore this topic further, see “retirement income solutions” in the Call to Action section below.

ESG investing

While the performance of environmental, social and governance (ESG) investment strategies has long been under scrutiny, the Covid-19 market dislocation provided the ESG category with its first real test — one it passed with flying colors. According to Morningstar, in 2020, three out of four sustainable equity funds beat their Morningstar Category average, and 25 of 26 ESG equity index funds beat index funds tracking the most common traditional benchmarks in their categories.³

Survey respondents registered mixed sentiments on ESG investing, with low levels of strong feeling on the issue (Figure 11). DC specialists were more likely than plan sponsors to have a good understanding of ESG investing, but both groups said they would value additional education. Smaller plans were less likely to indicate that ESG capabilities 
are important to evaluating investment managers, that they currently have or are considering adding ESG investments to the plan, or that they have a good understanding of ESG investing.

Figure 11. Plan sponsor and DC specialist agreement that participants are asking for ESG investment options

Source: Voya Investment Management.

Survey results notwithstanding, the demand for ESG strategies is expected to soar as younger employees come to represent a larger percentage of plan participants. DC specialists will need to enhance their knowledge of this space ― see “embrace ESG investing” in the “Call to Action” section below.

Since 2018, the survey has found increasing agreement among plan sponsors that their specialists provide effective participant education and support. Plan sponsors now are more likely to strongly agree that a range of plan options and tools can help participants achieve better outcomes. Perhaps even more significant, sponsors today offer more financial wellness programs, more frequently say such programs are important. The survey results highlighted several new findings, as noted below.

Covid-19 impact on participants

In a separate Voya Financial survey conducted in March 2021, almost half of Americans (46%) reported that the Covid-19 pandemic had negatively impacted their overall financial situation ― most notably, those ages 18–34 (57%), those with annual household income below $50,000 (57%), women (50%), those without a college degree (50%) and those not working with a financial advisor (48%).⁴ On par with findings in May 2020, 38% of respondents reported an impact on household employment status; importantly, the number of Americans who had lost their jobs, been laid off or had their salary reduced was significantly higher in March 2021 than in May 2020. These impacts were most drastic among African Americans and caregivers (both 51%), younger Americans (49%) and those with children (44%).

Challenges to retirement readiness

During the Covid-19 pandemic, a majority of Americans said they found it important to have a guaranteed source of retirement income, to maintain a long-term view of their investments and stay the course through volatile market environments (Figure 12). 

Figure 12. Top retirement savings priorities for Americans

Source: Based on the findings of “Consumer Sentiment during COVID-19,” a Voya Financial survey conducted March 12–15, 2021, on the Ipsos eNation omnibus online platform among 1,005 adults aged 18+ in the United States.

Most successful in this effort were those with household incomes greater than $100,000, those receiving investment guidance and those with an employer-sponsored retirement plan. Only 3% of Americans reported taking a Covid-19 related distribution from their employer-sponsored retirement plan, but Voya’s research showed higher utilization among healthcare workers (14%), caregivers (8%), those aged 18–49 (6%) and those with children in the household (6%), most of whom also were significantly impacted by job loss or left their jobs due to external responsibilities.⁵

In aggregate, 16% of Americans have taken a loan or withdrawal as a result of Covid-19. About half of those who did so regret their decision and wish they had consulted a financial professional; more than half feel they will not be able to “pay back” what they borrowed. Almost two-thirds believe they are now behind in saving for retirement. To get back on track financially after Covid-19, more than a third of Americans are reducing overall expenses; more than a quarter are re-evaluating monthly budgets and paying off credit cards, but findings also indicate the need for continued financial education and support. Only about one in ten is repaying loans or withdrawals taken, opening emergency savings accounts, writing financial plans or increasing retirement plan contributions; about two in ten don’t feel they will ever get back on track.⁶ 

In light of the impacts of Covid-19 on plan participants, we saw retirement readiness as an important issue for this survey and updated sponsor and specialist perceptions of readiness at the top of the report (Figure 1). It’s also important to note that, as in 2018, sponsors and DC specialists have similar views on the most challenging barriers to participant retirement readiness. Both see the top challenges as getting participants to think long-term, getting participants to contribute more and encouraging employees to participate in the plan. Other challenges that sponsors rank nearly equally include getting participants to make appropriate investment choices, participants taking premature withdrawals or taking loans against plan assets and helping participants transition to retirement (Figure 13).

Figure 13. Plan sponsor perceptions of top challenges to participant retirement readiness

Source: Voya Investment Management.

Focus on minority participants

In light of Americans’ heightened attention to social justice concerns in 2021, we added a survey question that sought to gauge whether such concerns had led to greater sensitivity among plan sponsors regarding issues of diversity and equal access to plan benefits. The responses to the new question suggest that sponsors do care about diversity and equal access (Figure 14). Plan sponsors are more likely than DC specialists to agree strongly that they could do more to help minority populations take advantage of the retirement plan.

Figure 14. Sponsors think they could do more to help minority participants take advantage of their retirement plans

Source: Voya Investment Management.

Stay in plan versus rollover

Sponsors also are more likely to want terminated participants to stay in the plan than DC specialists perceive. More than 70% of sponsors say they want to keep retiree/terminated employee assets in the plan (Figure 15), whereas less than half of DC specialists think sponsors feel that way. It’s important to be aware of this difference of view; should the topic come up in a client meeting, it would be advantageous for the plan DC specialist to have prepared talking points to discuss the pros and cons of keeping former employees in the plan.

Figure 15. More than DC specialists realize, sponsors want to keep former employees in their plans

Source: Voya Investment Management.

Participant decision-making

Sponsors of large and mid-size plans are more likely than those of smaller plans to strongly agree that improved monitoring and benchmarking improve participant outcomes. Large plan sponsors are most likely to strongly agree that participants are best served by investing in TDFs. Since 2018, agreement that having too many options inhibits effective investment decisions has more than doubled among mid-sized plan sponsors.

Plan sponsors and DC specialists are increasingly likely to agree with sentiments related to participant decision-making (Figure 16). The table shows that, over the years the survey has spanned, the points of closest agreement have been better monitoring of participant investment goals, the advantages of tiered investment menus and the value of digital planning tools. Points of least agreement have included staying invested in the plan after retirement and too many choices inhibiting effective investment decisions. 

Figure 16. Evolution of respondent sentiments on practices to improve participant investment decisions

Source: Voya Investment Management.

Given Americans’ post-Covid retirement savings priorities in Figure 12, sponsors and specialists may have an opportunity to make headway against these challenges. For ideas on how to help, see “financial wellness/retirement income solutions” in the Call to Action section.

Special needs/caregiving

Awareness of caregiving status has increased for plan sponsors and DC specialists alike, with significantly fewer indicating very low levels of caregiver status in their participant populations (Figure 17). Sponsors and DC specialists are equally likely to consider help for caregivers as important, with sponsors somewhat more likely to feel that it is very important. In a difference from 2018, the 2021 survey suggests greater awareness of the pressures on special needs caregivers.⁷ Sponsors of larger plans are more likely 
to recognize that caregivers comprise a higher percentage of participants, and are somewhat more likely than other sponsors to consider it important to focus on the unique financial needs of these employees.

Figure 17. Sponsor estimates of employees/participants work with who are caregivers for disabled/special needs individuals

Source: Voya Investment Management.

While these answers come closer to reality than the responses in 2018, they are still off the mark and largely underestimate actual incidence: about 21% of Americans, or one in five, are unpaid caregivers,⁸ providing care to parents, spouses, children, friends and neighbors and assisting with routine, day-to-day activities. (Figure 18).

Figure 18. Relationship to caregiver/special needs community

Source: Based on the results of a Voya Financial survey conducted March 12-15, 2021 on the Ipsos eNation omnibus online platform among 1,005 adults aged 18+ in the United States.

The good news is that even if sponsors don’t quite get the numbers right, they’re taking the issues more seriously (Figure 19). To learn how you can incorporate these concerns into your business plans, see “focused help for caregivers” in the Call to Action section.

Figure 19. Sponsor views on importance of focusing on unique financial needs of caregivers over next two years

Source: Voya Investment Management.

Since 2018, plan sponsors have significantly increased their adoption of financial wellness programs and tools; in addition, they have higher goals for their programs. The number of sponsors who say they have no plans to offer financial wellness programs has diminished by almost half. Across plan sponsor segments, sponsors align in describing the importance of financial wellness goals. The top wellness goals are similar for plan sponsors and retirement plan DC specialists: helping employees reach their financial goals, helping participants improve their financial futures and helping them understand the impact of saving and withdrawal decisions.

Sponsors typically offer online tools and calculators, education on retirement income planning and education on investing (Figure 20). Smaller plans have been adding all elements of financial wellness, bringing their offerings in line with mid-size plans. Larger plans maintain a slight edge over smaller and mid-size plans in terms of program offerings. An interesting interpretation of Figure 20 is that the combined intent to offer, within one to three years, is about the same for all the programs listed. This suggests that DC specialists could propose any of these programs with a similar likelihood of success, a helpful thing to know should specialists need new ideas for adding value to plans. 

Figure 20. Financial wellness programs sponsors offer or plan to offer employees

Source: Voya Investment Management.

There are minimal differences between plan sponsors and DC specialists regarding the challenges to offering financial wellness programs. Both see the greatest challenges as too much complexity for the average participant, prohibitive costs and difficulty in measuring outcomes.

Sponsor priorities for the next two years

Compared to 2016 and 2018, sponsors indicated significant increases in perceived importance across all areas of focus; notably, the need for a retirement income option was seen as much more important (Figure 21). These findings underscore the perceived need to “get back on track” after the detours imposed by the Covid-19 pandemic. Also notable are the significant shifts among concerns such as “ensure participants are appropriately invested,” “help participants with financial wellness” and “change number/types of investment options.” With increased sponsor attention, these points could arise during plan service reviews.

As in 2016 and 2018, sponsors’ top concern remains “ensure plan complies with new regulations.” “Reduce plan fees and expenses” has been a recurrent focus; though its percentage response was unchanged, its ranking moved from second place in 2018 to fifth place in 2021 because other concerns increased in importance. DC specialists with a heavy focus on retirement plans agree with sponsors’ areas of focus but assign greater importance to increasing plan participation and helping participants transition 
to retirement.

Figure 21. Percentage of sponsors citing priorities as area of focus over next two years

Source: Voya Investment Management.

The most frequently mentioned unprompted significant challenges for plan sponsors are educating employees about retirement savings and plan details and increasing participation/contribution levels (Figure 22). Responses were generally similar across sponsor segments. DC specialists frequently mentioned the same issues, along with plan details and fiduciary/regulatory/compliance concerns, but to a much lesser degree than sponsors. These findings point to a mismatch between sponsor and DC specialist perceptions; it could benefit specialists to explore these potential mismatches at client meetings. For ideas on how to address these challenges, see “sponsor priorities” in the Call to Action section.

Figure 22. Frequently mentioned unprompted challenges

Source: Voya Investment Management. *Includes access to employees for DC specialists.

The action items below tie to the 2021 survey insights and offer suggestions on how you can incorporate them into your practice. Voya’s primary motive for providing this information is to support DC specialists as they serve plan sponsor and participant clients.

Plan support: articulate your value

Before your next client meeting, draw up an inventory of the services that you provide to each sponsor, and assess yourself on how closely your services focus on those top three sponsor priorities. When you meet with your clients, use your inventory as a checklist to gauge the effectiveness of the services you provide and to remind the sponsor that you provide them. You can use the meeting as an opportunity to discuss the value you add for the fees received, and as a way to learn whether the client’s needs have changed. For tips on setting up a service inventory, see the Voya publication, How to Differentiate Yourself as a DC Specialist. The brochure is available on voyainvestments.com in the Defined Contribution section.

Investment selection: tap into the power of consistency

Investment options used in plan menus must help participants confront the many uncertainties and volatility inherent in the market that can often prompt suboptimal actions. Voya’s Consistency Lens™ methodology can help. Although “past performance is not a guarantee of future results,” we believe a fund manager’s track record may offer important signals to identify which strategies may help clients best position their portfolios for a smoother ride along the retirement investing path. This proprietary methodology ranks funds on six returns-based factors that that can help identify potential for consistent, repeatable results over time. This potentially can mean better retirement outcomes for clients and a differentiated way to enhance your value proposition. Read Voya’s publication, Applying a Consistency Lens™ to Fund Evaluations, to learn more about the methodology and how you can put its power to work. The brochure is available on voyainvestments.com in the Practice Management section.

Investment selection: embrace ESG investing

Demand for strategies that attempt to align client values with investment objectives is expected to soar as younger employees come to represent a greater percentage of plan participants. As ESG ratings become more standardized and more widely adopted, having a broad understanding of the ESG space will become a critical component of DC specialists’ expertise. For information, see Voya’s publication, Environmental, Social and Governance Investing: A Practitioner’s Guide, available on voyainvestments.com in the Practice Management section.

Investment selection: retirement income solutions

Shifting perspectives, along with favorable legislative actions, are motivating employers to consider adding retirement income solutions to their defined contribution plans. The SECURE Act highlighted the importance of income solutions. For ideas on potential retirement income solutions, see Voya’s new publication, Retirement Income is the New Retirement Plan Outcome, available on voyainvestments.com in the Defined Contribution section.

Participant support: focused help for caregivers

If 20 percent of the U.S. population is affected by a special need or disability, that figure likely includes plan participants. Helping employees better protect their families builds engagement and supports recruiting and retention — factors that should prompt sponsors to embrace special needs planning. A Voya study finds that 79% of caregivers think their employer could do more to help them.⁹ Read Voya Cares’ financial professionals practice management guide, Making Special Needs Your Business, available on voyainvestments.com in the Practice Management section or visit Voyacares.com for additional resources.

Sponsor priorities and challenges: identifying sponsor priorities

Not a surprise, most important focus areas and unprompted challenges for sponsors revolve around two key themes: participant participation and plan operations. Since participants and sponsors both see a need to “get back on track,” the next two years may present opportunities to engage both groups to enhance outcomes for participants. To assess your own readiness for this project, see the “How do You Stack up to Other Plan Sponsors: Benchmark Your Priorities” worksheet, available on voyainvestments.com in the Defined Contribution section.

Brookmark Research (BM) assisted Voya IM with the development, execution, and analysis of the plan sponsor and DC specialist surveys. An Internet methodology was used to conduct the study, similar to 2018 and 2016. Plan sponsor and DC specialist surveys were very similar with only minor differences in the language used. Interviews took approximately 17 minutes to complete and were collected from mid-February to early March 2021. 

The 2021 plan sponsor findings include 339 plan sponsors, targeted as follows:

The 2021 DC specialist findings include 200 DC specialists, targeted as follows:

Similar to prior years, results shown for total plan sponsors were weighted to DOL plan counts provided by Voya, modified using ICI data to accommodate survey size categories ($1M to < $5M: (2016)74%/(2018)75%/(2021) 75%, $5M to < $25M: 21%/19%/20%, $25M+: 5%/5%/6%). Total DC specialist data were weighted to the natural distribution of DC specialist focus (heavy vs. emerging) as determined by survey screening (heavy focus: 27%/27%/27%, emerging focus: 73%/73%/73%).