As retirement plans become more complex and employees look for more financial guidance, plan sponsors are expecting more from their retirement plan advisors.
In a recent HRD America article, Aaron Tallen, vice president and head of distribution operations and 401 defined contributions at Security Benefit, discussed how changing plan designs, administrative demands, and participant expectations are reshaping advisor relationships.
Small-business retirement plan adoption has grown approximately 60% since 2019, according to data from HR platform Gusto cited in the article. Nearly one-third of small businesses now offer a plan, with state-mandated retirement programs helping drive adoption.
As more employers offer retirement benefits, plan sponsors are navigating increasingly sophisticated decisions. Tallen points to growing interest in retirement income solutions, alternative investments, and digital currencies as examples of areas where specialized guidance is becoming more important.
Fidelity’s Plan Sponsor Attitude Survey, also referenced in the article, identifies adding target-date funds with an annuity or income rider as a leading plan sponsor priority. Evaluating these options requires consideration of investment selection, portability, and fiduciary responsibilities under ERISA.
Tallen identifies three areas where retirement plan advisors can provide meaningful support: simplifying complex decisions, establishing structure and processes, and reducing administrative burdens.
The last is becoming particularly important as employers seek to free up time and resources. According to the Fidelity survey, plan sponsors are increasingly willing to pay for outsourced administration, including 3(16) fiduciary services that transfer certain administrative responsibilities to third-party providers.
Meanwhile, participants want guidance that extends beyond retirement savings. Tallen says advisors are fielding more questions about college savings, inflation, and other financial concerns. Employees also increasingly expect advisors to engage with them directly rather than focusing exclusively on plan-level decisions.
These changing expectations are placing greater emphasis on participant engagement and retirement readiness as measures of advisor effectiveness, alongside traditional considerations such as plan costs and compliance.
The article also highlights potential disruption from advisor turnover, mergers, and acquisitions. Fidelity’s findings suggest these transitions are common triggers for plan sponsors to reconsider their advisory relationships, underscoring the importance of continuity and communication.
For plan sponsors and fiduciaries, the findings offer an opportunity to assess whether their advisory relationships meet the evolving needs of both the plan and its participants. That includes reviewing the quality of investment guidance, administrative support, participant education, and communication during organizational changes.
For retirement plan advisors, the message is equally relevant. Helping sponsors navigate complex decisions remains essential, but demonstrating value increasingly means engaging participants, addressing broader financial concerns, and helping employees make progress toward retirement readiness.
