A recent plan sponsor survey reveals fiduciary relationship value. More retirement plan sponsors and retirement plan committees are recognizing the importance of getting help. It arrives from outside consultants and financial advisors. This is especially impactful in light of the Covid-19 pandemic. So finds the latest “Inside the Minds of Plan Sponsors” survey from AllianceBernstein (AB).
Plan sponsors and retirement plan committees relied on third-party experts before the pandemic, and still do. About 58% of plan sponsors and committees receive help from an outside consultant or financial advisor — up 16% from AB’s previous survey. AB defines advisors and consultants as those who provide guidance on plan design. It also includes those who help with choosing service providers, and assist with selecting and monitoring investments. (AB uses “consultant” throughout its survey to refer to both advisors and consultants.)
In addition, AB found that fiduciary awareness is growing among plan sponsors and retirement plan committees. Seven in 10 plan sponsors identified themselves as fiduciaries, compared to 58% in a prior survey. In addition, the plan sponsors AB surveyed said they believed securing assistance from outside consultants and advisors helped them fulfill their fiduciary duties. However, plan sponsors are not averse to delegating a portion of that responsibility — 54% said it’s “very important” to have a consultant act as a fiduciary, up from 37% in the last survey.
A full 61% of plan sponsors who use a consultant lean on them for investment advice as fiduciaries, and about half said their consultant provides discretionary investment management services, up from 35% in the prior AB survey. Moreover, 42% of plan sponsors said their consultant is their fallback if something goes wrong; although sponsors are fully responsible, having third-party input is critical to show best intentions, according to AB. Nonetheless, plan sponsors and retirement plan committees are comfortable to change service providers if they are unhappy with service levels. The same goes for advice. Around 34% of the plan sponsors AB surveyed reported making a change.
Among those completing the plan sponsor survey, one of the biggest worries included that participants don’t know how much to save for retirement. More than half (52%) cited this as their chief concern, followed by participants not understanding their investment options (49%). Too-high plan fees were a not-so-distant third, with 44% of plan sponsors saying this keeps them up at night.
Consultants can help ease plan sponsors’ worries by offering more participant education and financial wellness. Retirement income solutions, such as guaranteed income options, are also top of mind for plan sponsors – and advising on solid solutions is another way for consultants to add value. In these challenging times, plan sponsors and retirement plan committees do not want to, nor do they have to, go it alone when it comes to managing their fiduciary responsibilities and serving participants’ best interests. Consultants can provide added value in many ways. The plan sponsor survey shows, plan sponsors welcome those expert opinions. Both to help navigate the current challenges brought on by the pandemic, and for future needs.