Retirement Advisor Satisfaction Lacking in Small Market Plans

Retirement Plan CoverageRetirement advisor satisfaction is not the same across all markets.  As pandemic uncertainty persists, plan sponsors are looking for additional guidance and expertise from financial advisor partners.  A new Fidelity study finds employees well-being and improving participant outcomes are among plan sponsors’ top priorities.  A priority has become retirement advisor satisfaction and plan sponsors are seeking advisors’ help.

According to the Fidelity research, cited recently in a ThinkAdvisor article, 88% of sponsors have made changes to their investment menus, and 82% altered their plan designs in an effort to boost outcomes.  Plan sponsors are seeking advice and input from financial advisors on investment menus and plan design, as well as improving employees’ overall financial well-being.

In 2020, advisor satisfaction (73%) and value (69%) was high among plan sponsors, Fidelity found.  Among smaller plans, however, advisor sentiment fell 10%, the survey revealed. Fidelity noted three drivers of advisor value, according to ThinkAdvisor:

● Helps improve employee outcomes.

● Helps improve employee satisfaction.

● Provides financial advice and guidance to participants.

In addition, plan sponsors appear eager to consider new financial advisor relationships.  The percentage of plan sponsors who said they were looking to change advisors more than doubled to 34% in 2021 from 16% in 2020.  Their primary reasons?  Sponsors are seeking better employee education and communication, lower fees, more retirement plan expertise, and an improved investment lineup.

In addition, sponsors expect a broader scope of expertise from their financial advisors.  Nearly half (46%) of sponsors reported they want their advisor to have more know-how when it comes to lowering costs, 44% to select and monitor investment options, and 42% to keep them informed on changing regulations and how to implement them.  The last is especially relevant as the SECURE Act, the CARES Act, and the pending SECURE Act 2.0 have significantly altered the retirement plan landscape since 2019.  In addition, the Cycle 3 Restatement deadline is coming up in less than a year.  The upcoming July 2022 deadline has plan sponsors scurrying to remain in compliance.  Now is the perfect time for plan sponsors to reevaluate their plan design and make any necessary amendments to their plan document.  There have been a cacophony of regulatory activities in retirement over the recent 2 years.

Plan sponsors expect advisors to engage them and participants in improving their plan value and outcomes.  Retirement advisor satisfaction remains a priority!  If the current retirement advisor satisfaction level is insufficient – the next step is clear.  Plan sponsors aren’t going to be shy about finding one that will.

Despite their increased demand for advisor guidance and expertise, it appears plan sponsors are meeting some of their retirement outcome goals.  Fidelity found that 68% of the plan sponsors it surveyed believe their participants are saving enough for retirement, up from 59% in 2020.  This is good news, as it seems employees continued to save for the future, despite financial challenges brought on by the Covid-19 pandemic.  In addition, 72% of plan sponsors said their retirement plans are meeting their goals this year, up from two-thirds in 2020.  For the majority of plan sponsors, their plan goals are employee-focused.

Plan sponsors seeking retirement advisor satisfaction are on the right track.  Those who want more from their existing financial advisor relationships, or those who are considering replacing advisor partners, should benchmark their current plan offerings against industry standards and peer employers.  This is something a plan advisor can – and should – assist with.  If the results of those benchmarking efforts reveal a ‘somewhat reasonable’ improvement, sponsors may consider putting out a request for proposal to vet new advisors so they can find a partner to provide the right guidance and advice to help improve participant outcomes.


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