Professional Support Boosts Satisfaction of 401(k) Plans

401(k)supportSixty-one percent of plan sponsors who work with a financial professional are very satisfied with their 401(k) plan compared to only 40% of sponsors who don’t use a financial professional, according to a survey by Guardian. Ninety percent of plan sponsors consider their 401(k) to be successful when it helps them recruit and retain good employees, helps them offer competitive benefits, and helps them secure an adequate retirement income for their employees. About 90% of employers say that their 401(k) is successful in making retirement savings easier, providing planning tools, encouraging systematic savings, and helping employees fund a secure retirement.

Forty-six percent of small businesses surveyed did not offer a retirement plan, with many citing the potential expense as a deterrent. However, 58% said that they were interested in setting up a plan within the next three years. “This, coupled with the fact that nearly 30% of business owners did not know which type of plan was best suited for their company, illuminates the huge opportunities for financial professionals in the small-plan market,” said Douglas Dubitsky, vice president at Guardian Retirement Solutions.

While the majority of plan sponsors are satisfied with their retirement plans, underlying fees and expenses are major concerns. Additional concerns include the staff and executive time required to manage the plan along with the need to educate employees to manage their investments.
The study also reveals that small business owners are confused by their fiduciary roles and responsibilities with nearly one in five not satisfied with fiduciary support. Additionally, almost one-third of plan sponsors did not realize they were the plan fiduciary. Plan sponsors who work with financial professionals are more knowledgeable about plan requirements, including their fiduciary responsibilities. Those who work with financial professionals generally offer plans that are better designed and include more advanced features, such as an employer match, target date funds, and a managed account option. Small-plan sponsors are increasingly realizing the value of working with third-party support services and financial professionals for outsourced solutions that help save time and mitigate fiduciary risks. “This, and the fact that many non-sponsors are extremely confused by their options in the 401(k) market, reinforces what we have seen at Guardian for a long time — there are more and better opportunities for financial professionals in the small-plan retirement market than ever before,” he said. For more information, visit www.glic.com

Last Updated 10/21/2020

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