Retirement Plan Sponsors Place High Value on Match, Advisers

Providing a matching contribution and access to an adviser were ranked by plan sponsors as the most important actions to encourage employees to save.

Ninety-four percent of retirement plan sponsors polled by American Century Investments said providing a matching contribution in their plans is at least somewhat important to encourage employees to save, with 51% saying it is extremely important.

Providing access to a financial adviser was ranked as at least somewhat important by 95% of respondents, with 31% saying it is extremely important.

Nearly all respondents said supporting employees’ efforts to have a secure retirement is an important corporate goal for providing retirement plans, yet only 28% measure how ready employees are for retirement. All respondents said the percent of employees taking full advantage of the match contribution is an important indicator of the success of their retirement plans, and 81% measure this metric.

Seven out of 10 plan sponsors view participant communication and education programs as extremely or very important, but only two in five think programs are effective, and 58% of plan sponsors agree that participants will not take advantage of support that is offered to them. Sixty-eight percent said materials prepared by plan providers play a major role in educating participants, while 65% said enrollment meetings play a major role and 58% cited plan providers’ websites.

Forty-three percent of plan sponsors polled said they offer retirement planning seminars or webinars to defined contribution plan participants fairly often, while 45% said they offer them seldom and 8% said they never do.


Adviser Use

The survey found retirement plan advisers are mainly sought for investment selection and monitoring responsibilities.

Three in four employers use an adviser, and three in ten of those who do not are likely to use one in the future. Nearly all are satisfied with their current adviser, and more than half have been with their adviser for at least five years.

Eighty-eight percent of plan sponsors that use an adviser said they use one for investment selection, and 83% use an adviser for employee education. Eighty percent use an adviser to help meet fiduciary obligations. Other adviser responsibilities include helping with compliance issues (78%), communicating with employees (76%) and plan administration (70%). Fifty-two percent said investment selection and monitoring is the most important duty their advisers perform.

For those respondents that expressed they are likely to use an adviser in the future, 58% indicated it would likely be for investment selection, 54% for communicating to employees and 53% for educating employees.

The survey was conducted in the first quarter of 2014 among 310 plan sponsors representing plan assets of less than $25 million through $100 million. More than 1,600 retirement plan participants were also surveyed, and the results showed most participants want a “nudge” to help them save for retirement (see “Employees Open to Retirement Savings Intervention”).

An Executive Summary of the survey findings can be viewed here.