Sponsors Less Optimistic than Advisers About Participants’ Retirement Readiness

A survey by Voya also found that sponsors do not always understand the services that advisers provide, which means that advisers need to communicate their value more effectively.

Sponsors are far less sanguine than advisers about participants’ retirement readiness, according to a new survey by Voya Investment Management, “Survey of the Retirement Landscape: Challenges and Opportunities for DC-Focused Advisors.”

The survey also found that sponsors do not always recognize the services that advisers provide, potentially leading to confusion about what benefits they receive from the fees they pay, Voya says. This means that advisers need to do a better job of communicating their value proposition, the firm says.

Large plan sponsors are more likely to recognize their advisers provide support for investment selection and fiduciary responsibility, but less likely to recognize support for financial wellness. By contrast, small- and mid-size sponsors are more likely to say their adviser supports financial wellness, but perceive less help with the selection of service providers.

“We found that the issue of retirement readiness is more of an issue for plan sponsors and is often an area where they could do more to address the topic with participants,” says Michael De Feo, managing director and head of retirement and investment only at Voya Investment Management. “On the other hand, advisers are more optimistic, perhaps because they have been able to convince their sponsor clients of how important this is and have provided them with the tools for these conversations. Plan compliance remains a top concern for both advisers and sponsors, but a number of new issues emerged that weren’t on the radar of advisers or sponsors in the past, such as cybersecurity, which will only grow in importance.”

Another emerging issue, Voya says, is helping caregivers for people of special needs; advisers are twice as likely as sponsors to say this is highly important. Advisers are also more likely to view a higher percentage of participants as caregivers.

“When you consider that, according to the U.S. Census Bureau, one in five workers has a disability, or one in six workers serve as a caregiver to an individual with a disability, you can see how important this is,” De Feo says.

The survey also found that advisers generally believe that sponsors need help understanding their fiduciary responsibilities, are overwhelming by compliance burdens, and demand more services from advisers. On the other hand, sponsors are less likely to say they need help with these issues.

Advisers said that sponsors’ biggest concern is fiduciary/compliance issues, but sponsors ranked this as fourth biggest. Voya says this suggests there may be fewer opportunities to discuss these issues than advisers think. Advisers think market volatility is sponsors’ top ten biggest concern, but in reality, it is their fifth. What sponsors and advisers do agree on is the importance of educating participants.

Voya’s findings are based on an online survey of 307 sponsors and 204 advisers conducted last December. Brookmark Research and Practical Perspectives assisted with the development, execution and analysis of the surveys.