Employee education and advice from plan advisers is universally valued by plan sponsors, according to a MassMutual survey.
Explaining the retirement plan benefits and options available to employees is a preferred topic for plan adviser education by 87% of plan sponsors that work with an adviser and 80% of those that do not. Seventy-three percent of both groups want advisers to educate employees about the importance of contributing to the retirement plan.
Three-quarters (76%) of plan sponsors that work with advisers want personalized advice for employees to determine whether they are on track for a successful retirements, as do two-thirds of those that do not work with and adviser. Specific help with employees who are approaching retirement is desired by 65% of sponsors that work with an adviser and 53% of those that do not.
However, advisers say they need better cooperation from plan sponsors in order to provide education and advice to participants. Advisers find it difficult to motivate sponsors to schedule a time where they can come in and conduct group or one-on-one meetings. Advisers also would like help from the plan provider with educating participants about their plan.
The MassMutual Winning Combination Study polled 565 employers that sponsor retirement plans, including 449 that worked with an adviser and 116 that did not, with retirement plan recordkeeping assets from less than $1 million to as much as $75 million.NEXT: Sponsors who work with advisers find them valuable
Overall, retirement plan sponsors say they prefer to work with a plan adviser who emphasizes employee education, good customer service and reducing plan costs, the survey found.
Sponsors who work with an adviser find them highly valuable. They primarily chose to work with an adviser for help with plan design and features, with fiduciary obligations and investment selection a close second and third. Plan sponsors that work with an adviser are more engaged and are more likely to think their employees are saving enough for retirement. They report doing more to encourage participation in their plan and to promote employees’ overall financial wellness.
The survey found plan sponsors working with an adviser review their plan more often. Half review their plan more than once per year. But, while these plan sponsors are satisfied with and highly value adviser plan reviews, they prefer to review with their adviser more regularly than they are currently.
One-third of those not working with an adviser are likely to do so in the future, and among those with plan assets of $25 to $75 million, six in ten say they are likely to engage an adviser in the future.
More information from the study is here.NEXT: Right measures could improve education
Leaning too heavily on participation statistics alone may mask a sub-optimal education program, MassMutual suggests. E. Thomas Foster, a spokesman for MassMutual’s retirement services division, speaking at a presentation by MassMutual, said, “When I talk to plan sponsors, I ask a few simple, probing questions,” he said, noting that size of plan is of little importance. At a session with plan sponsors ranging from Apple and Williams-Sonoma to smaller business owners, Foster says the same question resonated with all plan sponsors.
“How many of you can say succinctly what percentage of your participants are ready to retire right now with 75% to 80% of income at age 67?” he recalled. The answer might be surprising. Very few were able to quantify how plan participation actually ties into outcomes, and Foster pointed to education as the solution—or perhaps the problem.
“You might think you have a good education program, but if you can’t answer that, your education might not be as good as you think,” Foster said. Plan sponsors need a process that can lead them through the metrics and analysis to see where on the readiness scale their employees are.
Participation doesn’t tell the whole story, agreed Elaine Sarsynski, executive vice president of MassMutual retirement and Worksite insurance. Plan sponsors may have a 95% plan participation rate, but “employees may not be investing enough, they may not be invested properly, and it can create real issues.” Getting to the real statistics is critical, Sarsynski said.According to Foster, the retirement industry may be too hung up participation while outcomes go under the radar. “You can have 100% participation in the plan, but if you don’t have the right outcomes, that is an exercise in futility,” he said. The key is to have the right way to measure for employees how much they will be able to receive in retirement for the rest of their lives, and it is critical to ask the right questions.