More higher education institutions are looking to hire advisers than ever before to better help their employees prepare for retirement, according to Brodie Wood, senior vice president of nonprofit markets at Transamerica Retirement Solutions.
Citing new research from Transamerica Retirement Solutions, Wood says 38% of higher education plan sponsors are looking to hire an adviser in the next 12 months.
According to “Retirement Plans for Institutions of Higher Education,” higher education institutions want to stay competitive with other employers and are turning to plan advisers for support. The goal is to help transform their retirement benefit programs into more effective recruiting and retention tools, and those colleges and universities that partner with an adviser show great gains, the report says.
Institutions of higher learning that rely on a plan adviser or consultant are ahead of peers in retirement readiness of employees, approach to investment selection, plan design and adoption of features such as automatic enrollment, ability to allow loans and range of services outsourced to the recordkeeping service provider, according to Transamerica.
Higher education institutions primarily rely on their plan adviser or consultant to assist with investment selection, investment monitoring and plan compliance. Four in five institutions that use advisers tend to have an investment policy statement (IPS) in place (81%), compared with 56% for plan sponsors without an adviser. Smaller institutions, with 5,000 or fewer participants, tend to often rely on their adviser for an even broader range of services: acting as a plan fiduciary or assisting with plan design changes.NEXT: Advisers help out with more than just investments.
Higher education institutions that hired advisers had them play a stronger role in 2015 than in 2014, as more institutions had advisers engaged in investment selection (61% in 2015 vs. 40% in 2014), ongoing investment monitoring (55% vs. 31%), plan compliance (50% vs. 42%), development of the IPS (36% vs. 22%) and selection of vendors (25% vs. 11%).
Advisers have been instrumental in helping higher education institutions improve retirement readiness, increase employee matches and institute auto-enrollment. Institutions with plan advisers also are more likely than others to:
- Monitor retirement preparedness of staff and faculty (63% vs. 39%).
- Expand eligibility for part-time staff and faculty (28% vs. 19%).
- Invite part-time staff to participate (20% vs. 9%).
- Outsource services such as paperless enrollments (26% vs. 18%) and loan approval (35% vs. 24%).
As a result, institutions with plan advisers are more likely than others to show average participant contributions of $5,000 or more (56% vs. 37%) and to have more than half of their employee population on track for a successful retirement (41% versus 36%). As a result, most plan sponsors who use an adviser are very satisfied (56%) or somewhat satisfied (35%).
Other research shows that the workforces of colleges and universities are likelier than those in other industries to take concrete steps to save for retirement.
“We’ve seen advisers make important recommendations about plan design that can go a long way in helping more employees join the plan and save for retirement,” Wood says. “Now more higher education institutions are recognizing how advisers are able to help employers make the retirement plan a more effective benefit.”
Transamerica Retirement Solutions provides customized retirement plan solutions for U.S. organizations. “Retirement Plans for Institutions of Higher Education” was based on interviews with retirement plan sponsors at more than 250 higher education institutions.