The 2016 MassMutual Retirement Plan Review Study finds differences in plan review focus between retirement plan sponsors with an adviser as opposed to sponsors without an adviser.
During plan reviews, sponsors that work with an adviser typically prioritize satisfaction with their plan provider (79%), while sponsors without an adviser prioritize fees (73%). Other major considerations of plan reviews for sponsors that work with an adviser include performance of investments (76%), fees associated with the plan (71%), effectiveness of education and advice (50%), participation rate (45%) and time and effort to administer the plan (43%). For plan sponsors without an adviser, the order of other considerations is as follows: satisfaction with plan provider (71%), performance of investments (59%), participation rate (34%), effectiveness of education and advice (31%) and time and effort to administer the plan (28%).
Unfortunately, on the bottom of the list of priorities during plan reviews for both those that work with an adviser (27%) and those that do not (25%) is whether employees are saving enough. Tom Foster Jr., spokesperson and practice management leader for MassMutual Retirement Services, says, “Participation in the plan is certainly important too. But if every employee participates but each saves only 1% of his or her salary, it’s totally ineffective as no one will ever be prepared to retire.”
MassMutual points out that employees who work past the traditional retirement age band of 65 to 67 may cost employers significantly more for health care, disability and workers compensation insurance as well as salaries.
Many plan sponsors say they want to review their retirement plans more often than they currently do. Nearly three in five (57%) plan sponsors want advisers to help them review their retirement plans semiannually or more often, something that only 44% of sponsors report currently takes place. However, sponsors who rely on advisers typically review their retirement plans more often than sponsors who do not use an adviser.
The 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 ranging from less than $1 million to as much as $75 million.
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