According to the “2012 Perspectives Study: Retirement Plan Consultants” by Oculus Partners, plan sponsors are slowly warming up to the idea of addressing retirement income readiness for their participants; some are already taking real steps to initiate programs that address this issue.
However, plan sponsors have not yet developed a philosophy about retaining participants in the plan post-retirement. Consultants said HR and Finance departments have differing views about this issue, and other than fee leverage, providers have not made a compelling argument either way.Plan sponsors have not yet developed an interest in getting external qualified assets into the plan and keeping assets in the plan post-retirement. Oculus said this may reflect both sponsor and consultant views as to the benefits of these actions, as well as the inherent conflict many providers have between their IRA businesses and their plan businesses.
The survey also found that providers still have a task ahead to convince plan sponsors that more advanced automatic programs are both philosophically sound and not cost prohibitive.
The number of investment vehicles and the types of investment service platforms continue to expand, but although the popularity of exchange-traded funds (ETFs) is growing in the retail wealth management market, there is still little interest among retirement plan advisers.
Nearly 95% of consultants indicated that target-date funds were the qualified default investment alternative (QDIA) used by clients and, as such, have a prominent role in investment menu construction. Beyond that, responses indicated that simplified menus that are broad enough to cover most asset classes were also critical.
Winning recordkeeping mandates does not appear to automatically drive investment management opportunities, according to the survey responses. Each must be won on its own merits.The study is available for purchase. More information is at www.oculuspartners.com.