Defined contribution (DC) retirement plan sponsors would like to see broader financial wellness topics addressed in participant education, according to a survey by Voya Investment Management, titled, “Survey of the Retirement Landscape: Challenges and Opportunities for DC-Focused Advisors.”
In line with this, sponsors are less optimistic than advisers about their participants’ retirement readiness.
“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 DeFeo, 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.”
Sponsors are also less tuned in than advisers when it comes to providing help to caregivers of people with special needs. Advisers are more than twice as likely than sponsors to say this is highly important. Sponsors are also less 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,” DeFeo says.
The survey also found that sponsors are looking for expert guidance on a broader array of issues, including alternative plan design, cybersecurity, financial wellness and special needs caregivers. Sponsors are also behind the curve on using risk-assessment tools to gauge the suitability of investments, and need advisers’ help on this.
The use of target-date funds (TDFs) rose significantly among larger plans, with nearly 60% offering them and one-third that do not offer them now would like to offer them in the future.
Sponsors say the biggest challenge they face is increasing plan participation. They are also focused on fees, matches, investments and performance.
Sponsors rank market volatility as their fifth biggest concern, though advisers rank it as 10th. Sponsors said fiduciary/compliance issues are their fourth biggest issue, but advisers thought it was their first. However, sponsors and advisers agree on the importance of educating plan participants.
Voya’s findings are based on an online survey of 307 sponsors and 204 advisers conducted last December. Brookmark Research Practical Perspectives assisted with the development, execution and analysis of the survey.