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  • Writer's pictureSamantha Diggs

What Plan Sponsors Want Advisors To Know

Updated: Mar 11, 2022

Plan Sponsors bear many responsibilities of overseeing an employer-sponsored retirement plan, such as gathering data, communicating with servicing providers, providing information to employees, and much more. These duties can be quite burdensome, especially when combined with the other daily responsibilities required of the Plan Sponsor in his or her role within the company. Plan Sponsors are looking for advisors who will help them navigate these duties, not add to their administrative burdens. Let’s dig into the three primary things Plan Sponsors want from their advisors.

Better Communication and Education

Fidelity’s Plan Sponsor Attitudes Study revealed that the number of Plan Sponsors looking for a change in advisors has more than doubled in the past year, with one in three Plan Sponsors wanting to make a switch. The primary reason given for this is a desire for better employee communication and education. Plan Sponsors want their advisor to serve as a true, seamless extension of their HR Department. The Plan Sponsors are not the experts. They hired the experts. As such, they want quick and easy access to knowledge and guidance from someone who understands the problems at hand and can offer solutions. Additionally, advisors can provide key educational opportunities to the Plan Sponsor and the plan participants. Retirement readiness is a major challenge in many workplaces across America. According to the same study, 86% of Plan Sponsors have concerns that some of their employees are delaying retirement due to a savings shortfall. In these cases, the advisor can lead employee education opportunities to help participants achieve their retirement success.

Supporting The Big Financial Picture

Plan Sponsors want an advisor who knows how to look beyond the retirement plan to recognize the importance of other employee benefits. This is supported by the fact that advisors who prioritize topics such as financial wellness and health savings accounts earn higher satisfaction scores. According to the Fidelity survey, 76% of Plan Sponsors who have had these discussions with their advisors are highly satisfied. In cases where the advisor has not initiated these conversations, Plan Sponsors report only 62% satisfaction. Plan Sponsors who offer HSAs have seen increased enrollment, with more than half of employees enrolled, which is up 15% from 2020. With rising healthcare costs, wellness programs can help employees track and improve their health, which has been very favorably received by employees with 73% of Plan Sponsors reporting a positive impact. This data highlights the importance of advisor guidance on employee benefits outside of retirement plans.

Focus on Plan Goals

One of the primary focuses for Plan Sponsors is having a successful plan. The complications arise when Plan Sponsors do not clearly define a “successful plan” or when the Plan Sponsor’s idea of success differs from the advisor’s idea. The best way to mitigate this disconnect is to create objectives when establishing the retirement plan. It is equally important for the advisor to offer guidance on what elements to emphasize. Participation rates and ample contributions are vital to the success of a retirement plan, yet many Plan Sponsors are unaware of the importance of these factors. Similarly, most Plan Sponsors need recommendations on investment management depending on what goals they are trying to accomplish and how legislation impacts those investments. Plan Sponsors also want help minimizing costs and remaining informed of regulatory changes and how to implement them. The success of this give-and-take is highly dependent on strong communication and education, which is why that is another priority for Plan Sponsors. It is imperative that advisors take an active role in emphasizing plan goals and offering guidance to Sponsors on improving their outcomes.

With one in three Plan Sponsors actively looking to change advisors, it is crucial that financial advisors understand what is important to their clients to ensure they are not next on the chopping block. The statistics show clearly that communication, education, and supporting the big picture are high on the Sponsors’ priorities lists. Without matching these priorities, advisors can risk losing their clients to another advisor who provides the guidance they are craving. If you have any questions about this information, we would love to speak with you. Let us know how we can help!

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