BOSTON – Fidelity today announced the results of its 5th annual Plan Sponsor Attitudes survey, which found, for the first time in the history of the survey, that plan sponsors are most focused on driving better retirement outcomes for plan participants: "Preparing employees for retirement" was the No. 1 goal for plan sponsors. The study surveyed sponsors of plans ranging in size from 25 to 10,000 participants that use a wide variety of recordkeepers.
"We’re seeing that the conversation between plan sponsors and advisors is starting to change," said Jordan Burgess, senior vice president, head of defined contribution investment only (DCIO) sales at Fidelity Financial Advisor Solutions. "While fiduciary responsibilities will always be top of mind, their needs are becoming more complex as all parties recognize the difficulties their employees are facing in saving for retirement. This may require some advisors to shift their mindset – in addition to knowing their fees, funds and fiduciary responsibilities, they have to make sure they’re focused on retirement outcomes for employees."
Fidelity's survey also found that plan sponsors reported higher levels of satisfaction with their advisors, but they have higher expectations as well: almost half of those surveyed said the need for more retirement plan expertise was the primary reason behind a switch in advisors. In addition, plan sponsors are approached for plan business five times a year, on average, so it’s important for advisors to know what plan sponsors want out of the relationship.
Three Key Takeaways for Advisors
This year's survey was the first time Fidelity looked at what advisors can do to improve satisfaction among plan sponsors and uncovered some actions advisors can take to retain their business:
- Help plan sponsors measure progress toward retirement goals.
Nearly 70 percent of the plan sponsors surveyed are thinking about making design changes to their plans – almost twice as many in 2012. One reason may be their increased focus on retirement preparedness. Advisors can help plan sponsors set outcome goals, including targeted income replacement rates, and may also want to recommend that plan sponsors use auto-enrollment and automatic annual increase programs to help improve overall plan participation and savings rates.
- Take a holistic approach to investments.
Investment expertise remains important, with 67 percent of sponsors making investment menu changes in the past two years, up from 35 percent in 2012. However, the types of support plan sponsors are looking for go beyond creating investment menus. Advisors can meet with plan sponsors on a regular basis to discuss the plan’s investment components, and demonstrate their investment knowledge by optimizing the plan lineup, discussing QDIA (Qualified Default Investment Alternatives) decisions and determining the appropriate number of investment options for their specific plan.
- Provide regular progress reports.
Fewer than 20 percent of plan sponsors surveyed said that their advisor was consistently communicating the activities they perform for the plan. Advisors can demonstrate their value by reporting the progress made on plan performance measures and the activity performed on behalf of the plan. Those regular updates shouldn’t be overlooked: 100 percent of plan sponsors said they were highly or very satisfied with their advisor if they had improved plan metrics.
Additional information on the survey as well as resources and tools for defined contribution professionals, including fund analytics and details on investment options, are available at http://advisor.fidelity.com/attitudes.
Fidelity Financial Advisor Solutions, Defined Contribution Investment Only (DCIO)
Fidelity Financial Advisor Solutions is a leading provider of investment management and retirement services to defined contribution professionals nationwide, supporting advisors, recordkeepers, TPAs and plan sponsors in a collective effort to help participants achieve better retirement outcomes. As a retirement leader, Fidelity has deep knowledge of plans and participant behaviors. The firm combines this knowledge with a legacy of asset management—61 percent of Fidelity's $1.9 trillion in managed assets are retirement assets as of September 2014—to become a key manager in the investment-only arena with over $72 billion in total DCIO assets.
Plan Sponsor Attitudes Survey: Methodology
The 2014 Plan Sponsor Attitudes Survey was conducted in collaboration with E-rewards, an independent market research company, via an online survey in March 2014 of 897 plan sponsors on behalf of Fidelity. Respondents were identified as the primary person responsible for managing their organization’s 401(k) plan (ranging in size between 25 and 10,000 participants), and the survey focused on those plan sponsors (809 or approximately 90%) using the services of a financial advisor or plan consultant. Fidelity Investments was not identified as the survey sponsor. The experiences of the plan sponsors who responded to the March 2014 survey may not be representative of those other plan sponsors who use the services of an advisor. Previous Fidelity surveys were conducted in 2008, 2010, 2012, and 2013.
About Fidelity Investments
Fidelity's goal is to make financial expertise broadly accessible and effective in helping people live the lives they want. With assets under administration of $5.0 trillion, including managed assets of $2.0 trillion as of October 31, 2014, we focus on meeting the unique needs of a diverse set of customers: helping 23 million people investing their own life savings, 20,000 businesses to manage their employee benefit programs, as well as providing 10,000 advisors and brokers with technology solutions to invest their own clients' money. Privately held for nearly 70 years, Fidelity employs 41,000 associates who are focused on the long-term success of our customers. For more information about Fidelity Investments, visit www.fidelity.com.