Many employers will be going back to the basics in 2025 when it comes to retirement plan administration and management, according to one of the largest retirement, wealth and insurance aggregators.

“Compliance and performing due diligence aren’t exciting topics, but adopting or maintaining best practices in both areas will be key to avoid litigation, regulatory action and cybercrime in 2025, helping ensure a retirement plan’s long-term future,” Hub International Ltd. wrote in its “2025 Retirement & Private Wealth Outlook.”

The focus on fiduciary diligence comes as plan sponsors are not only focused on current employees, but also managing a trend of former employees staying in a plan after they leave for another firm or retire.

Whereas in the past, an employer would seek to get participants out of a plan, advancements in plan design, digital communication with participants and cost consciousness have all driven employers’ comfort with long-term participants, says Jim O’Shaughnessy, president of retirement and private wealth at Hub.

“Things have changed so much over the last 15 years,” O’Shaughnessy says. “It’s not as much as an administrative burden as it once was [to keep people in plan].”

Having a larger plan can also result, he notes, in cost savings, particularly as collective investment trusts, which offer lower rates as plan size goes up, have become such a popular defined contribution investing vehicle. But more broadly, there is a culture of offering the benefits of a plan to participants as long as it is useful to them.

“In their hearts, most employers want to help their employees, and if their plan gives people an opportunity to get access to institutional services, versus retail price services, they seem much more open and willing—and even at times very anxious—to help them stay in that ecosystem,” O’Shaughnessy says.

Financial Wellness Programs

Keeping more participants in plans will end up driving more trends in 2025, according to O’Shaughnessy, including financial well-being programs becoming more “embedded” in retirement plans.

According to Hub, by 2026, almost half of employers will offer a financial planning program for employees, one that includes things such as housing guidance and credit improvement programs. O’Shaughnessy notes that such programs are intended to both reduce stress and anxiety for current employees and to guide those near or in retirement. While plan sponsors might not pay directly for that guidance, they want former employees to have access to low-cost options.

“It’s all interconnected in different ways,” O’Shaughnessy says. “But the overall trend is toward more personalization and more services offered. … It’s an exciting time from that perspective.”

Offering numerous services, however, comes with fiduciary and administrative risks. Which points back to the compliance focus for many plan sponsors. According to research cited by Hub from consultancy Callan in April 2024, 74% of defined contribution plans are reviewing plan fees and reviewing, updating or implementing an investment policy statement.

Making Everything ‘Better’

Another way firms are expected to try to lower risk is a strategy of offering both active and passive investment options in the plan in what is called “active/passive mirroring,” according to Hub. In this scenario, all the core asset classes in a plan are available in both active and passive versions, so plans cannot be accused of either missing out on the best-performing strategies or not offering the lowest-cost options.

O’Shaughnessy says that, in the past, advisers were more focused on shrinking the number of options in an investment menu to make them more manageable. Now, things like active/passive mirroring can be used without sacrificing simplicity.

“It’s the best of all worlds now in some ways, because you can offer the best of both active and passive while at the best price and scale,” he says.

Meanwhile, new offerings and technology are creating ways for plans to offer more personalization and access to different types of investments, depending on participant need, O’Shaughnessy says.

He points to adviser-managed accounts as an example of that potential. The evolution of that more personalized investment option to be scaled across multiple recordkeepers has made it a more attractive option, particularly when available to advisers through an advisory with the scale to staff a large investment management team.

“We very much want to utilize everything that the industry has available to create a more personalized experience: better engagement, better long-term results,” O’Shaughnessy says. “AMAs are only going to grow because of the opportunity to personalize.”