Plan Sponsors Seeking Advisers with SECURE 2.0 Know-how

Plan sponsors may be seeking to switch retirement plan advisers for a fairly straightforward reason: help navigating changes from SECURE 2.0, according to UBS’s recent Workplace Voice report.

In a survey of 1,200 senior level executives overseeing their firms’ retirement plans, around 80% expressed concern about needing additional resources to manage their retirement plans because of SECURE 2.0, with more than half reporting that they are highly likely to start working with a new financial adviser or retirement plan consultant within the next year. Large plan sponsors are the most likely to be evaluating their adviser options, according to UBS.

Currently, 63% of plan sponsors said they are using their financial adviser for information about SECURE 2.0, but 53% said they are also relying on online resources as a main source of information.

In addition to looking for advisers or consultants who are more knowledgeable about SECURE 2.0, more than half (53%) of plan sponsors also said they are looking for better quality of service and 48% said they are seeking more comprehensive financial education for their employees in a new adviser or consultant.

Mike Griffin, head of workplace wealth solutions sales and relationship management at UBS, says the desire for more financial education assistance from advisers is a “huge change” from ten years ago when plan sponsors were not interested in having their advisers or consultants communicate with their participants.

“The tide has changed because of inflation and SECURE 2.0,” Griffin says. “[Plan sponsors] are saying they need help attracting and retaining employees … and they need service that goes all the way down to the employee, not just at the plan level… Almost half of [plan sponsors] are looking to change [advisers] because their current adviser does not help their employees with individual financial planning or individual wealth management.”

Plans More Likely

UBS also found that SECURE 2.0 had a positive impact on employers currently not offering retirement savings plans to their employees, as more than half (56%) said they are now more likely to offer this benefit.

Helping employees save more efficiently for retirement, attracting and retaining talent and contributing more to their own retirement were some of the reasons why plan sponsors now feel motivated to offer a plan. Around 31% of plan sponsors also said they want to offer a plan to take advantage of the tax breaks and deductions provided by SECURE 2.0.

UBS noted in its report that if employers do not currently offer a plan, they may soon be required to depending on what state they are in, as many states are now mandating that private employers offer some sort of retirement savings account. Employers can either enroll their employees into a state-sponsored plan or sponsor their own plan through the private market.

Good Reception, Education Needed

In general, SECURE 2.0 has been well-received by most plan sponsors, as more than eight in 10 expressed a positive view on the impact it will have on employees’ ability to save for retirement, especially among those that manage larger plans.

However, less than half of employers are “very familiar” with some of the provisions in SECURE 2.0. Specifically, many are not clear about the tax credits available to cover administrative costs and the distinction between which provisions are mandatory versus optional, according to the report.

“Not enough small employers know about the tax credits,” says Mike Griffin, head of workplace wealth solutions sales and relationship management at UBS. “And that’s exactly why the tax credits were put in place—to get more people to save and [for small plans] to implement them.”

In addition, less than half (48%) of plan sponsors said they were highly familiar with the timeline for when each provision will go into effect. SECURE 2.0 contains 90 provisions, and as a result, Griffin says many plan sponsors are overwhelmed by the “pure magnitude” of the legislation.

The Workplace Voice Survey included responses from 1,200 senior level executives and business owners responsible for overseeing their organization’s employer-sponsored retirement plans. Among this sample included 300 businesses owners who do not currently offer a retirement plan.

PLANADVISER worked with Groom Law Group, Chartered, on a list of SECURE 2.0 provisions advisers need to know in 2024.