Sponsors’ Satisfaction With Advisers Remains Relatively High

Fidelity Investments has released its 11th annual Plan Sponsor Attitudes Survey. As in years prior, the top concern among the 1,500 sponsors who were surveyed is whether their plan is effectively preparing their employees to retire in a sound financially state.

In late March, Fidelity also surveyed nearly 1,000 plan sponsors that use its recordkeeping services, and their top concern was employee financial wellbeing.

Fidelity reports that in the past two years, 74% of sponsors made changes to their investment menu, and 82% made changes to their plan design. The top investment menu changes were to increase the number of investment options (28%), replace an underperforming fund (23%) and add a target-date fund (TDF) (23%).

Among those making plan design changes, the top one was adding a company match, followed by increasing the match, changing the match formula and adding a Roth contribution option.

This year’s study also reveals that those plan sponsors working with an adviser made plan design changes at a higher rate than those not working with an adviser, including increasing the automatic enrollment deferral rate (7% higher), adding a Roth contribution option (6% higher) and adding automatic escalation (4% higher).

Overall, 92% of sponsors work with advisers, yet only 70% are “very satisfied” with their relationships.

“While supporting their employees’ retirement readiness has always been a top priority for plan sponsors, the current market crisis has accelerated its importance,” says Liz Pathe, head of defined contribution investment only (DCIO) sales for Fidelity Institutional. “Plan sponsors are looking for guidance and reassurance during this difficult time, and we continue to see plan advisers playing an important role in helping companies identify ways to improve their retirement plans and help their employees strengthen their financial well-being.”

With this fact in mind, Pathe says, Fidelity decided to look at sponsors’ actions following the financial crisis of 2008. By 2010, 35% of sponsors who decided to work with a plan adviser said the top reason was because they needed help with plan investments, especially given the market situation. This year, the top reason for working with an adviser, cited by 29%, was because of the increasingly complicated process of managing a retirement plan.

Asked how their advisers underscore their value, 56% of sponsors this year say it is the performance of plan investments. Fifty-three percent of sponsors cite investment menu changes that were driven by a desire for better performance.

“In our conversations with plan sponsors and advisers, investment performance is now top-of-mind, given the potential for continued market volatility,” Pathe says. “Plan advisers can play a more active role by proactively reviewing plans’ investment menus with sponsors and working to address their concerns.”

Other findings show 57% of sponsors offer financial wellness programs to employees. Among those with an adviser, 59% offer a financial wellness program, compared to 38% of sponsors without an adviser. Sixty-one percent of those with a financial wellness program say it has had a strong positive impact on employees.

Fifty-six percent of sponsors have a high deductible health care plan, and of those that do, 86% offer a health savings account (HSA). However, it appears that not too many workers understand the value of an HSA, as only 40% enroll.