Many plan sponsors don’t know exactly what their role as a fiduciary is, creating a major opportunity for plan advisors to step in and provide guidance, according to a new survey from AllianceBernstein. The study also highlighted remarkable growth in auto-enrollment features over the past few years.
Fiduciary Responsibilities Unclear
According to the survey, just 58% of plan sponsors think of themselves as fiduciaries; 37% of respondents mistakenly said they weren’t fiduciaries, up from 30% just three years earlier. At the same time, 79% of plan sponsors said it is important or very important to “have a financial advisor/consultant or other service provider act as a fiduciary,” while 82% of sponsors said fiduciary matters are important.
There is room for advisors to fill a gap left by insufficient fiduciary training — 36% of plan sponsors currently don’t provide that kind of service to their plans’ fiduciaries, and 63% of respondents said that having a review of their fiduciary responsibilities is important to them.
“It might help if fiduciary training were made mandatory for plan sponsors — or at least more easily accessible,” say the authors of the paper that accompanied the survey.
Participant Education and Participation
More than two-thirds (67%) of the plan sponsors in the survey expressed worry that their employees aren’t properly educated on how much money they need to save for retirement, and a strong majority of plans expressed lacking confidence in their ability to effectively increase participation and improve their workers’ understanding of their range of investment options.
The study noted a marked increase in plans with auto-enrollment features, reporting that, overall, 59% of employers now offer automatic enrollment in their plans, up from 37% just seven years ago. Larger plans are more likely to offer automatic enrollment (with about two-thirds of all plans with over $50 million in assets offering an auto-enroll option), and those that do have automatic enrollment have much larger participation rates (66% of auto-enroll firms have over 70% of employees participating in plans, as opposed to just 49% of firms without automatic enrollment).
Other Findings
More than 60% of of sponsors said they value the importance of fee transparency, ongoing reviews of investment options, and plan compliance and design updates. Also, with more than 80% of plan sponsors saying they want to add a target date fund in the next three years, the report says advisors who can give sound advice about guaranteed lifetime income TDFs will find a receptive audience.
The information in the report was compiled through a web-based survey of over 1,000 DC plan sponsors, with nearly equal representation from plan sponsors of all sizes, from under $1 million to more than $500 million in assets. To read the full study, including its findings on the importance of target date funds, click here.
