Plan Sponsors’ and Advisers’ Goals Sometimes Misaligned

Plan sponsors are more concerned with operating their plans and avoiding potential liabilities, while plan advisers are more focused on participant outcomes, a survey suggests.

By Rebecca Moore | January 12, 2017
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There are several disconnects between the perceptions of defined contribution (DC) retirement plan sponsors and advisers, according to surveys by Voya Investment Management.

The study report, "Sponsor Perceptions of Retirement Plan Services: Challenges and Opportunities for Advisors," includes findings from surveys of plan sponsors and advisers that were fielded in March and April of 2016. The surveys suggest that helping plan participants become retirement ready is an important concern for sponsors, but they place less emphasis than advisers on the means to achieve it, e.g., participant education, enrollment, communications and increasing savings rates. Plan sponsors are concerned with operating their plans and avoiding potential liabilities; the study shows if the plan is running smoothly and employees are contributing, sponsors tend to believe participants are preparing effectively for retirement.

By contrast, advisers look at potential outcomes and can see participants generally are not saving enough or investing wisely enough to provide for their retirement income needs. Nearly half of advisers say participants are "poorly prepared" for retirement, whereas only one in six plan sponsors agree. Seven in 10 sponsors say participants are "somewhat prepared" to retire, and four in 10 advisers concur. Yet only one in six sponsors and one in 10 advisers say participants are "well prepared" for retirement.

In other findings, plan sponsors cited the challenges of meeting compliance requirements as a major concern over the next two years. Other significant challenges respondents cited included educating plan participants, increasing participant savings and managing plan expenses.

"Our research found plan sponsors were most concerned with plan fees, the retirement readiness of participants and investment performance," says Michael De Feo, head of Retirement and Investment Only at Voya Investment Management. "While advisers agreed that plan fees were a top priority, they also thought sponsors were more concerned with managing plan complexity and less concerned about participants' retirement readiness."

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