Data and Research August 19, 2024

Fidelity Reports 81% Plan Sponsor Satisfaction With Advisers

An annual survey of more than 1,000 employers finds an 81% plan outcome satisfaction rate.

Reported by

Fidelity Investments’ annual survey of plan sponsors found at least an 80% satisfaction rating among plan sponsors when it comes to plan outcomes and adviser services, the country’s largest recordkeeper revealed Monday.

Of more than 1,100 plan employers who took the survey, 80% reported satisfaction with plans achieving their goals, a 6% jump from 2023 and a record high for the 15-year-old study.

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

In addition, of plan sponsors using a 401(k) adviser, 81% reported they are highly satisfied, a jump from a 76% satisfaction rating in 2023 and another high for the survey.

In its announcement of the findings, Fidelity was quick to link the satisfaction to the role of plan advisers not just for plan design and implementation, but in other areas related to retirement saving and participant outcomes as well.

“We’re observing a clear relationship between the combined value of specialized expertise and plan satisfaction, with the catalyst being advisers evolving and engaging beyond the retirement plan,” says Dalton Gustafson, head of the intermediary investment client group at Fidelity Institutional. “Plan sponsors are only expecting more from their advisors, and we certainly don’t see that trend slowing.”

Gustafson also notes that sponsors are meeting with prospective advisers to get a sense of services they offer beyond 401(k) plan advisement, showing the need for advisers to be well-versed in other areas of employee savings and financial wellness.

Plan advisers have been tasked with offering more services over the years, particularly when it comes to participant education and engagement offerings that range from financial wellness programs to being able to connect to individual wealth management services.

Fidelity’s findings seem to reiterate that shift among plan sponsors, with 81% of plan sponsors responding that advisers should be “allowed to work with employees outside their respective plan to support their broader financial planning needs.” Fewer than half of sponsors said it was “very important” for advisers to provide guidance on health savings accounts, still a 21% jump from 2023.

Reality Bites

Meanwhile, more plan sponsors (82%) feel optimistic that the retirement plan benefits they are offering employees will help them achieve success in retirement as compared with 2023, when 72% expressed that optimism.

Despite the optimism, reality may be a bit less rosy: When asked if employees were retiring on schedule—67 years old, per the study’s definition—only half said people were on track; the other 23% of sponsors reported employees are retiring later than expected. Of that group, 70% said the delays are primarily due to insufficient retirement savings.

“Advisers can serve as a bridge to address this gap, helping plan sponsors—and in turn, employees—be better prepared for life in retirement,” Gustafson says.

Fidelity highlighted in the report areas in which advisers seem to add value, including:

  • Advised plans are more likely to establish a defined retirement income replacement goal (82% compared to 66% for non-advised plans);
  • 83% of plan sponsors express satisfaction with advisers who actively promote retirement plans to employees;
  • 82% of advised plans feature automatic enrollment, compared with 68% of non-advised plans;
  • 31% of advised plans intend to increase their matching contribution, while only 25% of non-advised plans plan to do so; and
  • 28% of advised plans will introduce automatic enrollment, as compared with 21% among non-advised plans.

Investment Menu Findings

Fidelity also reported activity in the more traditional area of investment menu advisement. In the past 12 months, an average of nine out of 10 plan sponsors reported making changes to their investment menus.

When it comes to target-date funds, the most popular qualified investment default alternative in DC plans, sponsors were just slightly in favor of prioritizing performance (almost 60%) ahead of lower fees (41%), according to Fidelity.

Meanwhile, 32% of plan sponsors added collective investment trusts to their investment menus in the past year as a potentially lower-cost investment vehicle when compared to mutual funds; another 32% noted that they have plans to increase the number of CITs they make available in the year ahead.

The Fidelity Plan Sponsor Attitudes Study was an online survey conducted in January by polling 1,174 plan sponsors, each working with at least 25 participants and at least $3 million in plan assets; Fidelity Investments was not identified as the survey sponsor.

Administration August 19, 2024

IRS Forms Public-Private Committee to Combat Tax Fraud

The new coalition, an offshoot of the IRS’s Security Summit group, will work to reduce tax scams during the 2025 filing period.

Reported by

The IRS announced Friday a new coalition to combat tax scams and address what has already been “millions in revenue loss and risk to taxpayers.”

The Coalition Against Scam and Scheme Threats, or CASST, was conceived by IRS Commissioner Danny Werfel and includes federal and state tax agencies along with 60 different private sector organizations, including software and financial companies and national tax professional associations.

Through CASST, the groups plan to “work to expand outreach and education about emerging scams, develop new approaches to identify potentially fraudulent returns at the point of filing and create infrastructure improvements to protect taxpayers as well as federal, state and industry tax systems.” 

Werfel noted in the announcement a need for the group amid a “rising tide of scams and schemes that try to exploit taxpayers and find gaps in government and industry defenses.”

Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.

The collaboration between the groups is intended to include faster sharing of information, quick responses to threats and improved communication with the public.

“Our goal is to have a mass effect on this expanding problem that’s spread on social media and through bad actors,” he said.

According to the announcement, the coalition is an “outgrowth” of the IRS’s Security Summit, which was founded in 2015 and every year reports a “dirty dozen” list of tax scams. The list has, in some years, included abuse of 401(k) and IRA reporting.

Among those who have signed up from the private sector include the Council for Electronic Revenue Communication Advancement, the National Association of Computerized Tax Processors and the American Coalition for Taxpayer Rights.

The IRS noted that, during past tax seasons, there has been an increase in scams focused in particular on the Fuel Tax Credit, household employment taxes and the Sick and Family Leave Credit.

“The IRS has seen hundreds of thousands of dubious claims come in where it appears taxpayers are claiming credits for which they are not eligible, leading to refunds being delayed and the need for taxpayers to show they have legitimate documentation to support these claims,” the regulator wrote. 

The announcement comes one week after the U.S. Department of Justice’s Office of the Inspector General sent a warning to employers that hybrid scams, in which scammers impersonate Social Security Administration employees, are on the rise.

«