Plan Sponsor Activity Hits New Highs in 2022

Plan sponsors are actively adjusting their retirement plans, according to Fidelity’s 2022 Plan Sponsor Attitudes Study.

The study found that 88% of the 401(k) plan sponsors surveyed anticipate making changes to their retirement plan design, and 93% intend to make changes to their investment lineup. All told, the share of plan sponsors planning investment lineup changes in 2022 increased in 14 of the 16 investment menu categories.

Business opportunities are also reaching all-time highs among retirement plan advisers and recordkeepers, as 47% of plan sponsors are considering a new adviser, compared with 34% in 2021, and 48% are considering a change of recordkeeper, the survey found. 

“Plan sponsors are continuously seeking more expertise from their plan advisers year-over-year to help them in a more diversified capacity and are not afraid to look elsewhere if a competing adviser offers a better experience,” Liz Pathe, head of defined contribution investment only sales at Fidelity Institutional, said in a release. “With such strong activity this year, it increases the expectations and pressures surrounding this space.”

Despite the considerable share of plan sponsors considering a new adviser, plan sponsor satisfaction with advisers has reached the highest level in five years, at 76%.

The most frequently cited reasons for changing advisers, according to Fidelity, are the need for better employee communications and education; that another adviser offered a superior investment lineup; and the need for an adviser who is more effective in dealing with servicing issues with the recordkeeper.

The survey found that plan sponsors want from their retirement plan advisers expertise in several areas—most prominently, at 51%, proactive suggestions for bettering plan performance.

Regarding employees’ retirement readiness, the survey found that 70% of plan sponsors believe that workers are saving enough for retirement, with 64% citing the company-provided automatic enrollment deferral rate and/or company match as a sufficient retirement savings rate, an increase from 46% in 2018.

The research also shows that several financial priorities are competing with employees’ retirement saving, according to plan sponsors. The survey found that 50% of respondents said current living expenses are an impediment to participants’ saving for retirement, while 40% cited a lack of discipline among participants in saving for future needs and 37% blamed high health care costs.

The top plan-design change plan sponsors reported expecting to make this year, at 27%, is an increase in their matching contribution, while 34% reported that their plans made that change in the past two years.   

The 2022 Plan Sponsor Attitudes Study was conducted online in March, and surveyed 1,285 401(k) plan sponsors.