15th Fidelity® Plan Sponsor Attitudes Study
Finds:
- 80% of Plan Sponsors are Satisfied with Plans Achieving Their
Goals, an All-Time High
- Advisors play a crucial role in driving actionable plan design
changes to enhance employees’ retirement prospects: 82% of advised
plans feature automatic enrollment and advised plans are more
likely to increase their matching contribution
Fidelity Investments® announced today the findings from its 15th
annual Plan Sponsor Attitudes Study, highlighting how evolving
advisor expertise is meeting sponsors’ expanding needs and, in
turn, driving positive plan results and record satisfaction amongst
plan sponsors.
Fidelity’s study, which surveyed over 1,100 employers offering
retirement plans using a wide variety of recordkeepers, found that
not only do 90% of sponsors use an advisor for plan sponsor
consultation and management, but 80% are satisfied with the plan
achieving its goals, up from 74% in 2023. In addition, 31% of
advised plans are more often “very satisfied” with the plan
achieving its goals (versus 18% of non-advised), and 78% of
sponsors said their plan advisor provides good value.
Advisors are providing this value by engaging beyond the 401(k),
driving top-line advisor satisfaction from plan sponsors and better
positioning employees for retirement:
- 81% of sponsors are highly satisfied with their advisor, up
from 63% in 2019 and 76% in 2023.
- Nearly 50% of surveyed sponsors report it being “very
important” advisors provide guidance on HSAs – a 21% jump from 25%
in 2023.
- 81% of plan sponsors said plan advisors should be allowed to
work with employees outside their respective plan to support their
broader financial planning needs.
“We’re observing a clear relationship between the combined value
of specialized expertise and plan satisfaction, with the catalyst
being advisors evolving and engaging beyond the retirement plan,”
said Dalton Gustafson, head of 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.
In fact, our study showed that sponsors are meeting with
prospective advisors to merely remain informed on other services
being offered, signaling the need for advisors to not only be
knowledgeable, but understand how each sponsor perceives value and
taking steps to tailor their approach.”
Perspective on Investment Menus
As advisors adjust to meet the evolving needs of plan sponsors,
investment menus have also evolved to enhance retirement planning
for employees. In the past 12 months, nine out of 10 surveyed
sponsors made changes to their menus.
Advisors play an important role in the evaluation and selection
process for target date funds. For fund managers overseeing these
investments, fund manager access and performance are key to plan
sponsors. One out of four sponsors (26%) shared that hearing
directly from the target date investment manager and being able to
ask them questions was an important factor in selecting a target
date manager. Performance (22%) and advisor/consultant
recommendation (19%) were also important. Additionally, plan
sponsors value performance over cost when it comes to target date
funds. Nearly 60% of sponsors indicated a preference for a target
date investment option that is more expensive but has historically
delivered better performance net fees, compared to 41% who prefer
less expensive options with lower performance net fees.
Collective Investment Trusts (CITs) also hold significant value
in investment menus. Thirty-two percent of surveyed sponsors added
this investment vehicle in the past year, and 32% plan to further
increase the number of CITs available on menus this year.
Employee Retirement Readiness
Eighty-two percent of plan sponsors are optimistic their
retirement plan benefits best position employees to successfully
save for retirement—a 10% increase from 2023. Despite the
challenging and unpredictable economic environment, 78% of plan
sponsors consider automatic enrollment and company matches as
effective tools in long-term retirement planning.
However, despite the plan sponsor’s optimistic view, the survey
revealed only 50% of employees are retiring on schedule (defined as
age 67), indicating significant challenges in terms of retirement
readiness. Twenty-three percent of employees retire later than
expected.
According to over 70% of plan sponsors surveyed, these delays
are primarily due to insufficient retirement savings.
“There appears to be a disconnect between the perception and
reality of employee retirement readiness among plan sponsors,”
Gustafson said. “However, advisors can serve as a bridge to address
this gap, helping plan sponsors—and in turn, employees— be better
prepared for life in retirement.”
The survey findings indicate advised plans are more likely to
establish a defined retirement income replacement goal (82%
compared to 66% for non-advised plans). Additionally, 83% of
sponsors express satisfaction with advisors who actively promote
retirement plans to employees.
Plan Design Insights
Plan sponsors continue to evolve their plans alongside their
advisors and/or consultants to ensure they’re setting employees on
a positive path to retirement savings. When asked about plan design
changes made in the past 12 months, sponsors reported increasing
the matching contribution (37%) as the top change.
Even more so, plan sponsors are taking additional steps to
enhance retirement savings. The most notable change was
implementing automatic increases to deferral rates (28%), which saw
a significant increase compared to last year (up 7% from 2023). In
2024, 32% of plan sponsors are planning to adopt automatic deferral
rate increases, representing a 10% jump from the previous year.
Additionally, one out of four sponsors (26%) plans to introduce
emergency savings accounts this year.
Advisors can play a crucial role in driving these actionable
plan design changes to enhance employees’ retirement prospects.
Specifically:
- 82% of advised plans feature automatic enrollment, compared to
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.
- 28% of advised plans will introduce automatic enrollment vs.
21% among non-advised plans.
Fidelity’s Plan Sponsor Attitudes study is an example of how
Fidelity’s interconnected, yet diverse business model gives the
company unique insights into the industry. Additional information
on the survey, as well as resources and tools—including fund
analytics and details on investment options—can be found at
go.fidelity.com/attitudes.
Plan Sponsor Attitudes Study:
Methodology The 2024 Plan Sponsor Attitudes Study was an
online survey of 1,174 plan sponsors on behalf of Fidelity.
Fidelity Investments was not identified as the survey sponsor. The
survey was conducted during the month of January 2024. Respondents
were identified as the primary person responsible for managing
their organization’s 401(k) plan. All plan sponsors confirmed their
plans had at least 25 participants and at least $3 million in plan
assets. Though the survey is broad in scope the experience of the
plan sponsors participating in the survey may not be representative
of all plan sponsors. Previous Fidelity surveys were conducted in
2008, 2010, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020,
2021, 2022, and 2023.
About Fidelity Investments
Fidelity’s mission is to strengthen the financial well-being of our
customers and deliver better outcomes for the clients and
businesses we serve. Fidelity’s strength comes from the scale of
our diversified, market-leading financial services businesses that
serve individuals, families, employers, wealth management firms,
and institutions. With assets under administration of $14.1
trillion, including discretionary assets of $5.5 trillion as of
June 30, 2024, we focus on meeting the unique needs of a broad and
growing customer base. Privately held for 78 years, Fidelity
employs more than 75,000 associates across the United States,
Ireland, and India. For more information about Fidelity
Investments, visit
https://www.fidelity.com/about-fidelity/our-company.
Diversification does not ensure a profit or guarantee against a
loss.
Investing involves risk, including risk of loss.
Information provided in, and presentation of, this document
are for informational and educational purposes only and are not a
recommendation to take any particular action, or any action at all,
nor an offer or solicitation to buy or sell any securities or
services presented. It is not investment advice. Fidelity does not
provide legal or tax advice.
Before making any investment decisions, you should consult with
your own professional advisers and take into account all of the
particular facts and circumstances of your individual situation.
Fidelity and its representatives may have a conflict of interest in
the products or services mentioned in these materials because they
have a financial interest in them, and receive compensation,
directly or indirectly, in connection with the management,
distribution, and/or servicing of these products or services,
including Fidelity funds, certain third-party funds and products,
and certain investment services.
The registered trademarks and service marks appearing herein are
the property of FMR LLC.
Fidelity Investments® provides investment products
through Fidelity Distributors Company LLC; clearing, custody, or
other brokerage services through National Financial Services LLC or
Fidelity Brokerage Services LLC, Members NYSE, SIPC.
1159772.1.0
© 2024 FMR LLC. All rights reserved.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240816205596/en/
Contact for Media Only: Fidelity Media Relations
FidelityMediaRelations@fmr.com John Garretson
john.garretson@fmr.com Follow us on Twitter @FidelityNews
Visit About Fidelity and our online newsroom Subscribe to email
alerts for news from Fidelity