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What Is The Value Of Your Advisor? – Retirement Plans

September 24, 2020
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Retirement Plan Meeting

By SJS Senior Vice President & Director of Financial Institutions Craig Huntington.

Economic turmoil and seismic shifts in unemployment, consumer income, and savings have led to widespread uncertainty for the household finances of many. In spite of all of the uncertainty, SJS still believes that retirement plans remain a vital tool for American families to take control of their savings for retirement.

What do plan sponsors find important when it comes to structuring and managing retirement plans for their participants? Recently, Fidelity released the results of its 2020 Plan Sponsor Attitude Survey, using information from over 1,500 plan sponsors. SJS would like to highlight a few key takeaways from this survey, and provide details of how we have worked with plan sponsors to address their concerns and accomplish their goals.[1]

Why Offer A Retirement Plan?

From the survey, we learn that employers offer retirement plans for four primary reasons:

  1. Ensure participants save throughout their working years (45% of plan sponsors agreed)

  2. Provide adequate retirement savings to successfully replace participants’ income in retirement (20%)

  3. Retain and recruit top employees (18%)

  4. Remain competitive in marketplace (17%)

 

Retirement Plan Concerns

Additionally from the survey, we learn that plan sponsors are particularly concerned about the following when designing and implementing a retirement plan:

  1. Whether or not the plan is effectively preparing employees financially for retirement (27% of plan sponsors agreed)

  2. Fiduciary responsibilities (18%)

  3. Reducing business costs related to the plan (17%)

  4. Whether or not the plan is helping to attract top talent (13%)

  5. Whether or not the plan is helping to retain top employees (13%)

 

Increasing Participant Savings – Retirement Plan Features

Over SJS’ 20+ years working with retirement plans and plan sponsors, we have learned that various plan features can significantly increase participant savings, including:

Optimal Retirement Plan Features

  1. Setting up auto-enrollment when an employee is eligible to participate in your retirement plan
  2. Increasing the default savings rate for your participants

  3. Choosing investment options with lower expense ratios and more diversification

  4. Improving your plan’s default investment choice (using low-cost well-diversified target-date funds)

  5. Improving your employer matching formula to encourage more employee saving

  6. Adding auto-increase / auto-escalation savings program, so your employees agree ahead of time to save an increasing percentage as their compensation increases

  7. Providing a Roth savings option

  8. Allowing your employees to contribute 100% of compensation up to legal limits

  9. Improving your plan’s vesting rules

  10. Scheduling the plan’s investment advisor to meet with your plan participants annually to educate them and answer questions

  11. Sending emails to remind your participants of their current contribution levels, and demonstrate the potentially positive impacts of higher contributions

  12. Introducing you to and collaborating with reliable, experienced, low-cost recordkeeping and administrator firms

 

Value Of An Advisor

As a plan sponsor, you may work with an investment advisor to aid in determining that your retirement plan investments are appropriate for your employees and to help you stay current with managing plan investments. Large and small employers want to better understand how their retirement plans are working for employees and how they can improve their plans as their business grow and change. As an investment advisor, SJS can work with you as you shoulder these responsibilities and you look to limit your liability and manage your risks.

Working with an investment advisor that is experienced in retirement plans can really help you as a plan sponsor to deliver a positive experience for your participants.

If you would like help in reviewing your retirement plan, please feel free to reach out to us. We are always here to listen and assist.


Important Disclosure Information and Sources:

[1] “2020 Plan Sponsor Attitudes Survey.“ Fidelity Investments & Harris Insights and Analytics, 2020, institutional.fidelity.com.

Advisory services are provided by SJS Investment Services, Inc., a registered investment advisor with the SEC. Registration does not imply a certain level of skill or training. SJS Investment Services does not provide tax advice. Please consult your tax professional for specific advice. This material has been prepared for informational purposes only.

There is no guarantee investment strategies will be successful. Past performance is no guarantee of future results. Diversification neither assures a profit nor guarantees against a loss in a declining market.