Advisors Key to Success for 401(k) Plan Sponsors
Recent findings by Fidelity Investments underscore the growing importance of financial advisors in managing 401(k) plans, revealing a significant trend towards reliance on professional guidance among plan sponsors.
Only 6% of plans do not interact with an advisor or consultant, indicating that “plan sponsors are relying on advisor guidance more than ever,” according to an analysis by Fidelity Investments of 1,351 plans with at least 25 participants and at least $3 million in plan assets.
Additionally, 22% of plan sponsors are actively seeking a new advisor, while 35% are searching for benchmarking or “due to external factors.”
Among plan sponsors who are actively looking, 38% want a consultant who can provide more complete services, 36% want someone who can deal with servicing difficulties more effectively, and 34% want an advisor who can improve employee communications and education.
Fidelity views this as an opportunity for advisors to “improve employee outcomes as well as provide administrative support and objectivity when making plan recommendations.”
In fact, 44% of plan sponsors consider improved participant outcomes to be the most important feature of their plan advisor’s services. Furthermore, 43% appreciate time spent on plan and administrative support, and 41% rely on advisors’ objectivity when making plan decisions.
Liz Pathe, head of defined contribution investment only sales at Fidelity Institutional, believes that advisors, in particular, would profit from the shifting benefits and plan sponsors’ desire to provide their members with a more holistic experience that may be tailored by an advisor.
