Retirement Plan Advisors Expect Revenue Bump from Secure 2.0 Provisions
Financial advisors who specialize in retirement plans are anticipated to generate additional revenue because of the Secure 2.0 Act’s provisions, which are scheduled to take effect this year, according to a report.
According to a recent survey by Fuse Research Network, cited on the blog of the National Association of Plan Advisors, 59% of financial advisors believe that the provisions of the Secure 2.0 Act, passed in 2022 to promote employee participation in retirement plans and encourage more employers to offer them, will increase revenues by 1% to 10% by the end of this year.
Additionally, 9% of advisors believe the Secure 2.0 Act will increase their revenue by 10% or more by the end of next year, according to the survey cited by NAPA. The survey, which polled advisors managing 10 or more clients with defined contribution plans, suggests that many financial advisors expect the legislation’s provisions to create significant opportunities for growth in their practices.
However, 33% of advisors don’t expect any impact on their revenues due to the Secure 2.0 Act, according to the findings.
Loren Fox, director of research at Fuse, said the findings are encouraging because the legislation “is helping establish small, new retirement plans — where the profit margins tend to be slim for relatively more work.”
“Advisors also indicated that employers are rarely pushing back on DC plans or plan features, so we’re seeing more of a glass-half-full orientation to the law,” Fox added, according to NAPA.
Fuse said 79% of the advisors surveyed are working on implementing auto-enrollment with small defined contribution plans — those with $1 million to $10 million in assets — according to NAPA.
Moreover, 56% of plan advisors are working on implementing auto-enrollment with “micro” plans (those with less than $1 million in assets), and 51% are focusing on “mid-market” plans (those with $10 million to $100 million in assets), according to Fuse. The survey also noted that most plans with more than $100 million in assets already have auto-enrollment in place, typically at 3% to 10% deferral rates.