401(k) and 403(b) plan sponsors armed with a professional retirement plan adviser are more likely to painlessly administer and achieve fiduciary needs for participants, according to a new study from the Retirement Advisor Council.
As concern over the U.S. retirement industry continues to swirl in 2014, from the introduction of President Barack Obamas myRA program or Sen. Tom Harkins USA Retirement Funds Act, many have pointed to maintaining the current employer-sponsored defined contribution structure for future stability. However, new research finds that this future stability is contingent on plan sponsors having the right assistance at the ready.
The Retirement Advisor Council, which advocates for successful qualified plan and participant retirement outcomes, finds in its study that that retirement plan sponsors who work exclusively with professional retirement plan advisers are more likely to see these successes.
Of the more than 400 private sector plan sponsors surveyed, which contained plan assets between $5 million to $500 million, more than four in five plans said that having an adviser dedicated to retirement plans saw employee contribution rates rise in the last two years.
Also, three quarters of plans sponsors who work with this adviser segment estimate that half or more of their participants are on track to achieve successful retirement. Professional retirement plan advisers are defined as advisers that work primarily or exclusively with retirement plans.
This study demonstrates that plan sponsors who partner with a professional realize better plan benefits, says Grace Basile, assistant director of research at Transamerica Retirement Solutions, which is one of the seven firms that helped to fund the study.
[Retirement plan sponsors] have better participant outcomes, they benefit from the ease to which they can administer their plans, they dont have to dedicate an exorbitant amount of time in running the plan, they take comfort in knowing that fees are reasonable and the plan is in compliance with laws and regulation, Basile notes in a recap offered at Monday press conference.
The use of professional retirement plan advisers is a not a new occurrence. According to the study, which was conducted online between Sept. 11, 2013 and Sept. 24, 2013, approximately 82% retain service of an adviser, 23% partner with an adviser who works exclusively with retirement plans and 38% partner with an adviser who works primarily with retirement plans.
Of the research group, 18% do not use the services of an adviser, Basile highlights. She explains that professional retirement plan advisers can be split up into three segments: advisers who work exclusively with retirement plans, the benefits segment and the investment segment.
Steve LaValley, second vice president of retirement services at MassMutual Financial Group, highlights that this adviser sector is known to live, sleep and breathe retirement plans.
Approximately 60% of the surveyed plan sponsors say the amount of time they spend in administering the plan is reasonable and 53% label their adviser as doing an outstanding job with fiduciary process. To add to this customer service option, LaValley says that professional retirement advisers do a better a job at every single service area measured when compared to conventional advisers.
Professional advisers do make a difference in helping American workers achieve retirement success and are having a positive impact on the overall effectiveness of the U.S. retirement system, LaValley explains.
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