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A growing number of plan sponsors report they are focusing more on helping employees adequately plan and prepare for a secure retirement, a welcome development that can help combat the lack of retirement readiness among 401(k) participants.
This is great news considering:
- Auto-enrollment adoption has stayed flat for several years
- Many plan sponsors are leaving auto-features out of the plan
- The majority of plans (54%) offer only one source of investment advice
Up until now, one-size-fits-all 401(k) retirement plans have been the main strategy. However, it appears that 401(k) plan sponsors are starting to reconsider this approach. This year, Cogent has found evidence of increasing interest among plan sponsors in adding new forms of advice, as more than one-quarter (27%) are likely to start offering access to an advisor, and one in four (25%) is likely to give participants access to one-on-one advice from a third party. Nearly as many (23%) are likely to incorporate online investment models provided by the plan provider. Interest in offering new modes of advice are stronger among the Mid-sized, Large and Mega plan segments, in-line with a general trend in the 401(k) market where larger plan sponsors tend to be the early adopters of new features that ultimately increase in popularity across all plan size segments. Continue reading