June 15, 2023
To the average person who is steadily allocating 10% of their salary to their 401(k) plan and checking their balance a few times a year, the retirement plan market may look stagnant. But for those in the industry, there are a host of undercurrents in play that have the potential to dramatically alter the landscape in a way no one expects.
For more than a decade, we’ve carefully tracked the evolution of industry leaders—many of whom have consolidated to harness economies of scale and seize a larger footprint of today’s marketplace. As we continue to monitor the ebb and flow of brand differentiation of the leading plan providers, we also highlight the emergence of new digital recordkeepers poised to further disrupt the market especially as they join forces with established players.
Beyond all the brand evolutions, there are nearly 100 new provisions in the SECURE 2.0 Act bringing forth new requirements for automatic enrollment and automatic escalation, minimum plan distributions, income annuities, options for emergency savings and a variety of voluntary measures that have the potential to radically change the industry for the greater good if effectively harnessed.
In this year’s Retirement Planscape study from Cogent Syndicated, we asked plan sponsors to describe what specific actions firms and intermediaries could take to provide a better understanding of SECURE 2.0’s implications and opportunities for their respective organizations. Above all, plan sponsors are seeking timely, informational updates and proactive recommendations with specific timelines. Maintaining strong communication and responsiveness is also key.
Yet, on a cautionary note, plan sponsors are facing more cost pressures than ever, and with the backdrop of ongoing market volatility, increased data breaches and heightened litigation, plan sponsors’ fears are aplenty. Underperformance of plan investments remains the most pervasive fear, with first-ranked mentions increasing from 21% in 2021 and 22% in 2022 to 29% in 2023. Cybersecurity threats—the top fear among $100M+ DC plans last year—have also become more daunting (46% vs. 35% in 2021), and fears of fiduciary issues/potential lawsuits are rapidly accelerating (23% vs. 16% in 2021).
Potential staffing strains are another area of concern we are flagging this year. Large-Mega ($100M+) plans are finding it harder to communicate with plan provider representatives (14%, double the 7% cited in 2022), and Small-Mid ($5M to <$100M) plans are having greater difficulty reaching investment managers during periods of underperformance (18% vs. 11% in 2022). As such, providers must strengthen the basic elements of client service and support before stepping into the role of strategic partner in an effort to expand retirement plan access.
The full Retirement Planscape report tackles these critical industry topics, benchmarks the competitive strengths and weaknesses of the leading 29 DC plan providers and 44 DC investment managers, and tracks the emerging appeal of nine digital recordkeepers. As always, our goal is to help firms identify the best paths to success and claim their unique place within this ever-evolving market.
Click below to learn more about the full report and how it can help your firm. Or, send me a note and we can take a look at how your firm performed among your competitors.
Sonia Davis
Senior Product Director, Cogent Syndicated
Sonia is a senior product director for Cogent Syndicated with more than 12 years of market research experience. She has managed numerous qualitative and quantitative studies in financial services industry research, as well as the hospitality, consumer packaged goods and retail sectors. Prior to Escalent, Sonia served as a community manager for C Space, a public relations specialist for Putnam Investments and as a staff reporter for Community Newspaper Company. Sonia earned an MBA from Boston University School of Management and a bachelor’s degree in communications from Simmons College. She’s a proud finisher of the rainiest Boston Marathon on record (2018), but truly enjoys triathlon training and outdoor adventures with her black lab.
