December 14, 2023
Retirement Plan Advisor Trends™ report by Escalent outlines opportunities for more conversations with plan participants and plan sponsors
A new Cogent Syndicated report from Escalent demonstrates retirement plan advisors value the SECURE 2.0 Act, recognizing its potential to enhance retirement savings momentum. Upon initial reflection, more than one-quarter of defined contribution (DC) advisors consider the age increase for required minimum distributions (RMD) to be the most exciting component of the program, while others emphasize the benefits of catch-up provisions, auto-enrollment, and various employer and participant incentives.
When polled on specific SECURE 2.0 provisions, more than half of DC advisors are already recommending or “extremely likely” to recommend Roth account catch-up contributions and employer matching. In addition, automatic rollovers, 529 college savings account rollovers, expanded penalty-free withdrawals and in-plan emergency savings accounts also net strong traction.
These are among the key findings of Escalent’s 2023 Retirement Plan Advisor Trends™ report, which provides insights into the attitudes and preferences of the key players in DC plan distribution. The report is designed to help retirement plan providers and DC investment managers maximize market share by better understanding financial advisors who sell and support workplace retirement plans.
“Plan advisors are quick to tout the plan design changes of SECURE 2.0 that will propel retirement savings to new levels, including the mandatory automatic enrollment and escalation provisions that will be a great advantage for younger cohorts and RMD age delays that will benefit older cohorts,” said Sonia Davis, lead report author and senior product director at Escalent. “That said, there are important caveats that warrant greater discussion. Our DC participant research, for example, reveals at least four in ten Gen Zers and millennials are interested in expanded penalty-free withdrawals. Plan advisors aren’t wild about withdrawals, as they want to keep assets in the plan but realize it’s worthy of consideration as it alleviates a potential savings barrier for certain populations.”
DC plan sponsors, meanwhile, welcome additional SECURE 2.0 guidance and want to understand the implications and opportunities for their respective organizations. According to Cogent Syndicated’s latest plan sponsor findings, more than four in ten plan sponsors underscore the need for timely, informational updates on SECURE 2.0, followed more distantly by accurate and easy-to-understand information, proactive recommendations, specific timelines and next steps, and strong communication, responsiveness and accessibility from the advisors and firms they are working with.
“The types of support needed varies based on plan size, employee demographics, internal staffing levels and investment expertise, but SECURE 2.0 offers plan advisors a great opportunity to build stronger relationships with plan sponsor clients and provide more value-add services,” added Davis.
About Retirement Plan Advisor Trends
Cogent Syndicated, a division of Escalent, conducted an online survey of a representative cross section of 503 plan advisors from September 8 to September 14, 2023. Survey participants were required to have an active book of business of at least $5 million and be actively managing DC plans. Strict quotas were set during the data collection period, and post-fielding statistical weighting (where necessary) was applied. The data have a margin of error of ±4.37% at the 95% confidence level. Escalent will supply the exact wording of any survey question upon request.
Click below for more information about the full report.
