A new Cogent Syndicated report from Escalent shows underperformance of plan investment options has heightened the anxiety level of defined contribution (DC) plan sponsors. Top concerns include employees not saving enough for retirement, fiduciary issues and potential lawsuits. But these looming challenges create an opportunity for plan providers to offer support, stepping in to help with guidance on compliance, shifting regulations and employee engagement.
Those are the latest findings of the Retirement Planscape® report, which uncovers the most critical trends in the plan sponsor market and pinpoints strengths and weaknesses in brand, loyalty and key plan sponsor experience metrics.
“Creating a retirement plan that is attractive to employees is even more difficult in the current volatile economic and talent environment,” said Sonia Davis, senior product director at Escalent. “In order to combat participant fears, our research supports that plan sponsors need to encourage employees to keep a long game strategy, avoid drastic withdrawals that will hinder future retirement readiness and think beyond saving by seeking help with their decumulation phase.”
Becoming increasingly pessimistic about the US economy due to the Ukraine war and market volatility, nearly four in ten (37%) plan sponsors expect domestic marketplace conditions to worsen, up from 20% in 2021. Concern about underperformance of plan investment options continues to grow with 57% of plan sponsors concerned in 2022, increasing by 6% since 2021.
“For plan providers, understanding the most pressing issues their customers face and demonstrating capabilities that provide solutions will strengthen client loyalty and pave the path to new business growth,” added Davis.
Cogent Syndicated, a division of Escalent, conducted an online survey of a representative cross section of 1,267 401(k) plan sponsors from February 11 to March 8, 2022. Survey participants were required to have shared or sole responsibility for plan design, administration or selection and evaluation of plan providers, or for evaluating and/or selecting investment managers/investment options for 401(k) plans. In determining the sampling frame for this study, Cogent relied upon recent Form 5500 filings as maintained by ALM’s Judy Diamond Associates. To ensure the population for this research is representative of the universe of 401(k) plan sponsors, quotas were set during the data collection phase around key firmographic variables including total plan assets, number of plan participants, industry and geography. Minimal weighting was applied to adjust for purposeful deviations from the actual marketplace distribution. The data have a margin of error of ±2.75% at the 95% confidence level. Escalent will supply the exact wording of any survey question upon request.
Click below to learn more about the full report.