Retirement plan professionals play a key role in helping plan sponsors maintain the health of the plan. In fact, proprietary research conducted by Chatham Partners on behalf of Capital Group found that 96% of plan sponsors say they turn to a third party for guidance.
And plan sponsors are happy with the job their retirement plan professionals are doing. Of sponsors surveyed by Chatham Partners, 74% said they wouldn’t change any aspects of the support they receive. While this may sound like good news, it may also suggest that plan sponsors don’t fully grasp the value or additional services a financial professional (FP) can offer.
This presents an opportunity. In an increasingly crowded marketplace like the retirement plan business, FPs have the ability to differentiate themselves.
Not surprisingly, plan sponsors cited fund evaluation as the most important value-added service provided by FPs. Still, the Chatham research shows there are additional services that are important to plan sponsors.
Top value-added services
For example, a plan’s goals and objectives can vary for each plan sponsor, so FPs play an important role in helping them identify and prioritize what they are trying to accomplish — and emphasize — with their plan.
By clearly aligning with your client’s objectives for the plan, you can demonstrate to sponsors how you tie all the services you offer back to their goals. This can help clients better understand the value you provide and ensure you are achieving the best results.
Congress currently has several bills in motion, and states across the country have begun considering or already enacted their own state-sponsored retirement program mandates. Employers report a need to stay on top of what’s happening on both the federal and state levels, and to understand how their plans or responsibilities may be affected.
Plan sponsors rely on third parties to provide information on potential legislative and regulatory changes
One plan sponsor noted that “[Our advisor] was hired to track and stay on top of legislative and regulatory changes that affect our organization’s defined contribution retirement plan to keep the plan in compliance.” The majority of plan sponsors (two-thirds) say they rely on outside providers to bring potential legislative and regulatory changes to their attention, and three-quarters say they delegate such updates to their financial professionals.
The study found some of plan sponsors’ top priorities include:
Participant support and education through their FP seems to be particularly important to sponsors of plans with less than $75 million in assets, as it was cited as the most important service their financial professional could provide. Interestingly, participant education was one of the few areas of advisor support where plan sponsors would like to see improvement.
One respondent noted that employee education has mostly been handled by their plan provider, but they would like their financial professional to be more involved and proactively reach out to participants. With this in mind, and if your business model allows, you might want to consider personalizing your participant education outreach efforts, targeted to each client’s participant demographic.
Competing in today’s retirement plan marketplace poses increasing challenges. But given the increasing importance of participant experiences and outcomes, financial professionals who focus on these areas may help drive plan sponsor satisfaction and loyalty.
By uncovering the needs of plan sponsors and their participants and demonstrating the breadth of services you offer, you may be able to set yourself apart. And you don’t need to be a mind reader to know that.
*About the survey: Chatham Partners surveyed 50 defined contribution plan sponsors with decision-making authority for plans with at least $15 million in assets.
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