Fidelity: 22% of Plan Sponsors Actively Searching for New Adviser

Fidelity Investments released its 14th Plan Sponsor Attitudes Study, revealing an industry of transition, opportunity, and resilience. 2023 is shaping to be a year of disruption and innovation in the retirement plan sector.

Plan Sponsors on the Move

A staggering 22% of plan sponsors are actively searching for a new advisor. We're not merely talking about passive unhappiness here; this is full-on, cart-before-the-horse active shopping.

Moreover, 95% of plan sponsors anticipate alterations to their plan designs. What's sparking this change? According to Liz Pathe, head of Defined Contribution Investment Only (DCIO) Sales at Fidelity Institutional, it's the continuous evolution of plan designs, investment lineups, and benefits. Plan sponsors want more — more flexibility, more extensive services, and, yes, more personalization.

What Drives the Value of Advisors?

With only 6% of plan sponsors going solo without advisory support, the message is clear: Advisors are hot commodities. But what qualifies an advisor to be the crème de la crème in 2023? It's not all about crunching numbers. Plan sponsors are looking for advisors who offer a comprehensive, 360-degree service — think employee education, legislative nuances, and, most importantly, empathetic administration.

76% of sponsors say they're "extremely satisfied" with their current advisor. But let's get real; it's not a one-size-fits-all scenario anymore. Advisors earning their keep are those providing extensive services, effective handling of servicing issues, and improved employee communication. Simply put, "good" isn't cutting it any longer.

Keeping Up With Investment Menu Changes

Investment options are far from static in a year marked by shifts and turns. The study reveals a 30% uptick in plan sponsors widening their investment options and diving deeper into collective investment trusts (CITs). If you've dismissed CITs as a mere trend, it's time to reevaluate. 

The percentage of sponsors introducing CITs has been growing at a consistent 10% annually since 2018.

Employee Engagement: More Than Just Stats

Ninety-five percent of sponsors are rolling up their sleeves to revamp their plan designs. While 74% of sponsors are content that their plans meet company objectives — chiefly aiming at adequate retirement savings — a sliver of apprehension persists. Questions loom: Are these plans magnets for top talent? Do they adequately prepare employees for a financially secure retirement? Let's not overlook the elephant in the room: cost efficiency.

A Tale of Employee Turnover and Financial Priorities

A notable 37% of sponsors' workforces are fresh on the job, hired within the last two years. This isn't merely an HR headache; it's an educational challenge tied to 401(k) plans. Why? Because turnover isn't just about recruitment; it's intrinsically linked to financial wellness and long-term planning.

Final Takeaways

Whether you're an advisor aiming to level up or a plan sponsor seeking superior solutions, one message rings loud and clear: Stagnation is not an option. The challenges of today's landscape require innovative, bespoke solutions that elevate the metrics and the human experience enveloping retirement plans.

Click here to read the 14th Fidelity Plan Sponsor Attitudes Study.