Tenth Fidelity® Plan Sponsor Attitudes Study Finds:
• 75% of Sponsors Made a Change to Their Plan Design or Investment Menu in the Past Two Years
• 93% of Sponsors Work with a Plan Advisor, a Record High for the Study
• More than Half of Sponsors Have Implemented a Financial Wellness Program for Employees
BOSTON, Aug. 28, 2019 -- Fidelity Investments®, one of the industry’s most diversified and largest financial services companies, today announced the results of its 10th edition of the Plan Sponsor Attitudes Study, which revealed that many plan sponsors believe their employees are falling short in their retirement savings. While 62% of sponsors said their employees expect the plan to meet all of their funding needs in retirement, only about half (55%) said they believe their plan participants are actually saving enough in the plan to retire. The study, which began in 2008, surveyed employers who offer retirement plans that use a wide variety of recordkeepers.i
Fidelity’s study also found that nine in 10 plan sponsors reported that they have had employees work past their desired retirement date. Seventy-three percent of sponsors acknowledged that there are costs when employees delay retirement, including increased benefit costs (37%), reduced mobility for younger employees (33%), challenges for strategic workforce planning (31%), and lower productivity (27%).
“Plan sponsors recognize the increasingly important role they play in helping their employees reach retirement, and it is a ‘win-win’ situation when they can help their employees reach their financial goals,” said Jordan Burgess, head of specialist field sales overseeing defined contribution investment only (DCIO) sales at Fidelity Institutional Asset Management®. “Plan sponsors are balancing both company and employee needs, and they’re looking to plan advisors to help them better understand the complexities of a retirement plan in order to meet those combined goals.”
The top two reasons plan sponsors hired advisors were (1) to understand how well the plan is working for employees and how to improve it (27%), and (2) for help with the increasingly complicated process of managing a retirement plan (26%).
With 10 editions of the Plan Sponsor Attitudes Study, Fidelity® looked back at how plan sponsors’ relationships with plan advisors have changed over the years:
“About a decade later, more plan sponsors are seeing the value of working with advisors, and satisfaction is significantly higher,” continued Burgess. “What hasn’t changed is that sponsors continue to re-evaluate their advisor relationships, especially as their plans’ goals evolve. Advisors should be proactive by looking for opportunities to differentiate their offering.”
Opportunities for Improvement
This year, plan sponsors reported that they are actively seeking improvements to their plans: three-fourths of sponsors reported making a change to their plan design or investment menu in the past two years. The top plan design changes were to increase the match (26%) or add a match (24%). The top menu change was to increase the number of investment options, consistent with last year’s study.
It also appears that sponsors are reviewing plan performance more often, with a shift away from annual reviews (14% in 2019 versus 27% in 2018) to quarterly reviews (45% in 2019 versus 38% in 2018). This is an opportunity for advisors to play a more active role as sponsors may seek more frequent check-ins.
Looking Beyond Retirement at Employees’ Full Financial Picture
Retirement savings is just one aspect of an employee’s financial picture. Fidelity research found that 36% of employees have less than three months of income saved in case of emergency and that absenteeism is 29% higher among employees who do not have enough emergency savings.ii Plan sponsors and plan advisors are in a position to support employees throughout their career, and many see the value of implementing programs to improve employees’ overall financial wellness.
This year’s Plan Sponsor Attitudes Study found that more than half (56%) of sponsors said they offer financial wellness programs, and 59% saw them as very impactful for employees. Advisors have helped sponsors implement these programs: two-thirds of sponsors said that advisors discussed financial wellness programs with them, and plans with advisors were more likely to have them in place than those without advisors (57% versus 43% respectively).
Additional information on the survey as well as resources and tools – including fund analytics and details on investment options – can be found at go.fidelity.com/attitudes.
Fidelity Institutional Asset Management®, Defined Contribution Investment Only (DCIO)
Fidelity Institutional Asset Management® is a leading provider of investment management and retirement services to defined contribution professionals nationwide, supporting advisors, recordkeepers, third-party administrators and plan sponsors in a collective effort to help participants achieve better retirement outcomes. As a retirement leader, Fidelity has deep knowledge of plans and participant behaviors. The firm combines this knowledge with a legacy of asset management — 61 percent of Fidelity’s $2.8 trillion in managed assets are retirement assets as of June 30, 2019— to become a key manager in the investment-only arena with about $102 billion in total DCIO assets.
Plan Sponsor Attitudes Study: Methodology
The 2019 Plan Sponsor Attitudes Study was conducted in collaboration with Harris Insights and Analytics, an independent market research company, which conducted an online survey of 1,252 plan sponsors on behalf of Fidelity. Fidelity Investments was not identified as the survey sponsor. The survey was conducted during the month of February 2019. Respondents were identified as the primary person responsible for managing their organization’s 401(k) plan. All plan sponsors confirmed their plans had at least 25 participants and at least $3 million in plan assets. Though the survey is broad in scope the experiences of the plan sponsors participating in the survey may not be representative of all plan sponsors. Previous Fidelity surveys were conducted in 2008, 2010, 2012, 2013, 2014, 2015, 2016, 2017 and 2018
About Fidelity Investments
Fidelity’s mission is to inspire better futures and deliver better outcomes for the customers and businesses we serve. With assets under administration of $7.8 trillion, including managed assets of $2.8 trillion as of July 31, 2019, we focus on meeting the unique needs of a diverse set of customers: helping more than 30 million people invest their own life savings, 22,000 businesses manage employee benefit programs, as well as providing more than 13,500 financial advisory firms with investment and technology solutions to invest their own clients’ money. Privately held for more than 70 years, Fidelity employs more than 40,000 associates who are focused on the long- term success of our customers. For more information about Fidelity Investments, visit https://www.fidelity.com/about.
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Information provided in this document is for informational and educational purposes only. To the extent any investment information in this material is deemed to be a recommendation, it is not meant to be impartial investment advice or advice in a fiduciary capacity and is not intended to be used as a primary basis for you or your client’s investment decisions. Fidelity and its representatives may have a conflict of interest in the products or services mentioned in this material because they have a financial interest in them, and receive compensation, directly or indirectly, in connection with the management, distribution, and/or servicing of these products or services, including Fidelity funds, certain third-party funds and products, and certain investment services.
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i Data presented here is based on the full 2019 survey results. Other published or historical data may reflect different values based on the criteria used, such as plan asset level or participant count.
ii Data represents the Fidelity Investments Total Well-Being Research online survey of 9,315 active Fidelity 401(k) and 403(b) participants from across the United States. The survey was conducted by Greenwald and Associates, an independent third-party research firm, on behalf of Fidelity in September 2017.