Advisors can considerstarting with conversations around retirement income goals: Sevenin 10 sponsors reported setting a goal for retirement income.(Photo: Shutterstock)

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How much do you need to save for retirement? It's one of the mostcommon questions we hear, yet so difficult to answer given the manyvariables involved: When you're planning to retire, how much youplan to spend and so many other factors.

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Americans are bombarded by guidance from many sources – buttheir plan sponsor is one important resource.

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Ready for retirement

Plan sponsors are increasingly focused on making sure theirplans are effectively financially preparing employees forretirement, according to Fidelity's 2018 Plan Sponsor AttitudesStudy.

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This year, they reported retirement readiness as their topconcern (last year it was reducing plan costs), and that's apositive shift to see – yet, that probably means they're lookingfor guidance themselves on how to help employees prepare.

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Plan sponsors told us that the number one reason they hiredadvisors was to better understand how well their plans are workingfor employees, and how they can improve them.

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One plan sponsor; several plan expectations

An advisor will work with a variety of roles within a plansponsors' organization – from the CEO to human resources or financegroups – and these job functions have varying expectations.

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For example, the CEO is most interested in an advisor's abilityto help comply with fiduciary responsibilities. On the other hand,those in HR look for the ability to understand the needs of theircompany and employees.

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That being said, this theme actually stood out as the onlycommon priority in the top four expectations across job functions:They all want advisors to help them better understand what theircompany and employees need.

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The advisor opportunity

So, what does this mean for advisors? Ninety-two percent of plansponsors are working with advisors, which is an all-time high. Butsponsors are not afraid to switch advisors if their needs are notbeing met.

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In fact, 44 percent of sponsors revealed they have hired a newadvisor within the last four years.

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Advisors can consider steps to improve sponsor satisfaction, andthat ranges from administrative tasks to being transparent aboutservices.

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Plan sponsors reported higher satisfaction levels with advisorswho did the following versus those who did not:

  • explain their costs (34 percent higher)
  • ask the plan sponsor for feedback (22 percent higher)
  • demonstrate their value (20 percent higher)
  • and provide a written statement of services (25 percenthigher).

But the conversation shouldn't end there. With plan sponsors'focus on employee's retirement readiness, plan advisors can alsoadd value by proactively sharing knowledge and opportunities tohelp plan participants financially prepare.

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Advisors can consider starting with conversations aroundretirement income goals: seven in 10 sponsors reported setting agoal for retirement income. Fidelity suggests 45 percent is areasonable income replacement goal to help maintain apre-retirement lifestyle throughout retirement, but 37 percent ofplan sponsors reported a goal of less than 40 percent.

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Plan advisors can help sponsors set appropriate frameworks forthese goals and consider options like target-date solutions thatare aligned with their plans' income replacement goals.

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Additionally, advisors can look for ways to help participantsget more engaged. Many sponsors are making changes to plan design(82 percent) and investment menus (83 percent) in an effort to helptheir employees reach retirement savings goals.

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Pan sponsors that added or changed a matching contribution (thetop change to plan design) did so to increase employeeparticipation (56 percent) or improve savings rates (47percent).

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Or, advisors can consider suggesting features likeauto-enrollment; 87 percent of employees stayed in plans with anauto-enrollment default of 5 percent or higher, and 68 percentreported being “very satisfied.”

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My biggest takeaway from all of this? Advisors have a tremendousopportunity to add value to the plan sponsors they support, going beyond the basics of the plan sponsor/plan advisorrelationship.

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The outcome that matters most is positioning more participantsto be retirement ready. But—tactical discussions around regulatorychanges, plan performance, plan costs and fiduciary responsibilityremain important as ever.

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So, when plan sponsors receive all of those questions fromparticipants about saving for retirement – advisors can help thembe prepared.

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Jordan Burgess is head of specialist fieldsales overseeing defined contribution investment only (DCIO) salesat Fidelity Institutional Asset Management.

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The content provided herein is general in nature and is forinformational purposes only. The views expressed in this articlereflect those of the speaker and do not necessarily represent theviews of Fidelity or any other person in the Fidelity organization.Investing involves risk, including risk of loss. Products andservices provided through Fidelity Institutional Asset Management®(FIAM®) to investment professionals, plan sponsors andinstitutional investors by Fidelity Investments InstitutionalServices Company, Inc., 500 Salem Street, Smithfield, RI 02917. ©2019 FMR LLC.  All rights reserved. 871908.1.0READ MORE:

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