Perspective on investment menus

As advisors adjust to meet the evolving needs of plan sponsors, investment menus have also evolved to enhance retirement planning for employees. In the past 12 months, nine out of 10 surveyed sponsors made changes to their menus, including:

Target date funds: Advisors play an important role in the evaluation and selection process for target date funds. For fund managers overseeing these investments, fund manager access and performance are key to plan sponsors. One out of four sponsors (26%) shared that hearing directly from the target date investment manager and being able to ask them questions was an important factor in selecting a target date manager. Performance (22%) and advisor/consultant recommendation (19%) were also important. Additionally, plan sponsors value performance over cost when it comes to target date funds. Nearly 60% of sponsors indicated a preference for a target date investment option that is more expensive but has historically delivered better performance net fees, compared to 41% who prefer less expensive options with lower performance net fees.
Collective Investment Trusts: CITs also hold significant value in investment menus. Thirty-two percent of surveyed sponsors added this investment vehicle in the past year, and 32% plan to further increase the number of CITs available on menus this year.

Retirement readiness

Eighty-two percent of plan sponsors are optimistic their retirement plan benefits best position employees to successfully save for retirement—a 10% increase from 2023. Despite the challenging and unpredictable economic environment, 78% of plan sponsors consider automatic enrollment and company matches as effective tools in long-term retirement planning.

Instant Insights /

401(k) plan sponsors are 'highly satisfied' with advisor expertise: Fidelity

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