Dive Brief:
- A significant number of financial advisors are not doing a very good job in reviewing retirement plan effectiveness with plan sponsors, typically employers, according to a recent survey.
- In addition, the 2016 MassMutual Retirement Plan Review Study found that not only are plan sponsors unhappy with review frequency, when reviews do take place, they seldom uncover what matters most.
- Nearly three in five (57%) plan sponsors want advisors to help them review their retirement plans semiannually or more often (which 44% of sponsors report currently takes place), though sponsors who rely on advisors typically review their retirement plans more often than sponsors who do not use an advisor, the study found.
Dive Insight:
Tom Foster Jr., spokesperson and practice management leader for MassMutual Retirement Services, says that frequent, focused plan reviews are essential to assess the ongoing effectiveness of a retirement plan, and to help ensure that plan participants are saving enough to retire when they reach their traditional retirement age.
The MassMutual study, conducted in 2015 by Greenwald & Associates, polled 565 employers that sponsor retirement plans, including 449 that worked with an advisor and 116 that did not.
According to Foster, review-based improvements include new plan designs to better meet an employer's objectives. He added that any improvements to a plan should generally start with a careful review and include consultation with legal counsel and other experienced advisors.
"Unfortunately, only one in four sponsors reviews its plan to determine whether employees are actually saving enough to retire," Foster said, adding that it results in a missed opportunity on the part of both advisors and sponsors.
