Disconnect Exist Between Perceptions of Plan Sponsors and Advisors
NEW YORK, NY, January 12, 2017 -- Voya Investment Management, the asset management business of Voya Financial, Inc., today announced the findings of its survey of retirement plan sponsors and plan advisors. The goal of the survey, "Sponsor Perceptions of Retirement Plan Services: Challenges and Opportunities for Advisors," was to better understand what sponsors want from advisors in terms of services and support, as well as to identify unmet needs and emerging opportunities. The study also surveyed advisors who support retirement plans to provide insight into how sponsor and advisor perceptions align.
Among the critical findings of the Voya study is the existence of several disconnects between the perceptions of plan sponsors and advisors:
Helping plan participants become retirement ready is an important concern for sponsors, but they place less emphasis than advisors on the means to achieve it, e.g., participant education, enrollment, communications and increasing savings rates. Plan sponsors are concerned with operating their plans and avoiding potential liabilities; the study shows if the plan is running smoothly and employees are contributing, sponsors tend to believe participants are preparing effectively for retirement.
By contrast, advisors look at potential outcomes and can see participants generally are not saving enough or investing wisely enough to provide for their retirement income needs. Nearly half of advisors say participants are "poorly prepared" for retirement, whereas only one in six plan sponsors agrees. Seven in 10 sponsors say participants are "somewhat prepared" to retire, and four in 10 advisors concur. Yet only one in six sponsors and one in 10 advisors say participants are "well prepared" for retirement.
In other findings, plan sponsors cited the challenges of meeting compliance requirements as a major concern over the next two years. Other significant challenges respondents cited included educating plan participants, increasing participant savings and managing plan expenses.
"Our research found plan sponsors were most concerned with plan fees, the retirement readiness of participants and investment performance," said Michael De Feo, head of Retirement and Investment Only at Voya Investment Management. "While advisors agreed that plan fees were a top priority, they also thought sponsors were more concerned with managing plan complexity and less concerned about participants' retirement readiness."
Other Key Findings
Investment Selection and Monitoring
Sponsors and advisors generally agree that offering a tiered investment menu -- target date funds, core funds and a brokerage/mutual fund window -- for different types of plan participants can result in better investment outcomes. Investment performance is the leading factor driving change of plan investment options, followed by the availability of lower-cost options. Sponsors and advisors closely agree that most participants are best served by investing in target date funds rather than selecting individual funds or plan choices. Sponsors want more frequent review than the annual meetings that advisors typically offer: nearly three-fourths want at least semiannual reviews, and half want quarterly reviews.
Compliance and Fiduciary Responsibility
The key regulatory concern for sponsors is ensuring reasonable plan fees and expenses, followed by complying with Department of Labor (DOL) fiduciary standards. Advisors believe they are effective in controlling plan costs. They also believe their fee disclosures are easy to understand, but sponsors do not agree with this perception. Sponsors tend to focus on absolute cost, which suggests they are missing the point of DOL guidance about seeking reasonable value for the fees they pay.
Helping plan participants become retirement ready is an important concern for sponsors, but they place less emphasis on participant education, enrollment, communications and savings rates than advisors do. This represents an opportunity for advisors to add value by educating sponsors on the factors that contribute to retirement readiness.
"Based on the data, sponsors don't recognize all of the services that advisors provide," said De Feo. "Since we found that 95% of sponsors want to work with a retirement specialist, it is crucial that advisors highlight their skills and the value that they bring in this regard. It is also critical that advisors push for greater emphasis on participant education and communication between plan sponsors and participants to enhance the potential for participants to meet their savings goals."
GDC Research (GDC) and Practical Perspectives (PP) assisted Voya IM with the development, execution and analysis of the plan sponsor and advisor surveys. To implement this research, GDC and PP leveraged Brookmark Research Services to assist with the sampling, surveying and analysis of the target plan sponsors and financial advisors.
An internet methodology was used to conduct the study. With a goal of obtaining comparative findings, the plan sponsor and advisor surveys were similar, with only minor differences in their language. Interviews took approximately 12 minutes to complete and were collected from late March to early April 2016.
About Voya Investment Management
A leading, active asset management firm, Voya Investment Management manages, as of September 30, 2016, more than $208 billion for affiliated and external institutions as well as individual investors. With more than 40 years of history in asset management, Voya Investment Management has the experience and resources to provide clients with investment solutions with an emphasis on equities, fixed income, and multi- asset strategies and solutions. Voya Investment Management was named by Pensions & Investments Magazine as a 2016 Best Place to Work in Money Management for the second year in a row. For more information, visit voyainvestments.com. Follow Voya Investment Management on Twitter @VoyaInvestments.
About Voya Financial®
Voya Financial, Inc. (NYSE: VOYA), helps Americans plan, invest and protect their savings, to get ready to retire better. Serving the financial needs of approximately 13 million individual and institutional customers in the United States, Voya is a Fortune 500 company that had $11 billion in revenue in 2015. The company had $480 billion in total assets under management and administration as of September 30, 2016. With a clear mission to make a secure financial future possible -- one person, one family, one institution at a time -- Voya's vision is to be America's Retirement Company™. The company is equally committed to conducting business in a way that is socially, environmentally, economically and ethically responsible. Voya has been recognized as one of the 2016 World's Most Ethical Companies® by the Ethisphere Institute, and as one of the Top Green Companies in the U.S., by Newsweek magazine. For more information, visit voya.com. Follow Voya Financial on Facebook and Twitter @Voya.
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