Access to financial adviser ups retirement plan success, study shows

Access to a financial adviser strongly correlates with employee participation in a retirement plan, according to a new study.

Morgan Stanley at Work Tuesday released research from its workplace retirement study that shows plan sponsors are emphasizing the need for an attractive plan with a range of features not only to retain talent, but to meet the evolving financial needs of a diverse workforce.

According to the study, 401(k) plans with a financial adviser, or those that offer features like a Roth or a company match, are seen as more attractive and have higher enrollment rates, which in turn spurs employee satisfaction and supports retention.

“The dynamics of today’s economy have changed, with employers and employees alike juggling numerous competing financial needs. So it’s not surprising that plans with financial advisers are associated with more engaged employees, as a financial advisor can play a central role not just in managing the plan, but in helping employees navigate the markets and invest in their future,” Anthony Bunnell, head of retirement for Morgan Stanley at Work, said in a statement.

For example, access to a 401(k) financial adviser tightly connects with employee participation and heightens engagement. The survey showed a healthy 80% of plan sponsors who reported full employee participation had a plan financial adviser.

“Just as having an adviser to assist with a financial plan to manage a purposeful allocation can give clarity and confidence in all market cycles, access to a 401(k) financial adviser has numerous benefits," said Paul Lee, wealth manager at Kingswood US. "Proper planning and goal setting can allow an investor, including employees with a 401(k), to stay focused on long-term retirement goals, even when markets get spooked.”

The study also showed that plan design makes a difference. In addition to a 401(k) plan, it showed that 23% of companies also offer a Roth 401(k), followed by auto-enrollment (20%) and profit sharing (18%) to help encourage enrollment.

"The results of the survey are not at all surprising. In today's world, having a strong retirement plan adviser to assist with everything from plan design, to investment selection to employee financial wellness makes those retirement plans measurably more successful," said Marc Schmeeckle, retirement plan consultant at SageView Advisory Group.

Plan sponsors also identified automatic escalation (43%), automatic employer contribution (40%) and automatic enrollment (37%) as plan features with the highest participation, helping companies "meet employees where they are today," the study showed.