401(k) advisers busier this year helping with rollovers, distributions

Retirement plan advisers have been busier this year trying to retain clients than win new ones, and keeping plan sponsors happy has meant ramping up much-needed participant support in uncertain times.

Forty-four percent of defined-contribution plan advisers said they've spent more time this year than in the past helping terminated or retired workers with rollover or distribution options, while 50% said they're providing about the same level of service, and only 4% said they're providing less. That's according to a survey of about 500 retirement plan advisers that Escalent’s Cogent Syndicated division conducted in August and September. Results of the survey are being published in the company’s annual Retirement Plan Advisor Trends report.

More than a third of DC advisers have also dedicated more resources in 2021 to helping participants with long-term financial and retirement planning, according to Cogent.

Another 31% said they were more frequently helping laid off or furloughed workers with unemployment benefits, the report noted. Thirty-seven percent said they were more often providing one-on-one investment advice to participants, and 30% were more frequently helping with retirement income through investment strategies, according to Cogent. Generally, employers have also been encouraging workers to keep their assets in-plan after separating from the company.

Given the effect that the pandemic has had on the economy, as well as individual businesses, plan sponsors have largely put on hold any plans for big changes, such as hiring new advisers, record keepers or other service providers.

About half of the advisers surveyed said the pandemic has limited their ability to take on new business.

For advisers, providing a high level of service now could help their retention rates when the pandemic subsides and more plans consider making changes. Plan sponsors have had to consider cutting costs at the same time they are complying with CARES Act provisions, if they opted to allow temporary early withdrawals and assistance loans allowed under the new law.

“A lot of the plan sponsor organizations are just trying to make it through [the year] and keep their employees on board,” said Sonia Davis, senior product director at Escalent. “They’re not looking to overhaul their 401(k) plan. They’re just trying to ride out a storm.”

Retirement plan providers are also trying to support advisers in the new environment.

More than half, 52%, said that giving advisers support on regulatory changes, including the CARES Act and SECURE Act, is more important than ever, according to the report.

“Even in these really challenging times, this is a relationships business,” Davis said. “The record keepers that are able to engage with DC advisers and support them so they can better support their clients will amplify or solidify new business in the long run.”

Cogent surveyed plan advisers about which of the biggest 34 retirement plan providers they recall sending helpful communication during the pandemic. The top such firms advisers identified were American Funds, Vanguard, Fidelity, Merrill (and Merrill Edge), and Alliance Benefit Group.