Forrester's research exposes a broken 401(k) system and widespread confusion concerning retirement readiness, employers' fiduciary responsibility, fees, and education for employees.
Key findings include:
- Confusion Across the Board: More than half of employees are uncertain that they will retire comfortably when they want to and employers are likewise unsure about how prepared their staff is for retirement.
- Fiduciary Responsibility: 62% of employees believe their employers aren't legally responsible for ensuring that participants receive advice that reflects their best interests. The truth is that employers do bear fiduciary responsibility.
- Fees: Employees don't understand 401(k) fee structures, with almost 60% expecting to pay less than 1% in 401(k) plan fees, when fees are often much higher. A surprising 16% of employees are unaware as to how much their 401(k) plans actually cost.
- Plan and Investment Education: Traditional approaches to employee education also fall short, according to the research. Annual information sessions typically offered by 401(k) plan managers were effective for only about 20% of the employees surveyed.
The report, "Digital Tools Help Address Current Issues For 401(k) Plans," identified digital tools as a solution that employers can implement to help their employees better prepare for retirement.
According to the study, nearly 70% of employees agreed that digital tools would increase their likelihood of engaging with their 401(k) plans and that these tools would make it easier for them to invest for retirement.
"We believe this study clearly outlines the challenges that both plan sponsors and participants are facing," said
Online platforms, such as Betterment for Business—which can sync with outside financial institutions, provide advice that employees can trust, are easy to use, and are transparent in pricing—can help participants better invest for retirement. Participants enrolled on the Betterment for Business platform are invested in a globally diversified portfolio of index-tracking exchange-traded funds (ETFs) and benefit from personalized advice in a goal-based investing framework.
Consistent with Betterment's retail service, Betterment for Business aims to lower costs and offers a simple, easy-to-understand fee structure for plan sponsors with an assets under management-based fee ranging from 0.10% to 0.60%.
To download the full study please click here.
Betterment is the largest independent robo-advisor, helping people to intelligently manage and grow their wealth through smarter technology. With more than 180,000 customers and over
Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. Before investing, consider your investment objectives and Betterment's charges and expenses. 401(k) plan administration services provided by Betterment for
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/betterment-for-business-and-third-party-study-help-address-why-the-401k-industry-is-broken-in-new-report-300324803.html
SOURCE Betterment for Business