2020: A Year of Demonstrating Value for Retirement Plan Advisors

The impact of COVID-19 on retirement savers has differed across the country.

For individuals whose employment status has been affected as a result of the pandemic, the CARES Act legislation was a valuable lifeline, allowing easier access to retirement funds. Ups and downs in the financial market have alarmed some savers about the potential impact on their financial futures.

However, over the past year, the role of the advisor has never been more vital to both retirement plan sponsors and their employees. The next year will provide continued opportunity for you to show your value and partnership.

Keep Communication Personal
Proactive communication is key for advisors with both retirement plan sponsors and employees.

The Standard’s 2020 U.S. Workforce Retirement Plan Engagement study revealed that employees want to receive one-on-one interaction and value ongoing communication with a retirement expert.

Personalizing any form of communication to the specific individual’s needs indicates a level of care and displays that they are a priority. https://www.planadviser.com/magazine/robo-adviser-vs-human-adviser/

Employees look for reassurance and guidance with their retirement decisions, especially when their financial confidence has been impacted by financial uncertainty.

Additionally, plan sponsors may also require a higher level of guidance and counsel from advisors. For those struggling with explaining the value of a benefits program to employees, you can help create a communication plan that reinforces the benefits of saving for retirement at work. This may include getting back to the basics, reminding employees of tax benefits and the ease of investing, along with reinforcing simple, plan-specific solutions like taking advantage of the company match, investing in managed portfolios or periodically stepping up contributions.

This also may be a good time to help plan sponsors evaluate their plan’s investment line up, especially the availability of compelling capital preservation options like stable value funds. A review of plan design, to ensure the plan is taking advantage of available retirement readiness solutions, is also a critical and timely conversation.

Restore Financial Confidence

The pandemic has shaken many savers’ financial confidence. Some put retirement savings on pause, while others took advantage of the retirement plan loan and distribution provisions allowed by the CARES Act.

For investors, you have the unique opportunity to help employees get back on track and to build greater trust through empathy and guidance.

Advisors can encourage employees to set aside any guilt about tapping their accounts and remind them that it’s never too late to restart their savings efforts. You can also help employers and employees navigate loan repayment procedures with plan providers, helping remind employees of the importance of repayments within the three-year time period.

A recent retirement plan study shows that 91% of employees who worked directly with an advisor continued to contribute to their retirement plan over the past 12 months.

In comparison, 83% of employees working with an automated adviser continued contributing to their retirement plan. The personal access of an advisor increases employees’ financial confidence and encourages proactive actions around retirement savings.

Demonstrate Value to Employees

Advisors can provide access to tools to help employees evaluate their risk tolerance. After the last year, employees may find they are feeling less tolerant about risk, or they may be willing to take on more.

For instance, specific, personalized savings suggestions for employees highlight the value of an advisor and is shown to improve engagement and results.

Leading those conversations and presenting options and resources for retirement plan sponsors and their employees elevates your value, especially during times of market downturns.

As an advisor, you not only have the opportunity to guide clients with making decisions about their overall financial futures, but you also have the chance to play an integral role in helping them get back on course if they have strayed. The challenges of 2020 have made the importance of an advisor even more clear.

Joel Mee is senior director of retirement plans at The Standard. Joel can be reached at [email protected].\

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