The Principal: Research Reveals Opportunities for Financial Professionals
Greater retirement plan focus means better plan outcomes and higher client ratings
February 24, 2014 (Des Moines, Iowa) — Financial professionals who want their practices to flourish should deepen their retirement plan knowledge and focus. The greater the financial professional’s retirement plan know-how, the better the plan’s results &ndah and the higher the client ratings. That’s according to retirement plan sponsors surveyed by the Retirement Advisor Council.
“The results give financial professionals a roadmap for growing an efficient and successful practice,” says Tim Minard, senior vice president, the Principal Financial Group®, one of the sponsors of the study. “First and foremost, plan sponsors value the services they receive from financial professionals. By boosting retirement plan capabilities, financial professionals can more readily demonstrate their value with a track record of successful retirement savings outcomes.”
The study surveyed 407 sponsors of 401(k) or 403(b) plans and found better results among those who worked a financial professional than those who didn’t. Among plan sponsors working with a retirement plan-focused advisor:
- 95 percent report their advisor relationship is “very beneficial” or a “necessity”
- 70 percent say at least half of their participants are on track for retirement (that’s compared to just 47 percent of plan sponsors who don’t work with an advisor)
- 60 percent have had deferral rate increases of five percent or more in the last two years (versus 18 percent of plan sponsors who don’t work with an advisor)
Outcomes can bring income
The survey found that retirement-focused advisors were more likely to make plan design recommendations and provide measurements based on both plan and participant outcomes.
“Nothing can prove value as much as concrete results. Financial professionals who have the resources to help plan sponsors design plans that work have a better shot at being able to show quantifiable, positive outcomes (PDF),” said Minard. “This survey reinforces that plan designs focused on boosting participant outcomes can be a real differentiator. That’s why we encourage financial professionals to be advocates for features like automatic enrollment.”
Minard says financial professionals can use the survey results to assess the core services they offer and develop a plan to discuss outcome-based strategies with clients if they are not already doing so.
Financial professionals can increase their focus on retirement without becoming specialists by working with a retirement plan service provider that offers the resources they need. “That includes knowledge-building tools, flexible service and local, back office support,” Minard says.
The Principal® offers a broad array of retirement-focused resources for financial professionals, including those related to:
- Practice management: Tools for retirement plan assessment, analysis and measurement; compliance, governance, fiduciary and investment resources and a customizable client calendar with key dates
- New business and prospecting: Marketing strategies and resources for defining a value proposition, business development plans, prospecting materials and conversation guides
- Retirement plan business education: Easy-to-use reference materials about retirement plan features and operations and Continuing Education seminars
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About the Principal Financial Group
The Principal Financial Group® (The Principal®) is a global investment management leader offering retirement services, insurance solutions and asset management. The Principal offers businesses, individuals and institutional clients a wide range of financial products and services, including retirement, asset management and insurance through its diverse family of financial services companies. Founded in 1879 and a member of the FORTUNE 500®, the Principal Financial Group has $483.2 billion in assets under management and serves some 19.4 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit www.principal.com.
About the Retirement Advisor Council Survey
The survey was administered by EACH Enterprise, LLC., between Sept. 11 and Sept. 24, 2013 to 407 plan sponsors meeting the following criteria:
- 401(k) or 403(b) plan sponsors in the private sector
- 100 employees or larger and plan assets between $5 million to $500 million
- Head of the retirement plan committee or named fiduciary
The survey is sponsored by the seven member firms of the Retirement Advisory Council: the Principal Financial Group, Fidelity Investments, Franklin Templeton Investments, John Hancock Investments, MFS Investment Management, MassMutual and Transamerica Retirement Solutions.