Retirement plans are evolving beyond traditional investment lineups. Learn how personalization, scalable advice, retirement income options, and emerging investment capabilities are reshaping how sponsors support participant outcomes.
Quick takeaways
Retirement plan investment strategies are no longer focused solely on selecting investment options. Sponsors are increasingly evaluating how investments, guidance, plan design, and retirement income options can create a more connected retirement experience that supports participants before, during, and throughout retirement.1,2
In many ways, the conversation is shifting from managing investments to designing participant experiences.
In fact, 93% of employers believe they have a responsibility to help employees prepare for retirement, and 83% believe they should help employees generate retirement income from their savings.1 These findings suggest sponsors are placing greater emphasis on supporting participants before and throughout retirement, not simply helping them accumulate assets.
For financial professionals, this shift presents an opportunity to help clients align investment strategy with broader retirement outcomes. As workforce needs grow more complex, they can help identify solutions that align with sponsor priorities, participant needs, and fiduciary considerations.
Historically, many retirement plan investments have been designed around broad participant characteristics, such as age or expected retirement date. While those approaches remain foundational, participants increasingly expect retirement planning experiences that reflect their individual circumstances rather than rely on demographic assumptions.
This is prompting sponsors to consider solutions that can adapt to external assets, retirement timelines, and financial goals. As they evaluate the future of their retirement programs, many are looking for options that offer greater flexibility across a diverse workforce.
Personalization may involve adding options such as a managed account service or enhancing existing investment offerings, but the goal is to help ensure employees have access to the right mix of investments, guidance, and support for their individual needs.
Hybrid qualified default investment alternatives (QDIAs) are one example. By combining two options, such as target date funds and a managed account service, they can offer a more dynamic approach that can adapt to participants' needs over time by starting with a target date fund and then transitioning to the managed account service.
As sponsors look for ways to better support participant financial decisions, many face a practical question: How can individual advice be delivered consistently across the entire workforce?
The challenge is compounded by participant demand for more personalized guidance. Nearly 60% of participants say they would be interested in a managed account service, 48% are willing to share personal information for more tailored guidance, and 64% report that they don't currently receive financial advice 2. Together, these statistics highlight a growing opportunity for plans to expand access to advice and guidance.
Guidance can have a meaningful impact on participants. Participants with access to advice report greater confidence in making investment decisions, knowing when and how to rebalance, and feeling prepared for retirement. These gains are especially notable among women, Gen X participants, and those with lower levels of investable assets.2
As workforce needs become more complex, sponsors are evaluating ways to provide more individualized support without adding unnecessary complexity to the plan experience. A managed account service can help address that challenge by combining personalized guidance with ongoing portfolio management, allowing participants to receive support aligned with their circumstances while sponsors maintain an efficient, consistent approach.
For financial professionals, the opportunity goes beyond selecting an advice solution. It's about helping sponsors evaluate approaches that can help drive engagement and seeks to improve retirement readiness at scale.
As more participants approach retirement, sponsors are placing greater focus on how plans can help employees transition from saving to generating income in retirement.1 What was once viewed as a challenge for participants to solve on their own is becoming part of broader retirement plan and investment strategy discussions.
For many sponsors, retirement income is no longer viewed as a conversation that begins shortly before an employee retires. Instead, they're considering how investment decisions made throughout a participant's career can help support sustainable income in retirement. As a result, retirement income is increasingly influencing decisions about investment menus, QDIA design, and overall retirement readiness strategies.1
At the same time, retirement income solutions have advanced significantly, with many becoming easier to implement and integrate into existing defined contribution plans.
Adoption has continued to grow. Assets in target date funds with glide paths that include a lifetime income component reached $44 billion in March 2026, up from $25 billion a year earlier. Assets in multi-asset portfolios with embedded annuities now exceed $117 billion.
As retirement income solutions become more accessible, financial professionals can help clients evaluate options and fiduciary considerations to determine what best fits their workforce and objectives.
Private market investments are becoming a more common topic as sponsors explore diversification within retirement plans. Interest has continued to grow, with 37% of defined contribution plan sponsors saying they want to learn more about private market allocations. Among plans with $250 million to $1 billion in assets, interest rises to 57%.
Importantly, private market investments are expected to be offered through professionally managed structures, such as target date funds or managed account services, instead of private market investments that participants select on their own. By 2035, up to 20% of DC plans could offer private-market exposure through these solutions.
For financial professionals, the discussion is less about adding a new asset class and more about helping sponsors assess whether private market exposure supports program goals, participant demographics, and fiduciary obligations.
While each of these trends is gaining momentum individually, their real significance lies in how they intersect.
Personalized experiences often rely on scalable advice. Retirement income considerations are increasingly influencing investment strategy decisions. Private market exposure may become another option that sponsors evaluate as they evolve their investment strategy.
Together, these developments reflect a broader shift in retirement planning. The focus is no longer solely on building investment lineups. It's becoming more about creating connected retirement experiences that help participants navigate key financial decisions across their working years and into retirement.
As retirement plans continue to expand their role, financial professionals have an opportunity to help clients connect these elements into a cohesive strategy that supports workforce needs, organizational priorities, and long-term retirement success.
As clients evaluate changes to investment lineups and retirement plan strategies, financial professionals can help ensure that new solutions address workforce needs, plan objectives, and fiduciary responsibilities.
Talk with your Principal® representative about trends helping shape the next generation of retirement plan services and investment solutions, and how personalized guidance, retirement income strategies, managed account services, and emerging investment capabilities may support your clients' objectives.