Redefining employer-sponsored retirement plans begins with a proactive approach

December 13, 2023

man and women walking into work

Today’s economic landscape is complicated by factors that just didn’t exist for previous generations — and that points to a need for plan sponsors and financial professionals to implement new approaches to helping plan participants.Changes in wage growth, inflation, interest rates, market volatility, geopolitics and life expectancies all contribute to a financial reality that’s not what it was even a decade ago. 

For employer-sponsored plans to meet the evolving needs of participants, retirement and financial planning efforts need to address these changing variables with plan offerings and retirement planning strategies that meet the need.

The traditional “set-it-and-forget-it” approach isn’t really viable anymore. Instead, today’s essential blueprint starts with a proactive approach, and makes room for the ways that different economic factors can impact individual plan participants.

If it all sounds discouraging, keep this in mind: 

Plan sponsors that take steps now to help more employees improve their financial security in retirement can distinguish themselves as employers of choice in a competitive market for talent.

And the financial professionals who serve them have plenty to gain, too.

Yesterday’s status quo has some serious limitations

Maintaining an existing plan — and participant portfolios — with an “as-is” approach may result in lost opportunities. But for sponsors and planning professionals, there’s much more to consider than overall plan participation and performance. Consider the impacts of these developments:

  • Average life expectancies in the U.S. are 73.5 years for males and 79.3 years for females1
  • Recent increases in the Consumer Price Index (CPI) have neared 40-year highs2
  • Those CPI increases have outpaced wage increases, resulting in stagnating and even declining real wages for workers

Economic conditions aren’t fixed, so it stands to reason that a “fixed” retirement plan strategy may not be as effective as one that helps sponsors and participants adapt to changing conditions.

Risk exposure is a reality, too. Taking a reactive stance could lead to a plan that doesn’t perform as intended; it could even expose plan sponsors to fiduciary risks.

Getting proactive with the plan — and with participants — can help identify new opportunities as they arise, and manage risks before they take hold. A simple step like implementing regular, systematic plan reviews and individual portfolio reviews can make a difference, enabling a timely response to changing circumstances that can transform challenges into opportunities. 

A more proactive, consultative approach can also help elevate the participant experience and help kindle an overall improvement in their retirement confidence.

Adapt to deliver plans that help participants, sponsors and financial professionals alike

In a dynamic — and sometimes volatile — economic landscape, agility and adaptability aren’t just competitive advantages; they’re a must. Those who prepare in advance are more likely to be ready to pivot when economic indicators change. 

How do different parties stand to benefit by adapting now? Here are a few ways all constituents benefit from a plan that’s ready to adapt and keep delivering key must-haves, even amid changing circumstances:

Educating employees on topics in finance and investing

  • Plan participants: Customized financial education and resources empower employees to get involved in their retirement planning, enhancing their financial well-being and future security
  • Plan sponsors: Financially secure employees can afford to be more engaged and focused on work. That has the potential to improve productivity, reduce absenteeism and turnover, and support healthy profitability
  • Financial professionals: Offering a range of financial education and financial-wellness-focused services can help set you apart — and nurture enduring client relationships, the bedrock for building long-term business success

Actively mitigating fiduciary risks

  • Plan participants: While they may not be as aware of the benefit to their financial health, diligent fiduciary oversight helps keep investments aligned with employees’ best interests
  • Plan sponsors: Regular audits and compliance checks help create guardrails for the plan, to safeguard against potential legal repercussions and preserve the plan’s integrity. This means keeping a close eye on fees and performance, as well as proper documentation to demonstrate fiduciary compliance
  • Financial professionals: Digging in to demonstrate fiduciary excellence can be a compelling business differentiator to help attract a broader base of plan sponsors

Ensuring plan compliance with nondiscrimination rules

  • Plan participants: Fair and equitable plans contribute to more inclusive workplaces, and in the long term that can enhance employee morale — not to mention retirement confidence
  • Plan sponsors: Adherence to nondiscrimination rules not only mitigates risk of penalties but also has the potential to elevate your corporate reputation among prospective employees, and even the greater business community
  • Financial professionals: Plan compliance can be a unique selling proposition, creating a competitive edge that opens doors to new client opportunities

Next steps: putting fresh strategies to work

Adapting to change and being proactive aren’t just about staying competitive; they are crucial for ensuring that retirement plans continue to meet the evolving needs of everyone involved in a fast-changing economic landscape. 

Helping employees navigate today’s financial complexities demands an updated approach. Varying wage growth, inflation, market ups and downs, and longer lives all add up to a new reality — and that calls for a new way of helping people save and invest.

All together, proactive plan management and guidance can even lead to better work engagement, lower turnover and stronger client relationships for financial professionals.

1, Fast Stats: Life Expectancy, February 7, 2023.
2, Commissioner’s Corner: More Ways to Look at Wages and Inflation, February 13, 2023.