Readiness and Regulations Among Top Concerns of Retirement Plan Advisors: Survey

Market volatility and retirement plan evaluation are among the uppermost concerns of retirement plan advisors to small and mid-sized businesses, according to the results of a national listening tour conducted by Transamerica Retirement Services.

The Dow is thus far up for the year. It closed at nearly 11671 on Jan. 3 and at nearly 12046 on Nov. 30. But the market has fluctuated wildly throughout the year. Within the first two weeks of November alone, the Dow plummeted 300-points, nearly recovered, and then fell another 400 points a week later.

Retirees are especially concerned about the recent chaotic stock market, according to a November survey of investors conducted by Millionaire Corner. Just over 74 percent said this was a concern, compared to 70.6 percent of those who are still working or are semi-retired. Those not participating in a retirement plan are slightly more concerned about stock market volatility (73.8 percent) those who have a 401(k) (70.3 percent).

The retirement plan advisors surveyed by Transamerica view market volatility as a teachable moment on the importance of improving plan participants’ retirement readiness, and are working with employers to raise retirement plan awareness.

A Millionaire Corner survey from earlier this year found that just over 44 percent think it is important for a beginning investor to have a retirement plan, but nearly 40 percent were neutral on the subject.

Based on client feedback about their satisfaction with their retirement plan, advisors are also helping employers evaluate their plans’ success through annual reviews and establishing measurable goals. They are also looking for greater flexibility and customized “value for service” from retirement plan providers to ensure that their clients feel they are getting what they paid for.

Regulatory changes are also on retirement plan advisors’ radar. Anticipating the April 1, 2012 deadline for 408(b)(2) disclosure rules, which center on the disclosure of plan fees and services and the corresponding compensation for services, plan advisors “are expanding their efforts on fee education and transparency related to all plan services,” Transamerica found. 

They are also in the process of evaluating their fiduciary status in advance of the U.S. Department of Labor’s expected re-proposal next year of its rule that would amend the definition of “fiduciary” for those providing advice about retirement plans.

More than half of investors surveyed last year by Millionaire Corner believe a standard that holds an investment professional to working in a client’s best interests is necessary, but a large percentage don’t believe it will make much of a difference. Currently, Full Service Brokers, as well as Investment Managers, and Independent Investment Advisers (RIAs) are not held to a fiduciary standard when providing investment advice to individuals. Similarly, Certified Financial Planners are not fiduciaries but do have a Board of Standards and a rigorous certification process.