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The Principal: Research Reveals Opportunities For Financial Professionals

Stocks in this article: PFG

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 — 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,” 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.

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