Prudential survey: 2021 holds promise for financial advice and retirement income offerings

Defined contribution plan sponsors reported that adding or enhancing access to financial planning and advice were among their top objectives.

December 15, 2020

After a roller coaster year of sudden, crushing market lows and all-time rallying highs, it's little wonder that solid financial advice and ensuring long-term income security are top of mind as retirement plan providers look ahead to 2021.

More than three-quarters (78%) of defined contribution (DC) plan sponsors reported that adding or enhancing access to financial planning and advice offerings were among their top objectives for their plan, according to Prudential's 2020 Plan Sponsor Pulse Survey: The DC Landscape. The springtime survey, following up on a Prudential survey released last month, also showed that in-plan advice programs are an important objective for their plan, with 74% expecting to establish or boost their programs.

Prudential's 2020 Plan Sponsor Pulse Survey: The Defined Contribution Landscape PDF opens in a new window
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'With the reliance on DC plans such as a 401(k) for retirement today, the need for financial advice has taken on greater importance,' said Harry Dalessio, head of Prudential's Institutional Retirement Plan Services.

Designed to accumulate savings, 401(k) plans don't convert those savings into a steady stream of retirement income. With more than 100 million Americans relying on 401(k) plans after their working days are done, and research showing the average balance was $103,700 in 2018, the greatest challenge for retirees is knowing the amount of savings needed to last through retirement.

All this likely contributes to the 75% of survey respondents also looking to add or enhance retirement readiness education and preparation, and the 73% considering in-plan retirement income options an important objective going forward. Drivers behind these moves are likely the increasing influence of the SECURE Act as well as the gathering strength of managed advice platforms.

The act mandates that DC plans provide plan participants with individualized projections of how much retirement income their account balances will generate in the future. It recognized that these plans fall short in providing workers with lifetime retirement security.

'That's why managed advice platforms, which combine portfolio management with personal retirement strategies are an attractive evolution for defined contribution plans,' Dalessio said. 'By automatically rebalancing asset allocations to become more conservative as employees approach retirement, these platforms help to protect those workers closest to retirement during volatile markets.'

Understanding these dual imperatives to provide workers with solid advice, Prudential is planning to unveil a new digital managed advice platform in 2021.

Expected to launch in the first quarter of the new year, the new platform will help plan sponsors deliver personalized retirement advice to better prepare workers for a secure retirement future.

Click here to download the fact sheet, 'Prudential's 2020 Plan Sponsor Pulse Survey: The Defined Contribution Landscape. PDF opens in a new window'

Methodology: Research was conducted via an online survey among 666 plan sponsors from April 22 to June 2, 2020. Plan sponsors were qualified to participate if they had a decision-making or recommending role in the plan design, provider selection or investment selection of the DC, DB or NQDC plan the organization offers. Plans had to have $10 million or more in total assets under management or account balance.

Retirement products and services are provided by Prudential Retirement Insurance and Annuity Company (PRIAC), Hartford, CT or its affiliates. PRIAC is a Prudential Financial company.

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