PLANADVISER - November/December 2017 - 27

Capitalizing on growing
and evolving small to
mid-market 401(k) plans
L
arge market retirement savings plans may seem like an
obvious target for investment advisors. However, there
is great opportunity in small and mid-market defined
contribution (DC) plans, where growth is strong and plans are
evolving to look more like their larger counterparts. " The small
market space represents the largest share of total assets and
plans out there, " says Jim O'Connor, 401(k) National Sales
manager and head of Business Development at AXA Retirement
Plan Services. " With 98% of plans having less than $25 million
in assets, and 58 million Americans not covered by a 401(k)
or employer-sponsored plan,
growth. " 1
Jim O'Connor
there's a huge opportunity for
As this space evolves and plans become more complex, the
role of the advisor is more important than ever. Plan sponsors
are looking to their advisors to help make the best decisions for
their plan and their employees, helping ensure that employees
are prepared for retirement. Executives at AXA Retirement Plan
Services, part of AXA U.S., a leader in providing financial security
and retirement products, point
advisors new opportunities to grow their business.
* As the defined contribution plan space matures, the
institutional mindset of
larger plans is moving down
market. As a result, small and mid-market plans have a new
and growing focus on services, capabilities, and plan design
features once afforded primarily to large plans.
* The role of the advisor is evolving to be an extension of
the plan sponsor, meaning advisors are redirecting their time
and resources to help sponsors monitor plan health and ensure
operational effectiveness and efficiencies.
* New developments on the regulatory front, combined with
lack of understanding of basic fiduciary responsibilities,
have left plan sponsors worried they face heightened risk
exposure.
Institutional mindset boosts demand for
up-market services and design features
As smaller plan sponsors look to get the same value from their
retirement plan providers that larger plan sponsors do, O'Connor
sees several key areas of focus:
* Tailoring financial wellness and education programs to
both plan sponsor clients and individual plan participants
* Introducing design features such as automatic enrollment
and automatic escalation of participant contributions
1
Department of Labor, Cerulli Associates, PlanSponsor.com,
2017 Recordkeeping Survey.
SPONSORED SECTION
Tina Anstett
Rick Frink
to three key trends that offer
" If you
aggregate
the micro
and small
markets alone,
they account
for almost
$88 billion of
assets under
management,
through
36,000
401(k) plans. "
* Developing investment menus that give participants more
choice and more opportunity to diversify, stay on track, and
reach their retirement savings goals
* Ongoing benchmarking to show how plans stack up against
the competition, so that plan sponsors can better manage their
plans and maximize the value of their vendor's offering
" Investment flexibility is a requirement now, even in the small
plan space, " O'Connor says. " Plan sponsors want to be able
to choose from a diverse set of investment options so that
plan participants can maximize retirement savings, based on
their
individual
risk tolerance, proximity to retirement, and
investment style. They're looking for actively managed funds,
passive investments such as index funds, target date and
managed allocation funds for those who want to put their plan
on auto pilot, as well as institutional share classes that can
lower the cost of investing for their participants. "
Business owners are also interested in ways to maximize their
personal contributions. Advisors can help with strategies such
http://www.PlanSponsor.com
PLANADVISER - November/December 2017

Table of Contents for the Digital Edition of PLANADVISER - November/December 2017
