For the First Time, Fiduciary Responsibility Tops Plan Sponsors’ Reasons for Hiring Advisors

Seventh Annual Fidelity® Plan Sponsor Attitudes Study Finds 38 Percent of Plan Sponsors Surveyed are Concerned About Their Fiduciary Duties, An Increase of 14 Percent from Last Year

BOSTON--()--Fidelity Investments® today announced the results of its seventh annual Plan Sponsor Attitudes study, which revealed that – for the first time – fiduciary responsibility is the top reason plan sponsors start using retirement advisors. Thirty-eight percent of the plan sponsors surveyed are concerned about their fiduciary duty, a significant increase from 24 percent last year. Sixty-nine percent – a new high – ranked an advisor’s willingness to take on a formal fiduciary role as important. The study surveyed employers who have set up retirement plans that use a wide variety of recordkeepers and range in size from 25 to 10,000 participants.1

The research also found that a record 72 percent of plan sponsors in the study are satisfied with their advisors, with two-thirds saying they get good value from their advisors. Despite this, the percentage of respondents actively looking to change their advisors reached a new high of 23 percent, with the most common reason being the need for a more knowledgeable advisor who is an expert in a variety of areas, including how to best manage fiduciary responsibilities. Plan sponsors surveyed are also looking for retirement advisors who can consult on plan design and improving plan performance, with an all-time high of 86 percent having made plan design changes in the last two years, and a similar 87 percent having made investment menu changes in the last two years.

“Advisors who specialize in the retirement plan market are delivering increasingly greater value, offering services that allow them to operate as a fiduciary, as well as building scalable ways to manage investment menus and serve their plan sponsor clients,” said Jordan Burgess, head of specialist field sales overseeing defined contribution investment only (DCIO) sales at Fidelity Institutional Asset Management. “While plan sponsors are more satisfied than ever, they are also starting to expect more from their advisors, with many of them intensifying their search for even more knowledgeable advisors.”

“The Department of Labor’s rule on investment advice gives specialist plan advisors the opportunity to raise the game,” added Burgess. “If they are successful at demonstrating their knowledge, these plan advisors could potentially expand their share of the market and become even more competitive.”

Find Opportunities to Demonstrate Your Knowledge

Despite the progress made in areas such as satisfaction with advisors, an all-time high of 88 percent of the plan sponsors surveyed said they have participants who delay retirement due to a lack of savings. To help plan participants get on track in terms of reaching their retirement goals, and to stay competitive against their peers, plan advisors should share their knowledge across a variety of areas, beyond their fiduciary responsibilities. Plan sponsors who took part in the study are looking for these skills among advisors:

  1. Providing guidance on plan design changes. Plan sponsors are focused on driving participation among their employees, with a record number of respondents (61 percent) citing this as a reason for design changes. More than three-quarters (76 percent) of plan sponsors surveyed are planning future design changes – the highest percentage ever. While retirement advisors and consultants are considered the primary driver of plan design changes, recordkeeper influence is expanding, with more plan sponsors saying that advisors and recordkeepers have equal impact on decisions. Advisors should stay aware of what recordkeepers can offer, including simplifying plan administration, and they should ensure that their clients understand how a strong partnership that includes the plan sponsor, the recordkeeper and the advisor can benefit plan participants.
  2. Providing guidance on investment menu changes. Plan sponsors are just as active with menu changes as they are with plan design changes, with 87 percent of respondents having made an investment menu change in the past two years – a remarkable increase of 52 percent since Fidelity began asking this question in 2012. Again, plan sponsors in the survey rely most heavily on advisors for investment menu selection, and advisors should understand how their clients are measuring investment performance: relative to benchmark (54 percent); relative to investment category (53 percent); alignment with investment strategy (42 percent); and alignment with stated plan risk parameters (40 percent).
  3. Helping set clear savings and retirement income goals. Even though a record number of the plan sponsors surveyed are concerned about their participants’ lack of savings, 68 percent of them don’t define clear savings or retirement income goals. Plan advisors can help their clients redefine success measures, encouraging them to set a plan goal for a retirement income replacement rate, establishing a plan design that aligns with this goal, then monitoring participants’ collective progress toward that goal.

How to Structure Plans for Retirement Income

Fidelity believes that a retirement income replacement rate goal from assets should be about 45 percent of participants’ final salary,i if they don’t have a pension. For many participants, this means they may need to accumulate 10 times their final salary by their full retirement age of 67.ii Saving at least 15 percent of their salary, including an employer match, over the course of their career is one path to reach that goal.iii

There is no one-size-fits-all plan design for all plan sponsors, but advisors can recommend several plan design tools and work with recordkeepers to help participants save. Examples of steps advisors can encourage sponsors to take include:

  • Save long enough: Start early with auto enrollment for all employees.
  • Improve savings rates: One of the ways plan sponsors can help their participants reach a savings rate of at least 15 percent is to adopt a minimum 6 percent auto-enrollment default deferral rate or higher. This could be combined with an automatic one percent annual deferral increase up to 15 percent, and strategic match of 3 percent to encourage deferrals.iv,v
  • Align investment menu options with plan goals: Participants may need more exposure to equities for longer than expected. Advisors should talk to clients about a target-date option to assist with age-appropriate asset allocation. For example, the Fidelity target-date glide path assumes a 4.5 percent real rate of return (net of inflation.)
  • Set a goal and measure progress: Improve plan metrics against a plan retirement income goal and participant progress on overall savings rates.

Additional information on the survey as well as resources and tools – including fund analytics and details on investment options – can be found at (for defined contribution professionals only.)

Fidelity Institutional Asset Management, Defined Contribution Investment Only (DCIO)

Fidelity Institutional Asset Management is a leading provider of investment management and retirement services to defined contribution professionals nationwide, supporting advisors, recordkeepers, third-party administrators and plan sponsors in a collective effort to help participants achieve better retirement outcomes. As a retirement leader, Fidelity has deep knowledge of plans and participant behaviors. The firm combines this knowledge with a legacy of asset management —62 percent of Fidelity’s $2.1 trillion in managed assets are retirement assets as of June 2016— to become a key manager in the investment-only arena with more than $76 billion in total DCIO assets.

Plan Sponsor Attitudes Survey: Methodology

The 2016 Plan Sponsor Attitudes Survey was conducted in collaboration with E-rewards, an independent market research company, via an online survey of 976 plan sponsors on behalf of Fidelity in February 2016. Respondents were identified as the primary person responsible for managing their organization’s 401(k) plan (ranging in size between 25 and 10,000 participants), and the survey focused on those plan sponsors (849, or approximately 87 percent) using the services of a financial advisor or plan consultant. Fidelity Investments was not identified as the survey sponsor. The experiences of the plan sponsors who responded to the February 2016 survey may not be representative of those other plan sponsors who use the services of an advisor. Previous Fidelity surveys were conducted in 2008, 2010, 2012, 2013, 2014 and 2015.

About Fidelity Investments

Fidelity’s goal is to make financial expertise broadly accessible and effective in helping people live the lives they want. With assets under administration of $5.4 trillion, including managed assets of $2.1 trillion as of June 30, 2016, we focus on meeting the unique needs of a diverse set of customers: helping more than 25 million people invest their own life savings, nearly 20,000 businesses manage employee benefit programs, as well as providing nearly 10,000 advisory firms with investment and technology solutions to invest their own clients’ money. Privately held for nearly 70 years, Fidelity employs 45,000 associates who are focused on the long-term success of our customers. For more information about Fidelity Investments, visit

The information contained herein is general in nature, is provided for informational purposes only and is not legal advice. Fidelity does not provide advice of any kind.

The third-party trademarks and service marks are the property of their respective owners. All other trademarks and service marks are the property of FMR LLC or an affiliated company.

Fidelity Clearing & Custody Solutions provides clearing, custody or other brokerage services through National Financial Services LLC or Fidelity Brokerage Services LLC. Members NYSE, SIPC.

Products and services provided through Fidelity Institutional Asset Management (FIAM) to investment professionals, plan sponsors and institutional investors by Fidelity Investments Institutional Services Company, Inc., 500 Salem Street, Smithfield, RI 02917.


© 2016 FMR LLC. All rights reserved.

1 While the study surveys sponsors of plans that use a wide variety of recordkeepers and range in size from 25, to 10,000 participants, data used in the news release reflects sponsors of plans that range in size from 25 to 2,500 participants and have up to $100M+ in assets under management.

i The income replacement rate is the percentage of preretirement income that an individual should target replacing in retirement based on Consumer Expenditure Survey 2011 (BLS), Statistics of Income 2011 Tax Stat, IRS 2014 tax brackets, and Social Security Benefit Calculators. The 45% income replacement target assumes no pension income, and a retirement and Social Security claiming age of 67, which is the full Social Security benefit age for those born in 1960 or later.

ii The savings factor is a multiple of income that an individual should aim to have saved by a given age. For example, you should aim to have saved 1x your current income by age 30. Fidelity developed a series of income multiplier targets corresponding to different ages, assuming a retirement age of 67, a 15% savings rate, a 1.5% constant real wage growth, a planning age through 93, and an income replacement target of 45% of preretirement income (assumes no pension income). The final income multiplier is calculated to be 10x your preretirement income and assumes a retirement age of 67. See endnote 5 for investment growth assumptions.

iii Fidelity’s suggested total pretax savings goal of 15% of annual income (including employer contributions) is based on our research, which indicates that most people would need to contribute this amount from an assumed starting age of 25 through an assumed retirement age of 67 to potentially support a replacement annual income rate equal to 45% of preretirement annual income (assuming no pension income) through age 93. See endnote 5 for investment growth assumptions.

iv The auto enrollment example shown does not assume a constant savings rate throughout the working horizon. Target total savings rate includes both employer and employee contributions. For example, a hypothetical participant who starts with a 6% total annual savings at age 25 would need to increase her savings rate every year by 1% until she reaches the 18% target, including employer contributions, in order to replace 45% of pre-retirement annual income (assuming no pension income) at age 67. See footnote No. 5 for investment growth assumptions.

v The savings factor and savings rate targets are based on simulations based on historical market data. These simulations take into account the volatility that a variety of asset allocations might experience under different market conditions. Given the above assumptions for retirement age, planning age, wage growth, and income replacement targets, the results were successful in nine out of 10 hypothetical market conditions where the average equity allocation over the investment horizon was more than 50% for the hypothetical portfolio.

Remember, past performance is no guarantee of future results. Performance returns for actual investments will generally be reduced by fees or expenses not reflected in these hypothetical calculations. Returns will also generally be reduced by taxes.


Fidelity Investments
Corporate Communications
Follow us on Twitter @FidelityNews
Don Lim, 401-292-6496

Release Summary

Seventh Annual Fidelity Plan Sponsor Attitudes Study Finds 38 Percent of Plan Sponsors Surveyed are Concerned About Their Fiduciary Duties, An Increase of 14 Percent from Last Year


Fidelity Investments
Corporate Communications
Follow us on Twitter @FidelityNews
Don Lim, 401-292-6496