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Key Takeaways & Insights

The retirement plan landscape has changed dramatically over the last 10 years, and committed retirement plan fiduciaries are looking for insights on how their defined contribution plans could be impacted. Below are five key trends we believe plan sponsors should be aware of as we move further into 2021.

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Five Big Trends in Defined Contribution Plans for 2021

  • Holistic Financial Education

The pandemic has created a lot of pain for people. The CARES ACT made it easier for people to access their savings and many have dipped into their retirement savings to make it through the COVID crisis. People are hungry for good, objective financial education and advice and the workplace is a great place to provide it. Sponsors can start with their retirement plans. The best recordkeeper’s websites help participants not only with retirement savings but also with basic financial planning tasks such as creating an emergency savings account and managing debt including student loans. And streaming technologies like Zoom have made it much easier to conduct remote meetings.

  • Deaccumulation and Retirement Income

The SECURE Act requires recordkeepers to show what a participant’s account balance will be in terms of a monthly income stream. In addition, the Act now makes it easier for sponsors to add retirement income products to their plan and many asset managers are coming out with their own type of retirement income products including as part of a target date solution. Taken together, these steps will help participants target a well-defined retirement income stream while they are building their assets during their working years.

  • Industry Consolidation

Back in 2018, Principal agreed to buy Wells Fargo’s book of recordkeeping clients. That same year The Newport Group acquired PNC’s business. In 2020 Mass Mutual sold its retirement business to Empower who also acquired Fifth Third’s and Truist’s (the merger of Sun Trust and BB&T) businesses. The upshot is that recordkeeper consolidation is a long-term trend in DC marketplace and we expect to see more of it. Consolidation is also happening the financial advisor space. The institutional retirement space is increasingly dominated by professional, ERISA-focused advisors and Pes firms are increasingly driving M&A activity because of size of the deals.

  • ESG Investing

Environmental, Social and Governmental investing is continuing to the gain steam in the wealth management space. With the recent change in the administration and at DOL, we expect to see demand for ESG investment in investment lineups take off in the DC marketplace.

  • Pooled Employer Plans (PEPs) and Expanded Coverage

Roughly half of Americans do not have access to an employer-sponsored retirement plan. The Secure Act allowed small plan sponsors to band together under a PEP to offer a low-cost retirement plan. We expect smaller companies to use currently without access to a retirement plan to offer a low-cost plan to their workers.

Request Cerity Partners’ Plan Health Report™ to see how your DC retirement plan stacks up.

The report looks at more than 50 key performance indicators that drive plan success and highlights what is working as well as areas for improvement. You will also learn how your plan compares to industry peers and national averages. Through this evaluation, your plan committee will have a clear road map for increasing retirement readiness and reducing fiduciary risk.

https://ceritypartners.com/plan-health-smartcard-report/


* Your complimentary analysis is not contingent on using any of Cerity Partners’ services.

Cerity Partners LLC (“Cerity Partners”) is a registered investment adviser with offices in California, Colorado, Illinois, Ohio, Michigan, New York, Massachusetts, and Texas.  Registration of an Investment Advisor does not imply any level of skill or training.  This commentary is limited to general information, and should not be construed as personal investment advice.  There is no guarantee that the views and opinions expressed in this piece will come to pass.  The information is deemed reliable as of the date of this commentary, but is not guaranteed, and subject to change without notice.  It should not be considered as an offer to sell or a solicitation of an offer to buy any security.


Meet the Author

Matt Gnabasik

Partner

Matt is a Partner in the Chicago office. He is a well-known speaker, author and innovator in the retirement plan industry with more than 28 years of experience. Matt specializes in simplifying complex retirement issues for his plan sponsor clients by utilizing his deep experience to drive better outcomes for participants and reduced liability for plan sponsors. His areas of expertise include strategic plan design, fiduciary best practices, employee financial wellness, investment menu design, fee analysis and negotiation and multinational savings plans.

Prior to joining Cerity Partners, he founded Blue Prairie Group, a leading ERISA-focused RIA firm serving hundreds of corporate, not-for-profit and government clients throughout the country. He is the author of two books on retirement plans: 401(k) Best Practices: A Guidebook for Plan Sponsors (2020) and Smart Choices: Selecting and Administering a Safe 401(k) Plan (2002.)

Matt holds a Bachelor of Arts degree from the University of Wisconsin-Madison and a Bachelor of Science from the University of Minnesota, Carlson School of Management.

Connect with Matt

401(k) Best Practices Cover

Partner Matthew Gnabasik draws on his 30 years of experience to provide you with a strategic framework for transforming your 401(k) plan into a powerful engine for retirement readiness. Inside you’ll find actionable tips for reconfiguring plan design, employing financial wellness, finding a good advisor, and much more.

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