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Morgan Stanley at Work Retirement Study Shows Plan Sponsors Prioritizing 401(k) Plan Design Amid Challenging Labor and Economic Conditions
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Rhea-AI Summary
Morgan Stanley at Work released findings showing that 401(k) plan design is key to attracting and retaining talent amid a tightening job market. Survey results indicate that access to a Financial Advisor significantly boosts employee participation rates, with 80% of fully participating plans having one. Features such as auto-enrollment and tailored financial education also enhance engagement. As the economic landscape shifts, plan sponsors are prioritizing flexible, well-designed retirement solutions to support their workforce.
Positive
80% of fully participating plans have a Financial Advisor, enhancing employee engagement.
Plan sponsors report 23% of companies offer a Roth 401(k), increasing plan attractiveness.
Features like auto-enrollment (20%) and profit sharing (18%) are being adopted to boost participation.
87% of plan sponsors believe providers offer engaging financial education, which could lead to higher employee satisfaction.
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Attracting and retaining talent continue to pose challenges amid a tighter jobs market, changing workforce dynamics, and shifting business needs
Access to a Financial Advisor strongly correlates with employee participation
Not all 401(k) plans are created equal, and an agile plan design is key
NEW YORK--(BUSINESS WIRE)--
Morgan Stanley at Work today released new research from its workplace retirement study that highlight retirement plan sponsors are prioritizing 401(k) plan design amid challenging economic and jobs environment. While the 401(k) plan continues to be an essential workplace benefit to attract and retain talent, plan sponsors emphasized the need for an attractive plan with a range of features to meet the evolving financial needs of a diverse workforce.
Based on survey results, plan sponsors continue to see the 401(k) as a leading retirement benefit when it comes to attracting and retaining talent—a top priority. As the economic climate becomes more complex, plan design has emerged as a differentiator to help drive employee enrollment and support the company’s talent strategy. 401(k) plans with a Financial Advisor, or that offer features like a Roth or company match, are seen as more attractive with higher enrollment rates, which in turn inform employee satisfaction and support retention. The research also shows an increased need for employee financial education that is engaging, tailored to specific life or financial stages, and digital-friendly.
Plan sponsors cite features of an attractive 401(k) plan to boost engagement and participation including:
Access to a Financial Advisor strongly correlates with employee participation: Of those plan sponsors who reported full employee participation, 80% had a plan Financial Advisor. A 401(k) Financial Advisor brings value for enrollment, engagement, and talent.
Plan design makes a difference: In addition to a 401(k) benefit plan, plan sponsors report 23% of companies also offer a Roth 401(k), followed by auto-enrollment (20%), and profit sharing (18%) to help encourage enrollment.
Auto features help increase participation: Plan sponsors identified automatic escalation (43%), automatic employer contribution (40%), and automatic enrollment (37%) as plan features with the highest participation, helping employers meet employees where they are today.
Education should be engaging, tailored, and digital: Most plan sponsors (87%) believe providers are sharing engaging participant retirement and financial education. However, they say content should be even more engaging and based on individual financial stages (44%), delivered through digital tools (39%), and specifically tailored to life events (36%).
“The 401(k) plan has been around for decades and is largely the most popular workplace benefit to help employees build their retirement nest egg,” said Anthony Bunnell, Head of Retirement for Morgan Stanley at Work. “The dynamics of today’s economy have changed, with employers and employees alike juggling numerous competing financial needs. So, it’s not surprising that plans with Financial Advisors are associated with more engaged employees, as a Financial Advisor can play a central role not just in managing the plan, but in helping employees navigate the markets and invest in their future.”
Morgan Stanley at Work’s Retirement Solutions offers a flexible, multi-provider recordkeeper platform designed to meet the individual needs of companies. In addition to providing customized retirement solutions, Morgan Stanley at Work has dedicated Financial Advisors who focus on retirement that understand the challenges businesses face and offer support and services for their employees. Through a consultative process, the Firm’s Financial Advisors help companies improve plan competitiveness and fiduciary risk management, investment selection and monitoring, and employee retirement readiness.
Retirement Solutions is part of the Morgan Stanley at Work suite of financial solutions, which spans Equity Compensation through Shareworks and Equity Edge Online®, Retirement and Financial Wellness Solutions. Morgan Stanley at Work and Morgan Stanley’s intellectual capital and financial education are delivered through multiple channels to enable employees to build a holistic plan to help them achieve their financial goals. Shareworks services are provided by Morgan Stanley Smith Barney LLC, member SIPC, and its affiliates, and Equity Edge Online® employee stock plan solutions are offered by E*TRADE Financial Corporate Services, Inc., both are parts of Morgan Stanley at Work and all wholly owned subsidiaries of Morgan Stanley.
Methodology: The findings in the 2022 Plan Sponsor research arebased on proprietary, third-party research and survey data conducted by Rebel & Co. of 710 individuals responsible for selecting or managing their company’s 401(k) plan. The data represents a range of company sizes that offer a 401(k) benefit plan. The research was collected from a 90-minute focus group conducted in the third quarter 2022 by Rebel & Co.
About Morgan Stanley Wealth Management
Morgan Stanley Wealth Management is a leading financial services firm that provides access to a wide range of products and services to individuals, businesses, and institutions, including brokerage and investment advisory services, financial and wealth planning, cash management and lending products and services, annuities and insurance, retirement, and trust services.
About Morgan Stanley Morgan Stanley (NYSE: MS) is a leading global financial services firm providing a wide range of investment banking, securities, wealth management and investment management services. With offices in 41 countries, the Firm’s employees serve clients worldwide including corporations, governments, institutions and individuals. For further information about Morgan Stanley, please visit www.morganstanley.com.
When Morgan Stanley Smith Barney LLC, its affiliates and Morgan Stanley Financial Advisors and Private Wealth Advisors (collectively, “Morgan Stanley”) provide “investment advice” regarding a retirement or welfare benefit plan account, an individual retirement account or a Coverdell education savings account (“Retirement Account”), Morgan Stanley is a “fiduciary” as those terms are defined under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and/or the Internal Revenue Code of 1986 (the “Code”), as applicable.
When Morgan Stanley provides investment education, takes orders on an unsolicited basis or otherwise does not provide “investment advice”, Morgan Stanley will not be considered a “fiduciary” under ERISA and/or the Code. For more information regarding Morgan Stanley’s role with respect to a Retirement Account, please visit www.morganstanley.com/disclosures/dol. Tax laws are complex and subject to change. Morgan Stanley does not provide tax or legal advice. Individuals are encouraged to consult their tax and legal advisors (a) before establishing a Retirement Account, and (b) regarding any potential tax, ERISA and related consequences of any investments or other transactions made with respect to a Retirement Account.
2022 Morgan Stanley Smith Barney LLC. Member SIPC.
What are the main findings of the Morgan Stanley retirement study released in December 2022?
The study highlights that 401(k) plan design is crucial for attracting and retaining talent, with features like access to a Financial Advisor significantly boosting employee participation.
How does access to a Financial Advisor affect 401(k) plan participation?
The study found that 80% of companies with full employee participation in their 401(k) plans had a Financial Advisor, indicating a strong correlation between advisor access and engagement.
What features are important for boosting 401(k) plan participation according to Morgan Stanley?
Key features include auto-enrollment, Roth 401(k) options, profit sharing, and engaging financial education tailored to employees' needs.
How does Morgan Stanley's research relate to the current job market?
The research addresses challenges in the job market by emphasizing the need for attractive 401(k) plans to help companies attract and retain talent.
