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Morgan Stanley Study Unpacks Plan Sponsor Trends Amid Increasing Demand for Consultancy Services

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Morgan Stanley's 2024 Retirement Plan Survey reveals key trends in 401(k) plan management:

1. Consultant Demand: Over 80% of plan sponsors use consultants, with a shift towards higher-touch 3(38) investment manager services.

2. Expanding Investment Lineups: More than a third plan to increase investment options, including target date funds with guaranteed payouts, multi-asset strategies, and hybrid default options.

3. Participant Education Focus: Plan sponsors prioritize educational tools, with 47% relying on consultants for these resources.

The survey highlights the growing complexity in retirement plan management and the increasing reliance on consultants for comprehensive support.

Il sondaggio sul Piano Pensionistico 2024 di Morgan Stanley rivela tendenze chiave nella gestione dei piani 401(k):

1. Domanda di Consulenti: Oltre l'80% degli sponsor del piano utilizza consulenti, con un trend verso servizi di gestione degli investimenti 3(38) più personalizzati.

2. Espansione delle Opzioni di Investimento: Più di un terzo prevede di aumentare le opzioni di investimento, includendo fondi con data obiettivo con pagamenti garantiti, strategie multi-asset e opzioni di default ibride.

3. Focus sull'Educazione dei Partecipanti: Gli sponsor del piano danno priorità agli strumenti educativi, con il 47% che si affida ai consulenti per queste risorse.

Il sondaggio evidenzia la crescente complessità nella gestione dei piani pensionistici e la crescente dipendenza dai consulenti per un supporto completo.

La Encuesta sobre Planes de Jubilación 2024 de Morgan Stanley revela tendencias clave en la gestión de planes 401(k):

1. Demanda de Consultores: Más del 80% de los patrocinadores del plan utilizan consultores, con un cambio hacia servicios de gestores de inversiones 3(38) más personalizados.

2. Expansión de Opciones de Inversión: Más de un tercio planea aumentar las opciones de inversión, incluyendo fondos de fecha objetivo con pagos garantizados, estrategias de múltiples activos y opciones predeterminadas híbridas.

3. Enfoque en la Educación del Participante: Los patrocinadores del plan priorizan herramientas educativas, con un 47% confiando en consultores para estos recursos.

La encuesta resalta la creciente complejidad en la gestión de planes de jubilación y la creciente dependencia de los consultores para un apoyo integral.

모건 스탠리의 2024 퇴직연금 계획 조사에서는 401(k) 계획 관리의 주요 동향을 보여줍니다:

1. 컨설턴트 수요: 80% 이상의 계획 후원자가 컨설턴트를 이용하고 있으며, 보다 밀착된 3(38) 투자 관리자 서비스로의 전환이 이루어지고 있습니다.

2. 투자 옵션 확장: 3분의 1 이상이 보장된 지급이 있는 목표 날짜 기금, 다중 자산 전략 및 혼합 기본 옵션을 포함하여 투자 옵션을 늘릴 계획입니다.

3. 참여자 교육 집중: 계획 후원자는 교육 도구를 우선시하며, 47%가 이러한 자원에 대해 컨설턴트에 의존하고 있습니다.

이 조사는 퇴직 연금 계획 관리의 복잡성이 증가하고 있으며, 종합적인 지원을 위한 컨설턴트 의존도가 높아지고 있음을 강조합니다.

Le sondage sur le plan de retraite 2024 de Morgan Stanley révèle des tendances clés dans la gestion des plans 401(k) :

1. Demande de consultants : Plus de 80 % des sponsors de plan utilisent des consultants, avec une tendance vers des services de gestionnaires d'investissement 3(38) plus personnalisés.

2. Expansion des options d'investissement : Plus d'un tiers prévoit d'augmenter les options d'investissement, y compris les fonds à date cible avec des paiements garantis, des stratégies multi-actifs et des options par défaut hybrides.

3. Concentration sur l'éducation des participants : Les sponsors de plan privilégient les outils éducatifs, avec 47 % comptant sur des consultants pour ces ressources.

Le sondage met en lumière la complexité croissante dans la gestion des plans de retraite et la dépendance accrue aux consultants pour un soutien complet.

Die Umfrage zum Ruhestandsplan 2024 von Morgan Stanley zeigt wichtige Trends im Management von 401(k)-Plänen:

1. Beraternachfrage: Über 80 % der Planträger nutzen Berater, wobei ein Trend zu intensiveren 3(38)-Investitionsmanager-Dienstleistungen zu beobachten ist.

2. Erweiterung der Investitionsmöglichkeiten: Mehr als ein Drittel plant, die Investitionsmöglichkeiten zu erhöhen, darunter Ziel_date-Fonds mit garantierten Auszahlungen, Multi-Asset-Strategien und hybride Standardoptionen.

3. Fokus auf die Bildung der Teilnehmer: Planträger priorisieren Bildungstools, wobei 47 % auf Berater für diese Ressourcen zurückgreifen.

Die Umfrage hebt die zunehmende Komplexität im Management von Altersvorsorgeplänen hervor und die wachsende Abhängigkeit von Beratern für umfassende Unterstützung.

Positive
  • 80% of plan sponsors surveyed are using consultants, indicating strong demand for expert guidance
  • Nearly half of plan sponsors are considering working with 3(38) investment managers, potentially reducing workload and liability
  • Over a third of plan sponsors plan to expand investment options, offering more choices to participants
  • 71% of plan sponsors have added or are adding target date funds with guaranteed payouts
  • 64% of sponsors offer managed accounts, with another 22% planning to do so
  • 41% of sponsors now provide retirement income solutions, with an additional 44% planning to introduce this option
Negative
  • 25% of plan sponsors cited challenges in changing their investment lineup, indicating potential difficulties in plan management
  • Many plan sponsors identified participant understanding and involvement as key barriers to adding retirement income solutions

Insights

The Morgan Stanley study reveals significant trends in 401(k) plan management, with 80% of plan sponsors now using consultants. This shift towards professional guidance reflects the increasing complexity of retirement planning and fiduciary responsibilities. The trend towards 3(38) investment managers, who take on more fiduciary responsibility, is particularly noteworthy. This could potentially reduce liability for companies while improving investment management.

The expansion of investment lineups, including the addition of target date funds with guaranteed payouts (71%) and retirement income solutions (41%), indicates a focus on long-term participant outcomes. However, this complexity underscores the need for enhanced participant education, which consultants are increasingly providing.

For Morgan Stanley, this trend presents a significant business opportunity in their Institutional Consulting Solutions division. The increased demand for comprehensive retirement services could drive revenue growth in this segment, potentially impacting the company's financial performance positively in the medium to long term.

The survey results highlight a growing market for retirement plan consultancy services, with a clear trend towards more comprehensive offerings. The shift from 3(21) to 3(38) fiduciary relationships indicates a higher willingness to outsource investment decisions, potentially leading to larger contracts and increased revenue for service providers like Morgan Stanley.

The expansion of investment options, particularly in areas like target date funds with guaranteed payouts and retirement income solutions, suggests a maturing market responding to diverse participant needs. This trend could drive innovation in financial products and services tailored to retirement plans.

The emphasis on participant education presents an opportunity for differentiation among service providers. With 47% of plan sponsors relying on consultants for educational resources, there's a clear demand for integrated services that combine investment management with participant engagement strategies. This holistic approach could be a key factor in winning and retaining clients in the competitive retirement plan market.

80% of plan sponsors surveyed are using consultants in managing retirement plans

• Trends indicate preference is tipping toward higher-touch services

• Fund lineup and participant education singled out as strategic priorities

NEW YORK--(BUSINESS WIRE)-- Morgan Stanley today announced results of its 2024 Retirement Plan Survey, providing insight into shifting 401(k) plan sponsor attitudes and tactics amid a constantly evolving financial landscape.

Retirement benefits remain essential for attracting and retaining employees, but as markets grow more complex, so do demands on defined contribution (DC) plan sponsors to help employees prepare for retirement. To compete, plan sponsors are under pressure to offer attractive benefit packages that address myriad employee needs and business demands. In response, most are turning to consultants for support—and seeking more holistic services.

Polling nearly 200 plan sponsor decision-makers with 401(k) plans with at least $50 million in assets—and 56 from organizations with 401(k) plans with more than $1 billion—the survey provides a comprehensive look at how retirement leaders are approaching their choices around selecting support, investment lineups and strategies for engaging participants. Key insights include:

1. Consultant Relationships Are in Demand

  • Reflecting the need for guidance in an increasingly complex landscape, over 80% of plan sponsor respondents say they are currently using a consultant.
  • The structure of consultant arrangements is also shifting toward higher-touch services: A 3(21) fiduciary acts as an investment advisor who makes investment recommendations regarding plan assets, while by contrast a 3(38) investment manager reviews investment options, makes investment decisions, and ultimately takes more fiduciary responsibility for the plan's day-to-day investments. Today, 3(21) relationships are still nearly twice as common as 3(38) relationships, (55% vs. 27%, respectively), but the gap appears to be closing—with most 3(38) users beginning their engagement within the past five years. In fact, nearly half of plan sponsors are either highly (6%) or partly (42%) considering working with a 3(38) investment manager.
  • Among those not utilizing or considering a 3(38) investment manager, satisfaction with their current approach was the primary reason. On the other hand, top reasons plan sponsors cited for considering the switch to a 3(38) investment manager include reduced workload for executives, maximum investment liability transfer under ERISA, and the 3(38) investment manager’s ability to take immediate action for fund changes.

2. As Investment Lineups Expand, So Do Opportunities for Support

  • Though most plan sponsors are not currently seeking to increase the number of asset managers they use, more than a third plan to expand the number of investment options they offer. Yet, a quarter cited challenges in changing their investment lineup, particularly when it comes to participant communication, regulatory filings and the cost of moving assets—indicating key areas where consultant guidance adds value.
  • Most retirement plan sponsors are adding or have added target date funds with guaranteed payouts (71%), multi-asset strategies (65%), and hybrid default investment options (56%) to their offerings. Currently, 64% offer managed accounts, with another 22% planning to do so. And despite initial hesitation, 41% of sponsors now provide retirement income solutions—with an additional 44% intending to introduce this option to help workers turning savings into income post-retirement.

3. Participant Education Key to Success

  • Given so much complexity, educational materials and other tools to engage participants are very important to the success of retirement plans, especially when adding new solutions. The top three popular tools provided through a 401(k) include online retirement planning tools (85%), online account review and analysis tools (74%) and written education content (73%).
  • Consultants and investment advisors are now the most common source for participant educational resources, with nearly half of plan sponsors turning to their consultants (47%) to provide these services. This trend is expected to continue as consultants increasingly incorporate participant education into their offerings. Online tools are a favorite format, but nearly half of sponsors also offer live training, either online or in-person.
  • Many plan sponsors identified participant understanding and involvement as key barriers to adding retirement income solutions to their plans, stressing the need for education resources.

"Retirement plans are adapting to address both company and employee needs, and our survey results show that it's not just about improving financial results, but about doing what's best for the future," said Jeremy France, Head of Institutional Consulting Solutions at Morgan Stanley. “Plan sponsors are looking for a variety of solutions to help them maintain competitive benefits, foster employee understanding and fulfill fiduciary responsibilities, but there’s no one-size-fits-all recipe. Instead, we believe that it’s only through tailored guidance that organizations can find the right blend of support, investment options and education to unlock the full impact of their plans.”

Morgan Stanley has built a robust offering across the full spectrum of advice, workplace and self-directed solutions. Through Institutional Consulting Solutions, comprehensive retirement services include investment advice and solutions for institutional investors; support for plan sponsors in managing retirement plans, navigating regulations and educating employees; and plan participant education and personalized guidance. For more information, visit Morgan Stanley Institutional Consulting Solutions.

The 2024 plan sponsor survey is the second in an annual series from Morgan Stanley Wealth Management focused on insights into the institutional landscape. The full 2024 survey results are available here.

About Morgan Stanley Wealth Management

Morgan Stanley Wealth Management, a global leader, 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 42 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.

This has been prepared for informational purposes only and is not a solicitation of any offer to buy or sell any security or other financial instrument, or to participate in any trading strategy. This material does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Morgan Stanley recommends that investors independently evaluate particular investments and strategies and encourages investors to seek the advice of a Financial Advisor.

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.

Past performance is not a guarantee or indicative of future performance. Historical data shown represents past performance and does not guarantee comparable future results.

This material contains forward-looking statements and there can be no guarantee that they will come to pass.

Diversification and asset allocation do not guarantee a profit or protect against loss in a declining financial market.

This material should not be viewed as investment advice or recommendations with respect to asset allocation or any particular investment.

Morgan Stanley Wealth Management is the trade name of Morgan Stanley Smith Barney LLC, a registered broker-dealer in the United States.

© 2024 Morgan Stanley Smith Barney LLC. Member SIPC.

Media Relations: Susan Siering Susan.Siering@morganstanley.com; Jeanne Joe Perrone Jeanne.Perrone@morganstanley.com

Source: Morgan Stanley

FAQ

What percentage of plan sponsors are using consultants according to Morgan Stanley's 2024 Retirement Plan Survey?

According to Morgan Stanley's 2024 Retirement Plan Survey, over 80% of plan sponsors surveyed are currently using consultants in managing their retirement plans.

What are the top investment options being added by retirement plan sponsors according to Morgan Stanley (MS)?

According to Morgan Stanley's survey, the top investment options being added by retirement plan sponsors are target date funds with guaranteed payouts (71%), multi-asset strategies (65%), and hybrid default investment options (56%).

How many plan sponsors offer managed accounts in their 401(k) plans, as per Morgan Stanley's 2024 survey?

Morgan Stanley's 2024 Retirement Plan Survey reveals that 64% of plan sponsors currently offer managed accounts in their 401(k) plans, with an additional 22% planning to do so.

What percentage of plan sponsors are considering working with a 3(38) investment manager, according to Morgan Stanley's (MS) survey?

According to Morgan Stanley's survey, nearly half of plan sponsors are either highly (6%) or partly (42%) considering working with a 3(38) investment manager.

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