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Planning for Retirement
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Fiduciary Misperceptions
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The Power of Being Proactive
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Plan Sponsor & Participant Insights
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Target Date Fund Selection: The Importance of Choosing a Target Date Strategy
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Who is considered a fiduciary of a defined contribution plan? Generally, what are the fiduciary responsibilities of defined contribution plan sponsors with regard to the plan participants?
Is there a gap between plan sponsor’s perceptions of their fiduciary responsibilities and reality?
Are there any advantages for plan sponsors who understand they are fiduciaries?
The Employee Retirement Income Security Act (ERISA) defines a fiduciary as any person who:
Dan Notto
ERISA Strategist
J.P. Morgan Asset Management
Why is it important for those saving and investing for retirement to have a plan to achieve their retirement goals?
What are key topics that advisors and plan sponsors need to reinforce to help plan participants stay on track in saving for their retirement?
How can plan sponsors help participants achieve a sufficient level of income replacement for their retirement?
Why is it important for those saving and investing for retirement to have a plan to achieve their retirement goals?
What are key topics that advisors and plan sponsors need to reinforce to help plan participants stay on track in saving for their retirement?
How can plan sponsors help participants achieve a sufficient level of income replacement for their retirement?
Why is it important for those saving and investing for retirement to have a plan to achieve their retirement goals?
What are key topics that advisors and plan sponsors need to reinforce to help plan participants stay on track in saving for their retirement?
How can plan sponsors help participants achieve a sufficient level of income replacement for their retirement?
Why is it important for those saving and investing for retirement to have a plan to achieve their retirement goals?
What are key topics that advisors and plan sponsors need to reinforce to help plan participants stay on track in saving for their retirement?
How can plan sponsors help participants achieve a sufficient level of income replacement for their retirement?
Katherine Roy
Chief Retirement Strategist
J.P. Morgan Asset Management
Dan Notto, ERISA Strategist, J.P. Morgan Asset Management, clarifies what defines a fiduciary, the responsibilities of a fiduciary and common misperceptions.
Katherine Roy, Chief Retirement Strategist, J.P. Morgan Asset Management, addresses the critical importance of having a plan for retirement and how plan sponsors can help participants stay on track in their savings goals.
Meghan Jacobson, CFA, Head of U.S. Insights Program at J.P. Morgan Asset Management, discusses why plan advisors must be proactive with plan sponsors in order to position participants on stronger retirement investment paths.
Fiduciary Misperceptions
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by
Planning for Retirement
What role can/should advisors to the plan play in helping plan sponsors understand and meet their fiduciary obligations?
Who is considered a fiduciary of a defined contribution plan? Generally, what are the fiduciary responsibilities of defined contribution plan sponsors with regard to the plan participants?
Is there a gap between plan sponsor’s perceptions of their fiduciary responsibilities and reality?
Are there any advantages for plan sponsors who understand they are fiduciaries?
What role can/should advisors to the plan play in helping plan sponsors understand and meet their fiduciary obligations?
Who is considered a fiduciary of a defined contribution plan? Generally, what are the fiduciary responsibilities of defined contribution plan sponsors with regard to the plan participants?
In our 2019 survey of defined contribution (DC) plan sponsors, we found that one in four plan sponsors incorrectly believe they have offloaded all of their fiduciary responsibility for the plan’s investment offerings, even though they do qualify as fiduciaries under the ERISA. And some of these plan sponsors believe they can offload all of their fiduciary responsibilities for investments to a third party, like their recordkeeper or advisor. Plan sponsors who harbor misperceptions like these—or who are unaware of their fiduciary status—risk violating ERISA’s fiduciary standards, harming participants and exposing themselves and their firms to liability.
Is there a gap between plan sponsor’s perceptions of their fiduciary responsibilities and reality?
Are there any advantages for plan sponsors who understand they are fiduciaries?
What role can/should advisors to the plan play in helping plan sponsors understand and meet their fiduciary obligations?
What role can/should advisors to the plan play in helping plan sponsors understand and meet their fiduciary obligations?
Who is considered a fiduciary of a defined contribution plan? Generally, what are the fiduciary responsibilities of defined contribution plan sponsors with regard to the plan participants?
Is there a gap between plan sponsor’s perceptions of their fiduciary responsibilities and reality?
Are there any advantages for plan sponsors who understand they are fiduciaries?
Plan sponsors who understand they are fiduciaries tend to be more confident that they are doing
the sorts of things that prudent fiduciaries ought to do. On a number of measures—from having appropriate processes in place for selecting and monitoring investments to understanding their plans’ target date funds (TDFs)—plan sponsors who are aware that they are fiduciaries are more confident than those who are not aware of their status.
What role can/should advisors to the plan play in helping plan sponsors understand and meet their fiduciary obligations?
Who is considered a fiduciary of a defined contribution plan? Generally, what are the fiduciary responsibilities of defined contribution plan sponsors with regard to the plan participants?
Is there a gap between plan sponsor’s perceptions of their fiduciary responsibilities and reality?
Are there any advantages for plan sponsors who understand they are fiduciaries?
A sound understanding of fiduciary status, responsibilities, liabilities and protections can help ensure that DC plans are well administered and continue to evolve for the best interests of participants, while protecting individual plan fiduciaries and their organizations. An advisor can play an important role in improving plan sponsor awareness and comprehension of their fiduciary status and associated responsibilities. The benefits of this knowledge are clear. Plan sponsors who are aware they are fiduciaries are highly confident they are meeting their obligations. They also generally oversee plans with more proactive features designed to make it easier for participants to save for retirement.
A retirement plan is a critical need for most households. A comfortable retirement means different things to different people, but we all face the same challenges on the journey toward our goals. Achieving a financially successful retirement requires consistent savings, disciplined investing and a plan, yet too few Americans have calculated what it will take to be able to retire at their current lifestyle.
Define your goal and craft
Save, save, save
Based on our experience and research, there are four timely conversations to have and proactively incorporate into the retirement planning process with participants. These four ideas are central to building stronger retirement plans.
1. Getting longevity right—planning for
30+ years, or to 95 or 100
3. Incorporating Medicare costs and lifestyle
spending needs with inflation rates that
reflect both inflation and behavior
A key input into any retirement plan is the retirement “liability,” or how much an investor plans to annually spend throughout retirement. If your clients are many years from retirement, they may not have an idea what this amount should be. In lieu of having a specific number, using a percentage of pre-retirement income as an estimate of their lifestyle needs may be a helpful starting point.
1. Has discretionary authority or control over the management or administration of a plan;
2. Exercises authority or control over the plan’s assets;
3. Gives plan-related investment advice for a fee. Examples include the plan sponsor, plan investment
committee members, plan trustees and investment advisors. Among their responsibilities, fiduciaries
must act solely in the interest of plan participants and beneficiaries and meet high standards of care,
skill and prudence. Fiduciaries can be liable for losses to the plan caused by their failure to live up to
these responsibilities.
2. Helping clients make informed decisions
about social security with the facts
4. Ensuring that clients are income tax
diversified for greater flexibility and control
The good news is that less income is typically needed in retirement due to changes in spending,
lower taxes (specifically OASDI and FICA tax that is collected on earned income is no longer required) and the elimination of pre-tax savings.
Income replacement needs in retirement vary by household income due to different levels of pre-retirement savings and changes in spending and income taxes.
A retirement plan doesn’t have to be daunting— it’s important to just get started. Once you
know where you’re heading, a comprehensive retirement plan is like any good GPS. It helps
you get and stay on track to your destination—
even as your life, the markets and the economy change.
A key factor in achieving a successful retirement is to save as much as possible during your working years. Your checkpoint assumes that you save 10% of your gross annual income each and every year—nearly twice the average annual savings rate in America. The good news is that you are in complete control of how much you save, and your employer may help with a company match, so make savings a priority.
Why is it important for plan advisors to remain proactive in working with their plan sponsor clients in terms of proactively suggesting new ideas and sharing best practices to evolve the plan?
What are some of the plan features that are prevalent among sponsors that are proactive in the design of their plan’s features? What is the role of the plan’s advisor in guiding the sponsor to offer these proactive features?
Are plans that take a more proactive approach to set up their participants for success more effective in meeting plan goals?
Is automatic enrollment a cure-all, or do plan sponsors need to do more to help ensure that participants save enough to achieve the levels of income replacement they need?
Why is it important for plan advisors to remain proactive in working with their plan sponsor clients in terms of proactively suggesting new ideas and sharing best practices to evolve the plan?
Our 2019 survey of defined contribution (DC) plan sponsors shows that advisors and consultants have a real opportunity to differentiate their services by being proactive. Plan sponsors report they get tremendous value from working with partners they consider proactive, both in terms of how satisfied they are with the relationship and with their overall plan decisions and design. Yet only 27% say their advisors/consultants proactively suggest new ideas and share best practices to advance the plan. This relatively low percentage offers a real chance for advisors who do consistently bring new insights to the table. Their steadfast commitment to taking a proactive approach adds meaningful value to their client relationships and potentially taps into new ways to expand their business. It also helps drive stronger participant outcomes.
What are some of the plan features that are prevalent among sponsors that are proactive in the design of their plan’s features? What is the role of the plan’s advisor in guiding the sponsor to offer these proactive features?
Are plans that take a more proactive approach to set up their participants for success more effective in meeting plan goals?
Is automatic enrollment a cure-all, or do plan sponsors need to do more to help ensure that participants save enough to achieve the levels of income replacement they need?
Why is it important for plan advisors to remain proactive in working with their plan sponsor clients in terms of proactively suggesting new ideas and sharing best practices to evolve the plan?
What are some of the plan features that are prevalent among sponsors that are proactive in the design of their plan’s features? What is the role of the plan’s advisor in guiding the sponsor to offer these proactive features?
Our 2019 survey of defined contribution (DC) plan sponsors shows that advisors and consultants have a real opportunity to differentiate their services by being proactive. Plan sponsors report they get tremendous value from working with partners they consider proactive, both in terms of how satisfied they are with the relationship and with their overall plan decisions and design. Yet only 27% say their advisors/consultants proactively suggest new ideas and share best practices to advance the plan. This relatively low percentage offers a real chance for advisors who do consistently bring new insights to the table. Their steadfast commitment to taking a proactive approach adds meaningful value to their client relationships and potentially taps into new ways to expand their business. It also helps drive stronger participant outcomes.
Are plans that take a more proactive approach to set up their participants for success more effective in meeting plan goals?
Is automatic enrollment a cure-all, or do plan sponsors need to do more to help ensure that participants save enough to achieve the levels of income replacement they need?
Why is it important for plan advisors to remain proactive in working with their plan sponsor clients in terms of proactively suggesting new ideas and sharing best practices to evolve the plan?
What are some of the plan features that are prevalent among sponsors that are proactive in the design of their plan’s features? What is the role of the plan’s advisor in guiding the sponsor to offer these proactive features?
Are plans that take a more proactive approach to set up their participants for success more effective in meeting plan goals?
Our 2019 survey of defined contribution (DC) plan sponsors shows that advisors and consultants have a real opportunity to differentiate their services by being proactive. Plan sponsors report they get tremendous value from working with partners they consider proactive, both in terms of how satisfied they are with the relationship and with their overall plan decisions and design. Yet only 27% say their advisors/consultants proactively suggest new ideas and share best practices to advance the plan. This relatively low percentage offers a real chance for advisors who do consistently bring new insights to the table. Their steadfast commitment to taking a proactive approach adds meaningful value to their client relationships and potentially taps into new ways to expand their business. It also helps drive stronger participant outcomes.
Is automatic enrollment a cure-all, or do plan sponsors need to do more to help ensure that participants save enough to achieve the levels of income replacement they need?
Why is it important for plan advisors to remain proactive in working with their plan sponsor clients in terms of proactively suggesting new ideas and sharing best practices to evolve the plan?
What are some of the plan features that are prevalent among sponsors that are proactive in the design of their plan’s features? What is the role of the plan’s advisor in guiding the sponsor to offer these proactive features?
Are plans that take a more proactive approach to set up their participants for success more effective in meeting plan goals?
Is automatic enrollment a cure-all, or do plan sponsors need to do more to help ensure that participants save enough to achieve the levels of income replacement they need?
Our 2019 survey of defined contribution (DC) plan sponsors shows that advisors and consultants have a real opportunity to differentiate their services by being proactive. Plan sponsors report they get tremendous value from working with partners they consider proactive, both in terms of how satisfied they are with the relationship and with their overall plan decisions and design. Yet only 27% say their advisors/consultants proactively suggest new ideas and share best practices to advance the plan. This relatively low percentage offers a real chance for advisors who do consistently bring new insights to the table. Their steadfast commitment to taking a proactive approach adds meaningful value to their client relationships and potentially taps into new ways to expand their business. It also helps drive stronger participant outcomes.
Meghan Jacobson, CFA
Head of U.S. Insights Program
J.P. Morgan Asset Management
by
The Power of
Being Proactive
What are some of the factors that plan sponsors and their advisors need to consider when selecting the right target date fund for the plan?
Why is it important for plan advisors to remain proactive in working with their plan sponsor clients in terms of proactively suggesting new ideas and sharing best practices to evolve the plan?
What are some of the plan features that are prevalent among sponsors that are proactive in the design of their plan’s features? What is the role of the plan’s advisor in guiding the sponsor to offer these proactive features?
Are plans that take a more proactive approach to set up their participants for success more effective in meeting plan goals?
Is automatic enrollment a cure-all, or do plan sponsors need to do more to help ensure that participants save enough to achieve the levels of income replacement they need?
What are some of the factors that plan sponsors and their advisors need to consider when selecting the right target date fund for the plan?
Our 2019 survey of defined contribution (DC) plan sponsors shows that advisors and consultants have a real opportunity to differentiate their services by being proactive. Plan sponsors report they get tremendous value from working with partners they consider proactive, both in terms of how satisfied they are with the relationship and with their overall plan decisions and design. Yet only 27% say their advisors/consultants proactively suggest new ideas and share best practices to advance the plan. This relatively low percentage offers a real chance for advisors who do consistently bring new insights to the table. Their steadfast commitment to taking a proactive approach adds meaningful value to their client relationships and potentially taps into new ways to expand their business. It also helps drive stronger participant outcomes.
What are some of the factors that plan sponsors and their advisors need to consider when selecting the right target date fund for the plan?
What are some of the factors that plan sponsors and their advisors need to consider when selecting the right target date fund for the plan?
What are some of the factors that plan sponsors and their advisors need to consider when selecting the right target date fund for the plan?
What are some of the factors that plan sponsors and their advisors need to consider when selecting the right target date fund for the plan?