How will these trends impact financial advisors? “Financial advisors can use this information to help business owners manage their 401(k)s,” Goldstein said. With such advice, employers may be able to change the plan to be more cost-effective, instead of terminating the plan.
“Financial advisors also may be able to help employees,” Goldstein said. Without company-sponsored retirement plans such as 401(k)s to help save for retirement, employees must set aside their own money for retirement and develop their own investment strategies. He recommended that employees work with a trusted financial advisor who can help set up alternative plans such as IRAs, Roth IRAs and annuities.
“To make matters worse, the number of traditional defined benefit pension plans decreased by 15% in 2011," Goldstein stated. As employers terminate retirement plans, financial advisors will find more clients and prospects who need help in accumulating ample nest eggs for a comfortable retirement. Clients with 401(k) plans but no employer match may seek advice about whether to make unmatched contributions or invest elsewhere, perhaps through Roth IRAs or tax-efficient vehicles.
According to the 401(k) Performance Survey, 42% of businesses did not match participants’ 401(k) contributions in 2011. "Clearly, as businesses look for ways to lower expenses and improve bottom lines, it is not surprising that businesses have stopped matching,” Goldstein stated. “I have been studying this trend for the past four years and don't see the trend abating any time soon.”
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