Morgan Stanley at Work Retirement Study Shows Plan Sponsors Prioritizing 401(k) Plan Design Amid Challenging Labor and Economic Conditions

• 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

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 2022 Plan Sponsor Retirement study can be found here. As part of a series of findings from Morgan Stanley at Work’s second annual State of the Workplace Financial Benefits study, the business also published its findings on financial benefits, financial wellness and retirement.

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 are based 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.

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