Growth strategy: Help clients deliver 401(k) plans to employees


Thanks to Secure Act 2.0, businesses have new incentives to offer retirement plans to their employees. The original Setting Every Community Up for Retirement Enhancement Act (SECURE Act) was passed by congress in 2019 to strengthen the American retirement system. Secure Act 2.0, signed into law at the end of 2022, adds dozens of new provisions designed to make it easier for Americans to save for retirement. They include retirement plan incentives, like tax credits, to small and mid-sized businesses.

Despite these advantages, many business owners are still concerned about the administrative costs and complexity of offering retirement plans to their employees. Financial advisors equipped with the right resources and partnerships are uniquely positioned to help their business owner clients navigate the world of retirement plans for employee benefits, while growing their own businesses in the process.

Opportunities for wealth managers

According to the U.S. Chamber of Commerce, there are 33.2 million small businesses in America, which account for 99.9% of all U.S. businesses. Wealth managers who would like to offer retirement plan services to their business owner clients have historically struggled with the time and resources required to compare plan costs, research options, and deliver administrative support.

However, with the Secure Act 2.0 and improvements in retirement plan structures, offering 401(k) plans to small business employees has become significantly more cost-effective than ever before. This presents a win-win-win situation: business owners benefit from tax credits that help mitigate retirement plan costs, employees gain access to attractive retirement savings options, and advisors have the opportunity to enhance their client relationships and grow their business through the expanded offerings.

From an advisor’s perspective, the timing is ideal. Business owners are under pressure to offer retirement plans to their employees now. Advisors with resources at their fingertips can provide an immense amount of value to their business owner clients by helping them to understand their options and by helping to ease the complexity of offering retirement plans.

The importance of strategic partnerships

Not all advisors have retirement resources in their back pocket just waiting to be utilized, and it is safe to say that the vast majority of advisors are not experts on the universe of retirement plans available today (in 2020, there were about 600,000 401(k) plans, with about 60 million active participants).1 That’s where partnerships and technology come in.

Many advisors are turning to retirement plan partners that offer comprehensive, turnkey programs for small and mid-sized business owners. By leveraging subject-matter specialists, advisors can ensure their clients access the best retirement plan options available. Industry-leading providers automate a lot of the process and provide a participant account dashboard with real-time views of spending, savings, debt, and more. Savers can track, manage, and plan for all of their financial priorities in one place. Advisors find that being able to offer such sophisticated retirement services can be a differentiator in a crowded industry. Indeed, if you don’t have the plans or technology your clients need, they may turn to an advisor who does.

To assess if your practice might benefit from working with a retirement plan partner, review your book of business. Do you have a population of small to mid-sized business owner clients? Consider speaking with a few of them to get an idea of what their needs are and how they are currently managing their employee benefits. Gaining a deeper understanding of what your business owner clients are struggling with and/or looking for can inform how you proceed.

Picking a retirement plan partner

When choosing a retirement plan partner, advisors should prioritize established track records of success. There is a very wide range of retirement plan providers in the U.S., from nationwide to niche regional providers, and they are not all created equal.

Envestnet Retire Complete is a collaboration with leading retirement services provider Empower—a company with the scale, experience, and breadth of offering to make our solution as straight forward and accessible as possible. Envestnet Retire Complete combines Envestnet's fiduciary guidance and investment due diligence with Empower's personalized communications and investments to help more employers provide competitive 401(k) plans.

Which leads to the second most important thing to look for in a retirement plan partner: a comprehensive, turnkey offering tailored to the needs of business owners. As an advisor who is not a retirement specialist, you need a partner who can deliver:

  • Robust administrative support
  • A broad suite of diverse investment options
  • Fiduciary oversight
  • A seamless participant experience (ideally with an online account dashboard and mobile app)
  • A focus on cost efficiency

Established, proven partners will check all of these boxes and help to ensure advisors can offer retirement services to their business owner clients with a high degree of efficiency.

The provisions of the Secure Act 2.0 don't take effect all at once. Some changes went into effect as of January 2023 and others will roll out over the next several years.2 Your business owner clients are thinking about these changes now. Finding a proven retirement partner today means that your clients will have one more reason to see you as their primary source of financial support, turning to your experience and services for years to come.

Discover our retirement specific attendee sessions at Elevate and learn more about how you can grow your business:

The information, analysis and opinions expressed herein are for informational purposes only and do not necessarily reflect the views of Envestnet. These views reflect the judgment of the author as of the date of writing and are subject to change at any time without notice. Nothing contained in this piece is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type.

Plan sponsors will always retain some fiduciary responsibility and should therefore conduct their own initial and ongoing research and due diligence on third party service providers, including but not limited to trustees, investment managers, recordkeepers and third party administrators.

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1Investment Company Institute (ICI): 401(k) FAQs

2Time: What Is the Secure Act 2.0?