March 11, 2025
KEY TAKEAWAYS
Effective benchmarking can help you win and retain retirement plan business. Not only does it help you lead conversations and set goals with plan sponsors, but it can help you communicate your value to prospects as well.
Let’s review some metrics you may want to focus on, along with strategies for improving them.
Some retirement plan professionals focus narrowly on investment results. While these are important figures that should be monitored, there are more factors at play in a plan’s success. These include:
In addition to investment results, these three figures can help you get a clear sense of the plan’s health and progress.
In an ideal world, you’ll establish a plan’s benchmarks each time you take on a new client. Take note of where you’re starting, where you’d like the plan to be by the next review and how you plan to get there. Then, each review season, check your progress.
For startup plans, you get a freebie the first year when everything starts at zero. Still, setting goals and measuring against them annually is a useful cadence.
Each metric suggested here has at least one associated plan design lever you can pull to help improve the numbers. And while not every year will see dramatic growth, implementing certain features can have a significant impact.
You can help increase participation by using auto-enrollment. This is now required for most new plans (established after December 29, 2022) due to The SECURE 2.0 Act of 2022, but if your existing plan doesn’t use it, auto-enrollment can be a great way to boost participation rate.
If you’re struggling to increase participation even with auto-enrollment, a deeper dive into the issue may be in order. Perhaps employees are unaware of the plan, or they may not feel sufficiently incentivized. Financial education could help here, as could conversations about starting or increasing an employer match.
Improving deferral rate is another area in which financial education and employer match can help. But there’s a plan design feature worth considering as well: auto-escalation. This feature automatically increases a participant’s contribution rate, unless they opt out or reach a set ceiling. For example, this could look like an increase of 1% annually, up to a ceiling of 10%.
Before implementing auto-escalation, be sure it’s appropriate for the plan’s participants. While it can solve for lack of attention to saving, it can’t solve for lack of funds to save.
To help make sure participants are invested appropriately, consider using investment re-enrollment. This is a feature that automatically reallocates participants’ portfolios into the QDIA — usually a target date fund — unless they opt out. This helps prevent potentially damaging investment errors.
If a plan has consistently low usage of the QDIA or otherwise unusual investment usage, you may need to review the investment menu. It’s possible that something is confusing participants, and a fix could help improve upon the benchmark.
As always, communicating your value is key. As you establish and build upon benchmarks, make sure you’re prepared to talk about what you’ve done to bring numbers up. This can show your current clients how much value they’re getting for your fee, and it can help show prospects all they can expect to gain from working with you.
Together with an effective value proposition statement, benchmarking can be a key element to winning and retaining retirement plan business.
Jason Carlough is a retirement plan counselor with 24 years of industry experience as of 12/31/24. He holds a bachelor’s degree in business and economics from Lafayette College.
Although target date portfolios are managed for investors on a projected retirement date time frame, the allocation strategy does not guarantee that investors' retirement goals will be met.
