2017 Research Reveals Insight on 457 Plan Sponsors

Differences of opinion between 457 and 401(k)/403(b) sponsors

Being a trusted partner is important to you—and it’s even more critical as the regulatory environment changes. Staying on top of shifting sentiments and what’s important to your clients is paramount.

457 Employers Express a Strong Sense of Paternalism

In our most recent survey, we asked 457 plan sponsors about perceptions of their roles, the behaviors of employees and the expectations of partners. We then compared those results to a previous survey of 401(k)/403(b) plan sponsors.

When it comes to the goals and objectives of a plan, there is agreement in some areas, but major differences in others.

457 plan sponsors consider retirement readiness very important to plan success.

457 Plan Sponsors Embrace Automatic Investments

457 plan sponsors are more likely to embrace and implement automatic enrollment and automatic increases, believing these methods will do more to encourage savings. With these strategies in place, 457 plan sponsors are more confident in their employees’ ability to prepare for retirement compared to 401(k)/403(b) employers.

Eight in 10 457 sponsors consider automatic increases a good idea.

457 Plan Sponsors Are Confident in the Education They Provide

91% of 457 plan sponsors recently described their participant education as “extremely” or “very effective” versus 46% for 401(k)/403(b) plan sponsors from the year before.

457 sponsors are 45% more positive on education evaluation

Advisors Are Recognized as Fundamental

Use of an advisor is higher among 457 sponsors. 90% of 457 employers report being engaged with an advisor. Of those who do not, 80% expect to seek one in the near future, double that of 401(k)/403(b) sponsors.

When asked, What is the most important duty your advisor or consultant performs?, the top two responses are “investment selection” and “monitoring”. And those who have an advisor continue to report high levels of satisfaction, particularly valuing integrity and reliability. Sponsors tend to use the advisors for a wide range of plan-related functions.

Integrity, expertise and reliability continue to stand out as the best advisor qualities

When considering working with 457 plans, recognize the importance of paternalism and purpose, acknowledge their concern and provide metrics to evaluate effectiveness.

Investment Professionals:
Learn more about the findings during our June 20 Webcast.

The opinions expressed are those of Diane Gallagher and are no guarantee of the future performance of any American Century Investments portfolio.

This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.

No permission is granted to copy, redistribute, modify, post or frame any text, graphics, images, trademarks, designs or logos.

Survey Methodology:

The survey was conducted between December 23, 2016, and January 11, 2017. Respondents were screened to include only those who currently work for a private or publicly-held company or organization that was founded prior to 2011 and offers a 457 deferred compensation retirement plan for which the respondent has considerable influence. A total of 301 respondents completed the questionnaire. This includes 45 whose plan assets are less than $25 million, 93 between $25 and $50 million, 38 between $50 and $75 million, 40 between $75 and $100 million and 85 over $100 million. The data was balanced to reflect the makeup of the total defined contribution population by plan asset size. Surveys of 401(k) and 403(b) plan sponsors were conducted in March 2015.

Percentages in the tables and charts may not total to 100 due to rounding and/or missing categories.

Data collection and analysis were completed by Mathew Greenwald and Associates, Inc., of Washington, D.C.