Most 401(k) plans provided today are far too complex and confusing for the average employee to save with confidence. A better alternative to provide a plan with risk adjusted model portfolios and automatically put employees into the appropriate portfolio. The employee could then decide to change to a different risk level, opt out of the models and choose their own fund mix or opt out of the plan all together. Studies have shown that most employees would not change and therefore be in the appropriate portfolio. The outcome would be putting employees on the successful path to retirement.

She said that recent survey dataout about employees’ lack of retirement confidence is an area ripe for growth regarding products that meet people where they are and help enhance retirement understanding and plan options. She also hinted that future legislation or rulings may make it mandatory for plan sponsors to guarantee a safe retirement.Embracing technology can be a step toward making that guarantee, citing research that in 2010, 39% of Americans conducted banking transactions online. “Why can’t we put out something like that for the 401(k) benefit? I recognize we’re in a relationship business, but we’re in a technology business now. Make it automatic, make it easy.”

Increasing plan participant understanding and plan automation are sound suggestions, yet Simoneaux also acknowledged that advisors and vendors need to be transparent about what adding certain plan options will cost sponsors.

“If you want all participants to be auto-enrolled at 6%, it’s going to cost something to that sponsor; you have to know what it’ll cost,” she said. “[Employers] are going to ask you: If I have to adjust payroll, what will I have to do? Will my employees be willing to give up payroll increases to go toward this?”

Plan design will help more Americans successfully retire. Many plan sponsors are concerned about the cost and the effectiveness of any design changes. This can be determined prior to implementation through proper analysis.

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