CONTRIBUTORS
Michael Dullaghan
Retirement Strategist,
Franklin Templeton
The retirement market is evolving rapidly, presenting significant opportunities for financial advisors. With the US retirement market projected to grow from $35 trillion in 2023 to $52 trillion by the end of the decade,1 we think now is the time for advisors to position your practice to benefit from this growth. This article provides insights into market dynamics, strategies for building and managing a successful 401(k) practice, and ways to address participant concerns.
In 2023, US retirement assets surpassed $35 trillion, and are poised to reach $52 trillion by decade’s end.
Understanding the market dynamics
The US retirement market is witnessing substantial expansion, driven by increasing assets in IRAs and workplace plans. In 2024, 72% of private workers had retirement plans, and IRA assets reached $13.5 trillion.2 This growth offers a prime opportunity for advisors to broaden their client base and revenue streams.
What’s Changing in the Retirement Market?
Sources: (1) Cerulli, “The Cerulli Report—US Retirement Markets 2024.” The US retirement market concluded 2023 with over $35 trillion in assets and is projected to grow to $52 trillion by the end of the decade, highlighting a robust market with significant opportunities for advisors (Cerulli Report, Chapter 1: US Retirement Market Overview, p. 23). (2) “The Cerulli Report—US Retirement Markets 2024.” The US retirement market surpassed $35 trillion in 2023, projected to reach $52 trillion by 2030. IRA assets grew to $13.5 trillion, with an 8.5% projected CAGR. Retirement plan access rose to 72% in 2024, highlighting growth opportunities (pp. 23, 30). There is no assurance that any estimate, forecast or projection will be realized.
In addition, 4.1 million Americans are estimated to reach the age of 65—traditional retirement age—in 2025.3 That’s more than 11,000 per day! As this trend has been in place for a while and likely will continue, pre-retirement, “money in motion” conversations are abundant. Given the propensity of retirees to work with existing advisor relationships, being the advisor of a workplace retirement plan creates opportunity.
Building and managing a 401(k) practice
Establishing and managing a 401(k) practice can offer advisors many potential benefits, such as capitalizing on the growing need for 401(k) plans, deepening client relationships, creating new revenue opportunities and differentiating your business. To be successful, it is important to understand the needs of key decision-makers, such as CEOs, human resource professionals and compliance/legal teams. Additionally, leveraging service providers and asset managers can help you build a better practice and drive plan success.
Navigating the 401(k) landscape
The 401(k) landscape is complex, requiring astute navigation. Financial advisors must remain current on market trends and legislative shifts to furnish the soundest advice to their clients. Engaging with service providers and asset managers may yield invaluable support in participant engagement, compliance, fiduciary duties and the introduction of innovative investment solutions.
- Experienced professionals: Those who have been in the retirement plan industry for years or decades diligently update their knowledge and maintain relevant designations. This ongoing education ensures they remain proficient in the latest industry practices and regulatory requirements.
- New entrants and recommitters: Those newly committing or recommitting to the retirement plan business must consider the commitment required to service this business. Overpromising and underdelivering may lead to significant challenges, especially given the industry’s stringent fiduciary responsibilities.
Leveraging service providers and asset managers
Service providers and asset managers can play a vital role in supporting retirement plans. They offer tools for participant engagement, compliance support, fiduciary services and innovative investment solutions. Collaborating with these partners can enhance your practice and drive retirement plan success.
- Teamwork is key: The most successful retirement plan practitioners understand that success in the retirement plan business is a team effort. Knowing which partners to rely on is knowledge built over time.
Addressing participant concerns
Participants in retirement plans often face challenges such as financial stress, investment barriers and preparedness concerns.4 Advisors can add significant value by offering personalized solutions, financial wellness tools and benefit solutions tailored to each client's unique needs.
- Leveraging wealth management tools: Planning tools from the wealth management sector can effectively address these challenges by creating customized strategies that alleviate financial stress, overcome investment barriers and improve overall preparedness.
- Scalable personalization: A key challenge for advisors is efficiently distributing personalized and wellness solutions to a large number of participants simultaneously, rather than addressing each client individually. Developing scalable methods and leveraging technology can help meet this demand without compromising the quality of service.
Keys to success in the retirement plan business
In order to succeed in the retirement plan business, advisors need to concentrate on prospecting and closing opportunities, identifying client needs and delivering exceptional service. The formulation of client service policies can aid in the avoidance of overpromising and the establishment of long-term relationships.
Strategic steps for success
To excel in the complex 401(k) landscape and deliver exceptional value to clients, consider these actionable steps:
1. Expand your knowledge. Stay informed about market trends and legislative changes to provide the best advice to your clients.
2. Build strong partnerships. Collaborate with service providers and asset managers to offer comprehensive solutions.
3. Enhance client engagement. Use personalized solutions and financial wellness tools to address participant concerns and improve outcomes.
4. Focus on compliance. Ensure you are familiar with your firm's compliance and legal policies to navigate the evolving regulatory landscape.
Partner with Franklin Templeton
Whether you are a retirement plan industry veteran or novice, your Franklin Templeton Retirement team is available to enhance your practice. Visit our Retirement Plans Made Easy page to explore our comprehensive plan solution capabilities, including plan administration, fiduciary services, and investment menu oversight—all conveniently offered in a turnkey solution.5
Invest in the future of your practice
One of the most frequent requests for help we receive is for help training and retaining the next generation of 401(k) advisors. Our award-winning ACES: A Commitment to Education & Service program is designed to help you build and preserve your retirement plan business. We are excited to announce a redesign to this program, so be sure to click the link above.
Endnotes
- Source: Cerulli Report—US Retirement Markets 2024. There is no assurance that any estimate, forecast or projection will be realized.
- Ibid.
- Source: “How Many People Are Retiring Every Year for the Next 4 Years?” GOBankingRates. April 24, 2024.
- Source: PLANSPONSOR Defined Contribution Survey 2023.
- Compared to sponsoring a plan on your own. This webpage is provided for general information purposes and highlight the collective benefits of pooled employer plan (PEP)and multiple employer plans (MEPs). MEP's and PEP's allow employers to band together under a turnkey fully bundle retirement plan. Individual plans may vary.
WHAT ARE THE RISKS?
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