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CONTRIBUTORS

Michael Dullaghan

Retirement Strategist,
Franklin Templeton

When thinking about retirement planning in 2025, it's crucial to stay ahead of the curve in the evolving landscape of retirement. Our 2024 “Retirement Insights” series delved into several key areas, including retirement plan design and strategy, legislative and regulatory changes, and innovative retirement income solutions. Each article offers valuable perspective and actionable strategies that can help you refine and enhance your retirement business.

It is a great time to be a retirement plan advisor, in our view. Our business is robust and growing. The number of American workers we can serve is increasing.

Below are some highlights on how to  leverage our insights for your success. Dive into the links below to discover how to leverage these insights to implement a robust and forward-thinking strategy for 2025.

Retirement plan design and strategy

Navigating the next normal in the retirement industry (June 2024). Focuses on customized plan design and client engagement.

  • Insights into 2025 action: This article emphasizes the impact of plan design on participant outcomes, the need holistic participant engagement (budgeting, emergency savings and financial wellness), and adaptability to the changing needs of retirement plan sponsors and savers.
  • Retirement plan advisers can set themselves apart by crafting a 2025 value proposition statement that addresses their approach for each of these issues.

The pecking order of 401(k) plan design: A bird’s eye view (August 2024). Emphasizes the importance of prioritizing plan design over investments.

  • Insights into 2025 action: We believe plan design is a key component of workplace success, that third-party administrators (TPAs) should be consulted as needed, and the tax-deductible nature of plan expenses may be appealing to business owners.
  • Plan advisors who employ a partnership approach with record-keepers, TPAs, and asset managers may have an advantage over those who take a siloed approach.
     

401(k) plans and wealth advisors

Maximizing 401(k) plans: How financial advisors can leverage the DOL’s target-date tips (July 2024). Tips for financial advisors on enhancing 401(k) plans using target-date fund guidelines.

  • Insights into 2025 action: Given the prominent role target-date funds play in plan offerings, ensuring alignment between target-date philosophy and plan objectives is crucial.
  • To ensure proper alignment, retirement plan advisors should establish a well-defined, documented selection process that enhances understanding of glide paths and investment strategies. Emphasizing thorough target-date selection and ongoing reviews can help differentiate your business from advisors with less rigorous approaches.

Unlocking the treasure chest: The growing opportunity of 401(k) plans for wealth advisors (September 2024). Highlights the potential of 401(k) plans for wealth advisors.

To estimate the asset growth potential of a $1 million 401(k) plan over the next 10 years, there are several factors to consider, including annual contributions, employer match and expected rate of return. Consider this hypothetical example.

401(k) Growth Potential Over 10 Years

Hypothetical Example for Illustrative Purposes Only

Source: This example is for illustration only. The future value is calculated using standard financial formulas, assuming $180,000 in annual contributions, a 7% annual return, a 10-year period, and a starting balance of $1,000,000. Actual results may vary based on market conditions and fees.

  • Insights into 2025 action: Advisors looking to grow their wealth business may benefit from growth in the 401(k) marketplace. Ongoing contributions from existing plans and new plan creation driven by the SECURE Acts of 2019 and 2022 are driving current growth. These trends have the potential to provide advisors with generations of new investors.
  • Considering each plan participant as a potential future wealth client allows a wealth advisor to take a broad view when focusing on retirement plan opportunities. Simply put: Do not allow another advisor to help your business owner client with their workplace retirement plan.
     

Legislation and industry opportunities

Driving convergence between retirement and wealth (May 2024). Discusses new legislation and opportunities for wealth advisors and retirement specialists.

  • Insights into 2025 action: With the convergence of retirement and wealth businesses, consider focusing on business owners who don’t have workplace savings plans. They may benefit from holistic financial guidance and tax credits for plan establishment.
  • Wealth advisors may want to review their book of business for existing business owner clients who may be unfamiliar with new plan tax credits.
     

In-plan retirement income solutions

What retirement plan advisors need to know about in-plan retirement income solutions (November 2024). Covers essential information for advisors on in-plan retirement income solutions.

  • Insights into 2025 action: Retirement income isn’t just a passing trend—it’s a real and growing focus for in-plan solutions, addressing a universal need with lasting impact.
  • Advisors can spark meaningful conversations by creating educational content that highlights the importance of personalized retirement income strategies. This includes exploring in-plan, out of plan, as well as guaranteed and non-guaranteed options.
     

The bottom line

As we look ahead in 2025, the evolving landscape of retirement plan design, wealth advisory opportunities, legislative advancements, and innovative retirement income solutions offer immense potential. Whether you are looking for practice management, creative customization capabilities, or diversified retirement investment solutions, your Franklin Templeton Retirement team is ready to help you succeed in 2025 and beyond.

WHAT ARE THE RISKS?

All investments involve risks, including possible loss of principal.

Principal invested is not guaranteed at any time, including at or after a fund’s retirement target date; nor is there any guarantee that the fund will provide sufficient income at or through the investor’s retirement. The investment risk of the retirement target fund changes over time as its asset allocation changes. Investments in underlying funds are subject to the same risks as, and indirectly bear the fees and expenses of, the underlying funds.

Equity securities are subject to price fluctuation and possible loss of principal. Small- and mid-cap stocks involve greater risks and volatility than large-cap stocks.

Fixed income securities involve interest rate, credit, inflation and reinvestment risks, and possible loss of principal. As interest rates rise, the value of fixed income securities falls. Low-rated, high-yield bonds are subject to greater price volatility, illiquidity and possibility of default.

International investments are subject to special risks, including currency fluctuations and social, economic and political uncertainties, which could increase volatility. These risks are magnified in emerging markets.

Alternative strategies may be exposed to potentially significant fluctuations in value.
Active management does not ensure gains or protect against market declines.

Any information, statement or opinion set forth herein is general in nature, is not directed to or based on the financial situation or needs of any particular investor, and does not constitute, and should not be construed as, investment advice, forecast of future events, a guarantee of future results, or a recommendation with respect to any particular security or investment strategy or type of retirement account. Investors seeking financial advice regarding the appropriateness of investing in any securities or investment strategies should consult their financial professional.

Franklin Templeton, its affiliated companies, and its employees are not in the business of providing tax or legal advice to taxpayers. These materials and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any such taxpayer for the purpose of avoiding tax penalties or complying with any applicable tax laws or regulations. Tax-related statements, if any, may have been written in connection with the “promotion or marketing” of the transaction(s) or matter(s) addressed by these materials, to the extent allowed by applicable law. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.

IMPORTANT LEGAL INFORMATION

This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice. This material may not be reproduced, distributed or published without prior written permission from Franklin Templeton.

The views expressed are those of the investment manager and the comments, opinions and analyses are rendered as at publication date and may change without notice. The underlying assumptions and these views are subject to change based on market and other conditions and may differ from other portfolio managers or of the firm as a whole. The information provided in this material is not intended as a complete analysis of every material fact regarding any country, region or market. There is no assurance that any prediction, projection or forecast on the economy, stock market, bond market or the economic trends of the markets will be realized. The value of investments and the income from them can go down as well as up and you may not get back the full amount that you invested. Past performance is not necessarily indicative nor a guarantee of future performance. All investments involve risks, including possible loss of principal.

Any research and analysis contained in this material has been procured by Franklin Templeton for its own purposes and may be acted upon in that connection and, as such, is provided to you incidentally. Data from third party sources may have been used in the preparation of this material and Franklin Templeton ("FT") has not independently verified, validated or audited such data.  Although information has been obtained from sources that Franklin Templeton believes to be reliable, no guarantee can be given as to its accuracy and such information may be incomplete or condensed and may be subject to change at any time without notice. The mention of any individual securities should neither constitute nor be construed as a recommendation to purchase, hold or sell any securities, and the information provided regarding such individual securities (if any) is not a sufficient basis upon which to make an investment decision. FT accepts no liability whatsoever for any loss arising from use of this information and reliance upon the comments, opinions and analyses in the material is at the sole discretion of the user.

Franklin Templeton has environmental, social and governance (ESG) capabilities; however, not all strategies or products for a strategy consider “ESG” as part of their investment process.

Products, services and information may not be available in all jurisdictions and are offered outside the U.S. by other FT affiliates and/or their distributors as local laws and regulation permits. Please consult your own financial professional or Franklin Templeton institutional contact for further information on availability of products and services in your jurisdiction.

Issued in the U.S. by Franklin Templeton, One Franklin Parkway, San Mateo, California 94403-1906, (800) DIAL BEN/342-5236, franklintempleton.com. Investments are not FDIC insured; may lose value; and are not bank guaranteed.

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