Why Better 401(k) Outcomes Matter More for Employers

For employers, the 401(k) plan is no longer just a benefit. It is a fiduciary responsibility, a retention lever, and a signal of how seriously a company takes the financial well-being of its people.

Yet many CEOs, CFOs, and HR leaders still evaluate their plans primarily through one lens: fees.

Industry research shows this approach is incomplete.

Advisor value is increasingly defined by participant outcomes, not cost alone.

Why the Focus Is Shifting

According to Fidelity’s Plan Sponsor Attitudes Survey, 92% of plan sponsors work with a 401(k) advisor, and overall satisfaction with advisors has increased in recent years. Crucially, satisfaction is significantly higher among employers who believe their employees are saving adequately for retirement.

This correlation suggests a clear pattern:

When participant outcomes improve, sponsor confidence in their advisor increases.

Reducing fees may lower expenses, but it does not automatically improve participation, contribution rates, or retirement readiness.

Participant Outcomes as the Real KPI

Institutional research consistently shows that plans supported by advisors demonstrate stronger participant behavior:

• Higher participation and contribution rates
• Greater use of diversified investment options
• Higher confidence in retirement preparedness 
  
  

Vanguard’s How America Saves report shows that participants receiving professional guidance or managed advice tend to save more and maintain more diversified portfolios than self-directed participants. Fidelity research further indicates that advised participants are more likely to feel aligned with a long-term financial plan.

Importantly, a majority of participants report being willing to pay for professional advice, reinforcing that advice is perceived as value-added support rather than an avoidable cost.

Plan Design Drives Long-Term Results

Advisor impact is most visible in plan design.

Fidelity data shows that advised plans are more likely to implement features such as:

• Automatic enrollment
• Automatic deferral increases
• Professionally managed investment options
  

The U.S. Department of Labor explicitly recognizes automatic enrollment and escalation as best practices for improving retirement outcomes, particularly in small and mid-sized plans.

These decisions directly influence employee behavior over time and require informed fiduciary judgment.

Reducing Complexity for Plan Sponsors

Plan sponsors consistently cite regulatory complexity and fiduciary responsibility as major challenges. Fidelity research highlights how compliance requirements, documentation, and oversight are often perceived as difficult to interpret and burdensome to manage internally.

The Department of Labor makes clear that fiduciary responsibility remains with the employer, even when tasks are delegated. Advisors add value by helping sponsors:

• Understand fiduciary obligations
• Document prudent decision-making
• Apply best practices consistently

This support extends well beyond investment selection.

Fiduciary Oversight Is Central to Advisor Value

Modern advisory services increasingly include:

• Plan governance support
• Compliance guidance and documentation
• Assistance with audits and vendor evaluations

Department of Labor guidance emphasizes that a prudent process and clear documentation are central to fiduciary compliance. Advisors who help sponsors establish and maintain these processes materially reduce risk.

What Employers Should Evaluate Today

Institutional research suggests that employers should evaluate 401(k) advisors based on outcome-driven criteria, including:

• Participant engagement and savings behavior
• Effectiveness of plan design features
• Quality of fiduciary and compliance support
• Clarity and usefulness of sponsor and participant guidance
• Fees matter, but they represent only one dimension of advisor value.

Executive takeaway

Better participant outcomes are the strongest indicator of effective 401(k) advice.

Employers who focus on outcomes rather than fees alone are better positioned to support their employees, meet fiduciary responsibilities, and build long-term trust.