Given the industry's aggressive push to promote retirement-income products, the findings might seem discouraging, but Jessica Sclafani, senior defined contribution strategist at T. Rowe, doesn't see it that way.
"In-plan retirement income solutions won't be a priority for all plans, and that's okay," she said.
Ms. Sclafani explained that retirement income may not be right for certain plans, including those with young or transient workforces. Plans with a high percentage of workers who rollover their balances when they leave are also not well-suited for annuity and other retirement-income products.
"There are plenty of reasons that are rational for why a plan may determine that in-plan retirement income solutions are not a top priority or a good fit," she said.
More importantly, from Ms. Sclafani's point of view, is the percentage of plan sponsors that consultants estimate don't have an opinion on retirement income. Consultants estimate that fewer than 1 in 4 plan sponsors, or 24%, now don't have an opinion, down significantly from 59% in 2021.
"We see plan sponsors as evolving from an exploratory to a more decision-oriented posture on retirement income," she said.
The findings, which will be released formally on Sept. 6, also showed that the majority of consulting and advisory firms, 60%, either do not produce formal ratings for retirement income solutions or have no formal ratings process in place.
Many consultants don't currently offer formal ratings because plan sponsors are often "beholden" to whatever retirement-income products are offered by their record keepers, Ms. Sclafani said.
The study also looked at what consultants view as the most persuasive ways to keep retirees in-plan, a growing goal for many plan sponsors. The features considered most persuasive included targeted communications explaining the benefits of staying in-plan, making financial planners and advisors available through the plan, and offering flexibility in how assets can be drawn down.
Finding ways to keep retirees in-plan will be important for plan sponsors looking to offer retirement-income products, Ms. Sclafani said.
The study surveyed 32 consulting and advisory firms with more than $6.7 trillion in assets under advisement on a variety of topics from Feb. 14 to March 31.