Professional financial advice from licensed advisors is a key part of the support system offered to members of more than half of Canadian group pension plan and RRSP sponsors, according to a new report from Winnipeg-based Great-West Life Assurance Co. (GWL).
Specifically, the GWL study, entitled Forecasting the Future of Group Retirement Plans, finds that 57% of defined contribution (DC) pension plan sponsors and 61% of RRSP sponsors say they provide their members with access to professional financial advice.
This integration of this advice into the group benefits system provides a distinct financial advantage to workers, says Christine van Staden, vice president, national accounts, group retirement distribution for GWL, in a statement.
“Canadians who work with an advisor have household assets over four times higher than those who don’t,” explains van Staden, citing data from a study the Montreal-based Centre for Interuniversity Research and Analysis of Organizations produced in 2012. “I see a significant opportunity to improve the financial wellness of Canadians by offering advice in group retirement plans.”
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GWL’s report finds that 63% of smaller sponsors with fewer than 500 employees are more likely to provide those employees with access to financial advice compared with 52% of sponsors with 500 employees or more.
It may be difficult for larger sponsors to offer the in-person services of an advisor, so they may look to their plan provider to offer education and other support for members, van Staden says.
The report also suggests that the value advisors provide to plan members will increase as advisors continue to embrace more flexible ways of communicating their advice.
In particular, there will be a growing use of online chats and telephone calls between licensed advisors and group plan members, predicts Amanda Fickling, director, marketing and communications, group retirement services, GWL.
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These methods of communication “provide the convenience of planning from anywhere and on the member’s own time,” explains Fickling in the report, “but offer the support of professionals when needed.”
Other ways of providing information to plan members is through seminars, which are popular with 58% of DC pension plan sponsors and 43% of group RRSP sponsors. More than a quarter (27%) of DC plan sponsors and 22% of group RRSP sponsors offer advice that’s specific to members who are getting close to retirement.
The report’s data are based on the results of updated plan sponsor profiles in the Canadian Institutional Investment Network, in addition to an online survey fielded by Transcontinental Inc., which owns and publishes Investment Executive. Data were collected between March and August 2016 from 333 organizations offering a DC plan, group RRSP and/or a deferred profit sharing plan to their employees.
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