Can professional service providers help encourage small businesses to offer retirement plans?

The retirement plan coverage gap, which undermines the financial security of millions of U.S. workers, is driven by a lack of coverage among small employers. Despite various efforts to develop affordable and simple plans for small businesses, many of these organizations still overestimate the cost and administrative burden required to offer a plan, perceiving plan adoption as out of reach.

This study explores whether professionals who provide services to small firms — such as accountants, lawyers, financial advisors and others — could bridge the information gap and help encourage more small companies to offer retirement plans. We surveyed 506 small business professional service providers, identifying misperceptions among these providers that could hinder plan adoption and strategies to encourage adoption.

• Misperceptions about cost and administrative burden are widespread. Many accountants, bankers and lawyers substantially overestimate both the time and cost required to offer a retirement plan, potentially reinforcing misunderstandings which could hinder plan adoption among small business owners.
• Knowledge is just a first step. Hands-on guidance and strategic framing matter. Providers who actively guide clients through the setup process and position retirement plans as a recruitment and retention tool are significantly more likely to have a higher share of clients offering plans.
• Discussions of certain plan types appear to support plan adoption. Discussing PEPs, MEPs, solo 401(k)s and traditional 401(k)s is positively associated with plan adoption, while an emphasis on SEP IRAs is associated with lower coverage. This correlation highlights the importance of steering employers toward appropriate plan options.

• Characteristics of professional service providers
• Knowledge of retirement plan adoption and administration
• Strategies that encourage retirement plan adoption
• Preferred resources for learning and staying informed
• Actionable next steps

Read our study for more information on improving knowledge and adeptly framing the benefits of retirement plans, as well as providing more hands-on guidance to boost the share of small employers offering retirement plans.