Over the next few years, there will be a growing opportunity for wealth advisors: The small or “micro” 401(k) plan market.
What is a small or micro 401(k) plan market? It’s simply plans with less than $5 million in assets. This segment represents the largest area of growth in 401(k) plans according to Cerulli Edge – U.S. Retirement Edition. According to Cerulli Edge, there will be a million 401(k) plans by the end of the decade – an increase of 36 percent. And about 92 percent of these plans will be micro plans.
So, what is the reason for this? According to Cerulli, it’s all because of the incentives offered by the SECURE 2.0 Act and an increase in several states putting mandates in place to have more folks covered by retirement savings options.
The fact is, 401(k) plans have been growing for years, with more than 150,000 new plans added between 2018 and 2023 – mainly due to employers starting to offer plans.
For wealth advisors, this can create new opportunities in the micro market.
It is sure to become a more competitive market, as people seek the advice of seasoned wealth advisors over the next 10 years.
This is also an opportunity for employers to begin offering retirement plans as a way to attract and retain key talent.
Small businesses have generally not offered such plans, as they aren’t cost effective, but with SECURE 2.0, they can be.
Keep an eye on this space for more information on this growing sector. We’ll be sharing more information and tips for investors and wealth advisors – keeping you up to date!
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