Columbus, Ohio (July 10, 2003) -- The majority of small business owners can’t accurately answer basic questions about their retirement plan responsibilities, yet more than four in five say they’re comfortable they are meeting them, according to a survey sponsored by Nationwide Financial.
Many owners reported critical lapses in at least one aspect of fiduciary knowledge, Nationwide reported. A large percentage incorrectly identified the plan investment provider, the financial advisor, or employees as holding primary fiduciary responsibility, according to the survey, “Financial Advice Today: A Small Business Perspective.” The survey polled 501 owners/operators of businesses with a maximum of 50 employees, that were at least two-years-old, and produced more than $100,000 in revenue.
“Retirement plan education is a major and immediate need among small business owners that financial advisors can help fulfill,” said Michael Butler, senior vice president of NFS Distributors Inc., a division of Nationwide Financial. “It can be a good way for financial advisors to demonstrate their expertise and service capabilities to prospects or clients.”
Owners also fail to evaluate investment selections regularly, Nationwide reported. Sixty-one percent of those with 401(k) plans said they have an investment policy statement in place, but less than that reported having a formal process to evaluate investment selections on a regular basis. In addition, more than one-third consider it acceptable for a plan provider to require its funds be among a plan’s investment options.
While half of those surveyed said fiduciary and legal responsibilities are a top concern, only one in five have taken steps in the past year to increase fiduciary oversight. The majority (63 percent) aren’t very certain they’ve appropriately planned for their business’ future, Nationwide said. Retirement or transition are key areas of concern, second only to recession and economic issues. In terms of revenue, the smallest and largest companies were most concerned about retirement planning, the report said.
-- WebCPA staff
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