Canada (FR)
Plan sponsors are increasingly expected to help participants make informed, confident decisions about their financial futures. This means ensuring access to trusted, high-quality financial advice.
At Alight, we cater to a vast and diverse client base that includes Fortune 500 companies, public sector entities, and mid-sized employers, and we support over 11 million participants. These impressive figures highlight the effectiveness of our plan design and participant engagement strategies. But even the best-designed plan can fall short if participants don’t know how to use it. That’s where advice becomes essential.
Bridging the financial advice gap
Recent data reveals a sobering trend: Nearly half of Americans turn to friends or family for financial guidance, while only about one in four consult financial websites or engage a professional advisor. This reliance on informal sources is especially pronounced among younger and lower-income employees. This creates a clear and growing divide in access to trusted, expert advice — what we call the “advice gap.”
At Alight, we believe closing the advice gap is fundamental to delivering meaningful retirement outcomes — and it starts with plan sponsors taking action.
As a plan sponsor, you may be wondering: How do we close that gap? And how do you know that the advice your participants receive is genuinely in their best interest?
The conflict-of-interest dilemma — “in-house” funds
Some recent academic research raises significant concerns about using investment advisors provided through your recordkeeper because participants may end up being harmed in the process. However, it is important to note that this occurred only when the recordkeeper was promoting their proprietary (in-house) mutual funds. Participants who were directed towards poor-performing in-house options resulted in a decline in risk-adjusted returns of about 21 basis points in the first year, escalating to 33 basis points annually thereafter.
These numbers might seem small on the surface, but they can have significant impacts on a person’s retirement savings. Using reasonable assumptions, a 30-basis point fee can cost a typical long‑term saver roughly 7–8% of their retirement balance over 30 years.
The effects of this compounding can result in an individual losing $50,000 to over $100,000 of their retirement balance over 30 years.
This finding is critical, highlighting a clear call to action for plan sponsors.
Alight's conflict-free financial advisory model
At Alight, we’ve designed our advisory model to eliminate these conflicts. Here’s how:
- No proprietary mutual funds: Alight does not offer proprietary mutual funds. We are not in the asset management business, meaning our advisors have no incentive (implicit or explicit) to push participants toward “in-house” funds.
- Independent advisory partnerships: We collaborate with independent, fiduciary advisory firms to drive our advice platforms. These partners supply the investment methodologies behind our managed account services, ensuring that participant outcomes are prioritized without any bias toward fund providers or platform economics.
- Fee-only structure: Our advisory services operate on a fee-only basis. Advisors are paid only for their advice and do not earn extra commissions for suggesting certain products. Their interests are focused on helping participants succeed, not making sales.
This structure matters immensely. When your employees seek assistance — whether through digital tools, managed accounts, or one-on-one consultations — they’re assured objective, personalized, and conflict-free advice. This means you, as a fiduciary, can confidently affirm that your plan’s advisory services prioritize participant outcomes over provider revenue.
The growing need for trustworthy investment advice
The need for that confidence in financial decisions has never been greater. As digital advice proliferates and social media becomes a prevalent source of financial information, participants face increased exposure to unvetted and often misleading advice. Even though social media is used by many for investment advice, it garners the lowest trust ratings among advice sources, with 46% of respondents stating they “don’t trust it at all.” In stark contrast, professional financial advisors and employer-provided services received the highest trust scores.
Plan sponsors are uniquely positioned to foster stronger trust among participants.
By providing access to high-quality, conflict-free advice, you can equip your participants to make better decisions and build stronger financial futures.
401(k) plans are complicated
Retirement Benefits - Defined Contribution
We set your people on the right path to a secure financial future.
Is your financial advice trustworthy? An action checklist for plan sponsors.
- Confirm the product policy from your advice provider: Do they offer their proprietary mutual funds? If so, how do they manage conflicts of interest?
- Check compensation structure: Is advice offered on a fee‑only basis and transparent? Are there commissions or revenue‑share arrangements?
- Measure participant outcomes: Track behavior changes, asset allocation improvements, and account balances over time.
- Communicate proactively: Promote trusted advice channels to younger and lower‑income workers who are most likely to rely on informal sources.
The Alight difference
Alight is not just managing retirement plans. We're creating pathways to financial security with integrity as our compass and participant success as our true north. Trust isn't a marketing slogan. It's our fundamental responsibility.
