401(k) Survey: Trends Benefit Participants, Reveal Opportunities for Advisors

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1 : Trends Benefit Participants, Reveal Opportunities for Advisors According to an April 2016 T. Rowe Price survey 1 of 401(k) plan sponsors, when it comes to managing their plans, plan sponsors are focused on the best interests of their participants and improving retirement outcomes. Our findings show those same decisions are providing opportunities for forward-thinking advisors to demonstrate enhanced value for plan sponsors. Plan Sponsor Perspectives 1 T. Rowe Price/Brightwork Partners, LLC, Plan Sponsor Pulse Survey, April Survey of (k) plan sponsors with assets of $100 million or more, conducted online, March 22 April 1, 2016.

2 1 Financial Wellness Linked to Recruiting and Retaining Talent For many plan sponsors surveyed, the major objectives of a financial wellness program are retention of their firm s skilled employees and an increase in employee satisfaction not the program s ability to drive participant savings rates. Advisors have an opportunity to help plan sponsors take financial wellness programs beyond recruiting and retaining employees to driving outcomes in 401(k)s. Specifically, financial wellness programs can positively impact participants overall financial condition and, ultimately, their capacity to save more for retirement. Sponsor Objectives for Financial Wellness Programs Major Objective Minor Objective Retaining Skilled Employees Employees Increasing Employee Satisfaction Satisfaction Improving Employee Productivity Competing Effectively for Skilled Employees 74% 22% 69% 26% 67% 27% 64% 29% Increasing 401(k) Participation Rates Increasing Participant Engagement Employees Ability to Manage Finances Beyond Retirement Savings Increasing 401(k) Deferral Rates 61% 29% 55% 39% 43% 49% 34% 54%

3 2 Stay-in-Plan Assets Increasing Larger plans ($250M+) are leading the trend to keep assets in plan, with less than one-third preferring that retired participants withdraw their account balance. That compares with nearly half of plan sponsors with 401(k) assets of $100M to $250M who prefer withdrawals at retirement. Nearly three-quarters (71%) of larger plans indicate that they prefer or don t have a preference retirees staying in plan. This creates an opportunity for advisors to provide deeper industry insights about this trend, drive plan design, and propose suitable programs to assist retired participants. Plan Sponsors Stay-in-Plan Preferences 39% Prefer retirees leave their balance in plan $250M+ in Plan Assets $100M $250M in Plan Assets 32% Prefer retirees leave their balance in plan 32% Don t have a preference 20% Don t have a preference 29% Prefer that retirees withdraw their balances 48% Prefer that retirees withdraw their balances

4 3 Sponsors Believe DOL Rule Will Protect Participants, Prefer More Advisor Involvement Large Plan Sponsors ($100M+) Prefer Increased Advisor Involvement A majority of large plan sponsors say they expect advisors to play a larger role in future planning and especially in providing advice for investment menu selection. More than half of sponsors expect that the Department of Labor (DOL) Fiduciary Investment Advice Rule will: Shield participants from conflicted advice Result in participants being better off Plan Sponsor 25% Consultant or Advisor 22% 40% Recordkeeper Retired and Terminated Participants Advisor Selected by Participant 43% 8% 49% Plan Sponsors on Investment Menu Selection There is an expanding opportunity for advisors to meet the demand of plan sponsors and play a larger role in plan management. Advisors who are prepared to demonstrate their value to sponsors in these key areas should be well positioned. 29% 46% 12% Active Participants

5 4 Due Diligence Activity High, Few Expect to Change Recordkeepers While the majority of plan sponsors say they are at least somewhat likely to put their plan out to bid within the next three years, less than 10% say they are absolutely certain they will change recordkeepers. Advisors can demonstrate their value in this area by providing education around and helping with due diligence. Sponsors Likelihood of Calling for Bids in Next Three Years Sponsors Absolutely Certain They Will Switch Recordkeepers Not at All Not Very Somewhat Very Absolutely Certain Plan Assets <1% 9% 46% 31% 12% All Plans 7% 48% 29% 11% $250M+ 5% 1% 7% 45% 33% $100M $250M 8% T. Rowe Price Investment Services, Inc. C1DRZQ6FC 10/ US-26553