2025 is shaping up to be a lucrative year for retirement plan advisors in 2025, thanks to the SECURE 2.0 Act of 2022. Most plan advisors seek to grow their revenues this year, as highlighted by a recent Fuse Research Network, where 59% of the respondents are looking to increase their revenues by 1% to 10% by the end of 2025. With enhanced retirement savings incentives and new plan structures, advisors have fresh opportunities to attract new clients and boost revenue.
Established in December 2022 as an expansion of the “Setting Every Community Up for Retirement Enhancement Act of 2019,” the SECURE 2.0 Act aims to drive workers to save more for retirement and to create more Defined Contribution (DC) plans. And there have been significant changes to the act that came into effect since January 1, 2025. So, let’s dive in and find out how these changes could benefit plan advisors!
A Quick Recap of the New SECURE 2.0 Act Provisions
Here’s a breakdown of some of the key provisions that came into effect from January 1, 2025:
Automatic enrollments
Companies with at least 10 employees that have 401(k) and 403(b) plans established on or after December 29, 2022, were to automatically enroll participants in their respective plans as soon as they were eligible.
The initial automatic enrollment salary amount must be 3% to 10% and should automatically increase by 1% every year until it reaches a cutoff between 10% and 15%. Also, employees that chose to opt out have been excluded from the plans.
Change in catch-up contributions
Another provision that took effect in 2025 is the catch up limit for employees aged 60-63 where the limits were increased to $10,000 or 50% (Whichever was greater) more than the regular catch-up amount. Prior to the new law, the catch-up limit was valued at $6,500 with the exception of SIMPLE plans, which had a $3,000 limit.
Long-term part-time Workers
As per the new provision, employers are now required to allow long-term, part-time workers to participate in their 401(k) and 403(b) plans if they meet the following conditions:
- Have completed at least 500 hours of service in each of two consecutive 12-month periods
- Are at least 21 years old by the end of the second 12-month period
Student loan matching
SECURE 2.0 also introduced student loan matching, allowing employers to make matching contributions for qualified student repayments into an employee’s retirement account. This is to help employees reduce their burden on student loan repayments and divert more savings towards retirement. This provision is available to employers sponsoring 401(k), 403(b), governmental 457(b) plans, or SIMPLE IRA.
The Impact and Outlook on Revenue for Advisors
Having polled advisors with at least 10 DC plan clients, Fuse Research Network’s survey unveiled a few more interesting details about the new provisions, especially their impact on plan advisors and expectations. For starters, it found that two-thirds of the advisors polled expected the new rules to boost their revenue by at least 1% where:
- 59% expected a 1% to 10% revenue increase
- 9% expected a growth of 10% or more than that
On the other hand, one-third of the advisors claimed to not expect any revenue increase from the new provisions.
The survey also found that plan advisors have been working with sponsors for many years to meet the new requirements of SECURE 2.0. Additional findings include:
- 79% working towards implementing auto-enrollment for small DC plans with $1 million to $10 million in assets.
- 56% of plan advisors working on auto-enrollment for micro plans with less than $1 million in assets
- 51% working on auto-enrollment for mid-market plans with assets worth between $10 million to $100 million.
- 9% of respondents reported that while plan sponsors with less than 10 employees do not have auto-enrollments, many advisors were working with these clients to push auto-enrollments with limited opposition from sponsors.
DC plan advisors are particularly optimistic about SECURE 2.0’s potential to establish new retirement plans, especially among small businesses. Despite the slim profit margins, the sheer volume of new plans and increased participation rates are expected to drive revenue growth for advisors. This could also kickstart a lot more 401(k) and 403(b) plans, lifting employee participation through auto-enrollment and increased contributions to the plans.
Strategies for Advisors
To maximize the revenue potential of SECURE 2.0, advisors can implement the following strategies:
Increased plan adoption: The expanded eligibility for start-up tax credits will lead to more small businesses setting up retirement plans. Advisors can capitalize on this to increase their potential client base.
Diversified services: By offering advice on student loan matching and other features, advisors can attract new clients through diversified offerings and also position themselves as holistic financial advisors.
Investment in technology: Technology plays a central role in streamlining plan management and compliance, allowing advisors to handle more clients and plans.
Effective communication: Developing strategies to clearly communicate the implications and benefits of SECURE 2.0 provisions to clients can build trust and boost their satisfaction.
