The 401(k) Feature That Could Significantly Boost Your Assets Under Management
Key takeaways:
- Auto enrollment is one of the most effective 401(k) features for driving assets under management (AUM) growth
- Research shows auto enrollment boosts plan participation rates by 40%, directly increasing contributions and plan balances
- Eligible plan sponsors may be eligible to receive up to three years of tax credits for adding auto enrollment, making it an easy sell to clients
- Advisors should audit their book of business to identify clients without auto enrollment enabled — it’s a ready-made growth opportunity
- Auto enrollment is required for certain plans
How to boost AUM
If you’re a financial advisor looking to grow assets under management (AUM), you may already be exploring new client acquisition strategies or deepening existing relationships. But there’s one 401(k) plan feature that consistently moves the needle on AUM — and it’s surprisingly easy to overlook: auto enrollment.
Auto enrollment tends to fly under the radar precisely because it’s generally hands-off once activated. But don’t let its simplicity fool you. The National Bureau of Economic Research found that enabling auto enrollment boosted 401(k) participation rates by 40%. More participants means more contributions, and more contributions means higher plan balances — translating directly into increased AUM for you.
The rare triple-win
There’s a compelling incentive you can bring to the table when recommending auto enrollment: eligible plan sponsors may qualify for up to three years of tax credits, $500 per year, when adding it to their plans. That makes this a straightforward win-win-win conversation, as your clients potentially reduce their tax burden while simultaneously improving employee retirement outcomes, and you maximize AUM.
Your action item
Take a look at your current book of business and identify which clients are running plans without auto enrollment. We can help you gather this information, if you want. From there, a simple outreach conversation could open the door to meaningful plan upgrades, stronger client relationships, and AUM growth.
Auto enrollment is one of those rare features where the effort is minimal and the impact is substantial. For advisors focused on growth this year, it deserves a much closer look. Reach out if you’d like support helping your clients activate auto enrollment.
