The 401(k) plan has officially pulled even with healthcare as the benefit employees value most, according to Morgan Stanley’s 2026 Retirement Plan Survey. That elevation, however, is creating a new problem for the organizations that sponsor them.
Survey respondents now rank helping employees understand the plan as their top concern, cited by 45% as one of their top three worries, up from 32% in 2024. That shift from competing to communicating captures something significant about where plan sponsors are right now: they’ve won the battle for perceived importance and are losing the one for actual engagement.
Thirty-four percent of the 200 plan sponsors surveyed said employees now rank the defined contribution plan as their single most valued benefit, more than double the 15% who said the same in 2024. The survey polled investment decision-makers at organizations with at least $50 million in plan assets; more than two-thirds represented plans over $250 million. The shift, the report suggests, reflects workers in peak earning years with thinning defined benefit pension options and Social Security uncertainty treating their 401(k) account as a primary household asset rather than one workplace perk among many.
Elevated status and actual usage are not the same thing, and the survey’s data makes that gap visible. When sponsors that offer managed accounts were asked what percentage of participants use the feature, the average answer was 12%. Among sponsors not offering managed accounts and not planning to add them, the dominant objections were high participant fees, cited by 64%, and insufficient perceived value, cited by 56%.
The pattern is consistent in retirement income. Eighty-six percent of respondents said offering retirement income solutions is important or critical, but fiduciary concerns have since 2024 overtaken lack of participant understanding as the leading barrier to implementation, cited by 63%. The finding suggests the SECURE 2.0’s momentum on retirement income adoption may be slowing as liability questions reassert themselves, rather than accelerating as the regulatory landscape settles.
That combination of high aspiration and low adoption is the specific terrain on which benefits advisors operate. Sponsors cite investment advisors and consultants as their most valuable resource in assessing their plan lineup, ranked among the top three by 69% of respondents. The same sponsors identify comprehension and engagement as their top unresolved concern. The two things are connected: the advisor relationship is the channel through which education strategy and plan design decisions actually get made, and the survey signals that sponsors are ready to be pushed on both.
The participant engagement section of the survey offers the most granular picture of what sponsors say they need. When asked in open-ended questions what tools would most effectively drive higher participant engagement, sponsors coalesced around four themes: group education sessions, personalized one-on-one consultations (virtual or in-person), content tailored by demographic or life stage, and broader financial wellness topics beyond retirement. These are not product requests. They are design and delivery requests. The kind that advisors are positioned to help structure and execute.
The 3(38) versus 3(21) data adds a useful advisory-model layer. Only 26% of surveyed sponsors use a discretionary 3(38) investment manager, compared with 56% using a non-discretionary 3(21) advisor. Among those not using a 3(38) arrangement and not considering one, the dominant reason is satisfaction with the status quo, cited by 85%. Among those using or considering a 3(38) model, the top draw is reduced executive workload, cited by 76%.
The data suggests a meaningful segment of plan sponsors is defaulting to their current model by inertia rather than by deliberate evaluation, a known dynamic in plan governance that advisors can test with clients, particularly as regulatory complexity increases.
The Morgan Stanley findings land alongside evidence that employers’ confidence in their benefit strategies may outrun their employees’ actual experience. A Prudential study published earlier in 2026 found a 23-point gap between how many employers believe their benefits show care for employees and how many employees agree, 89% versus 66%. That disconnect is not specific to retirement but it runs through the same comprehension and communication channels the Morgan Stanley survey identifies as plan sponsors’ top operational gap.
The survey sample skews large: more than two-thirds of respondents represent organizations with over $250 million in plan assets, and 30% are over $1 billion. The adoption challenges around managed accounts and retirement income are more pronounced at smaller plan sizes, where the administrative and fiduciary capacity to evaluate and implement sophisticated solutions is thinner. That context matters when extending the findings to mid-market and small employer clients.
The research was conducted by independent research firm 8 Acre Perspective between July and August 2026. Morgan Stanley was not identified as the research sponsor during fieldwork.
