Why retirement planning financial advisors shouldn’t overlook small businesses

Last updated: February 12, 2026

Small businesses are underserved, highly relationship-driven, and increasingly under pressure to offer retirement benefits from talent competition and new regulations. Financial advisors who work with retirement plans are uniquely positioned to serve as trusted guides, helping owners make sense of their options while building long-term, scalable relationships.

Retirement planning for small businesses key takeaways:

• Small businesses are vastly underserved in retirement planning, and demand is growing.
• Retirement plans are growing simpler and more affordable than most owners realize.
• A 401(k) financial advisor can close the awareness gap and become a trusted guide.
• Integrated retirement and payroll technology reduces friction for advisors and employers.
• SECURE 2.0 tax credits make starting a plan financially compelling.
• Small business 401(k)s deepen relationships and fuel long-term practice growth.

The small employer plan universe

Small businesses – those with fewer than 100 employees – make up a significant portion of the United States business landscape. Yet, many still don’t offer a workplace retirement plan because they:

• Don’t know where to begin
• Assume plans are too expensive or time-consuming
• Believe retirement benefits are only for larger organizations

Employees feel differently. 75% of them say a 401(k) or defined contribution plan is a must-have benefit.¹

This gap between employer hesitancy and employee demand presents a prime opportunity for 401(k) financial advisors who know that modern, integrated retirement solutions have simplified plan setup, administration and compliance. They’ll be poised to make it easier than ever for small businesses to compete for talent and support employee financial well-being.

Why employers do and don’t offer retirement savings benefits

Why they do

Small employers who offer retirement plans often do so to:

• Compete for talent in a tight labor market
• Improve employee retention and engagement
• Support financial wellness and long-term security
• Take advantage of tax incentives and deductions

A retirement financial advisor can help reinforce the notion of retirement plans as strategic business investments amongst these employers.

Why they don’t

Common barriers include:

• Perceived complexity of plan administration
• Fear of high costs or fiduciary risk
• Limited awareness of tax credits available under recent legislation

The reality is that many employers haven’t had a financial advisor for retirement explain how accessible and affordable retirement plans have become due to integrations between payroll and retirement plan systems.

The challenge: Access and awareness

Despite the availability of low-cost and low-effort solutions, many small employers still believe 401(k) plans are “out of reach.” Others are unaware that they may soon be required to participate in a plan due to expanding state retirement legislation. These laws require certain employers to enroll their employees in the state-run plan or sponsor one of their own. Legislation is either enacted or being phased in by more than 25 states.

In this evolving landscape, a 401(k) financial advisor can add powerful value by:

• Helping prospects or clients understand how to comply when they receive a state retirement mandate notice and why state programs may not be in their best interest
• Educating owners on their obligations and options
• Clarifying misconceptions around cost and complexity
• Showing how a retirement plan helps attract talent and improve employee retention and loyalty

Advisors who fulfill these educational needs become indispensable business allies rather than transactional service providers.

How to make small business 401(k)s a key growth strategy

1. Learn more about retirement plans

Becoming a technical expert overnight isn’t necessary, but building knowledge of plan design is crucial. Financial advisors should focus on understanding:

• Plan types, such as safe harbor, SIMPLE IRA, solo 401(k), 403(b), 401(a), starter-k and pooled employer plans (PEPs)
• How plan design impacts owners, highly compensated employees and staff
• The role of retirement plan technology integration in simplifying administration

2. Know that retirement plans don’t have to be complex

Modern integrated retirement solutions remove much of the traditional friction that advisors and employers once faced. This ease of use is made possible by the following:

• Compliance testing, plan documents and reporting are handled centrally
• Payroll and retirement data sync with integration capabilities
• Advisors gain visibility into plan health, participation and opportunities for improvement

In addition to integrated retirement solutions, there are newer plan types that are broadly accessible and have minimal administrative burdens. Starter-k is one such example designed for smaller businesses with no existing plan. Another is the pooled employer plan (PEP), which allows unrelated employers to join a single plan structure. Both can be strong options for cost-conscious clients seeking compliance-friendly solutions.

3. Trusted business relationships matter

Small business owners value advisors who understand their broader business challenges, not just investments. Helping them establish and manage a retirement plan is one way to demonstrate this level of understanding. In doing so, advisors:

• Deepen trust at the organizational level
• Move upstream from individual advice to enterprise strategy
• Position themselves as a long-term partner in growth

Once trust is established, retirement plan clients are likely to expand into additional advisory services over time.

4. Find opportunities inside your current practice

Advisors may already have prospects in their existing book of business who can benefit from a retirement savings plan. Ideal candidates include those who are:

• Rapidly growing or adding headcount
• Hiring their first employees
• Operating in states with retirement plan mandates

Demystify the options

Small business owners often feel overwhelmed by plan choices. Advisors can simplify the landscape by explaining the following:

• Safe harbor 401(k) plans can eliminate nondiscrimination testing while allowing owners to maximize contributions
• SIMPLE and solo plans may fit very small or owner-only businesses
• Auto-enrollment features can boost participation without increasing administrative burden

To further boost client confidence, retirement planning financial advisors should align plan designs with business goals.

Maximize tax efficiency

Tax incentives are one of the most powerful motivators for small employers, yet many remain underused. Financial advisors can motivate them to act by showing the projected tax savings available through:

• Startup tax credits for new plans
• Additional credits for auto-enrollment features under SECURE 2.0
• Employer deductions for matching or nonelective contributions

Explore SECURE 2.0 Act Tax Credit Calculator

Leverage turnkey technology

Technology is the backbone of scalable small business retirement advising. ADP’s payroll retirement integration, for example, simplifies contributions, reporting and administration for clients already using ADP payroll. For those on other systems, ADP Retirement Services Connect offers integrations with many non-ADP payroll providers.

Advisors leveraging this technology benefit from:

• Streamlined reporting and compliance workflows
• Simplified Form 5500 preparation
• Fewer manual errors and operational touchpoints

In short, an integrated benefits platform allows advisors to serve more clients without increasing complexity.

Extend the relationship

A small business 401(k) is rarely the end of the conversation. Often, it’s the beginning of new advisement opportunities that naturally emerge from retirement planning, such as:

• Key person and business insurance
• Business succession and exit planning
• Executive compensation and retention strategies

Promote employee financial wellness

Financial wellness is a competitive differentiator for employers and a relationship-builder for advisors, especially those using ADP’s Achieve program. It provides personalized, technology-driven instruction and engagement tools that help employees:

• Understand their retirement benefits
• Increase their participation and contribution rates
• Build healthier long-term financial habits

This type of financial wellness education can reinforce an advisor’s value as an advocate for both employers and their workforce.

Conclusion

Small-business 401(k) plans are no longer a niche offering. For forward-thinking advisors, they represent a scalable growth engine that deepens relationships, expands services and aligns with integrated HR, payroll and retirement ecosystems.

By making small businesses a strategic part of their 401(k) financial advisor business plan, advisors position themselves to lead in an evolving market and help employers and employees build a more secure financial future.

Frequently asked questions

What role does a financial advisor play in retirement planning?

A retirement financial advisor helps employers design, implement and manage workplace retirement plans while guiding employees toward better retirement outcomes. Advisors also serve as educators, fiduciary partners and long-term strategic resources.

What are good ways to stay current?

Successful advisors stay informed and earn their clients’ trust by:

• Working with integrated retirement providers
• Attending continuing education and industry events
• Using ADP advisor tools and resources
• Monitoring regulatory and legislative updates impacting small businesses

¹ ADP 401k Enhanced Capabilities Brochure | 99-6416-PS-0525

M-878075-2026-02-02

ADP Inc. owns and operates the ADP.com website. ADP, Inc. and its affiliates (ADP) do not offer investment, tax or legal advice to individuals. Nothing contained in this communication is intended to be, nor should be construed as, particularized advice or a recommendation or suggestion that you take or not take a particular action. Unless otherwise disclosed or agreed to in writing with a client, ADP does not endorse or recommend specific investment companies or products, financial advisors or service providers; engage or compensate any financial advisors to provide advice to plans.

Only registered representatives of ADP Broker Dealer, Inc. (ADP BD), Member FINRA, may offer and sell ADP retirement products or speak to retirement plan features and/or investment options available in such ADP retirement products.