It may be difficult to see the silver lining of a recession, but the truth is that bad economic times provide many opportunities for employee benefit advisers.

"When the market's up it's easy to not look backwards, but when it's down it's a good time to look at the plans," says Neil Netoskie, retirement plan adviser for Compass Bank.

A new Hewitt study shows that companies are more actively managing their retirement plans this year and focusing on reducing retirement plan risk. Experts agree economic uncertainty reinforces this trend.

"Employers and employees are both feeling a crunch across the board. With gas prices going up and the general economy it is creating quite a bit of pressure," says Alison Borland, defined contribution consulting practice leader at Hewitt Associates.

Matches hold strong

Employers are trying to reduce fees and cut admin costs, but - at this point -they are not reducing benefits.

"[W]e're not seeing employers cut back on their match," says Borland.

Matches are not going up across the board either, according to Hewitt's research. Just 12% of employers plan to add to or increase the company match this year, and a fraction of that (2%) plan to reduce or eliminate the company match. Employers have limits as to where they're willing to cut costs and the match appears to be safe, meaning enrollment will remain attractive to employees.

Focus on fees

One way employers are cracking down on costs is by taking another look at fees.

"Employers are making sure that what they've got is the best they can have. A lot of clients don't pay attention to what they're paying out in fees," says Netoskie.

As an adviser, Netoskie uses fee disclosure as a way to attract and retain clients. He recently won a new plan by showing the sponsor what they were actually getting from their adviser for how much they were paying. This mid-sized plan's fees topped what Netoskie makes servicing his largest plan.

"I told them, 'What you're paying in total fees is way more than what I ask for, and I'll show you, from my books, a plan that's equivalent to yours. And I'll show you what I'm making in terms of compensation,'" says Netoskie.

Focusing on fees could be a smart strategy for advisers at this time. In an effort to reduce plan fees, 29% of employers plan to alter their fund options this year. Twenty-nine percent of employers also plan to reduce costs by swapping mutual funds for institutional funds, says Hewitt.

"It's a trend that was happening before the economy slowed as part of risk aversion. But we're seeing an increase, or at least significant attention, in that area both because of new DOL regulations and the additional awareness about high fees," says Borland.

Netoskie also says it's advantageous to look at another area that's received publicity as of late: fiduciary responsibility. According to Hewitt, 35% of companies say they are very likely to review their 401(k) plan governance structure or hire a third party monitor to review their investment options this year. Employers are nervous about the economy and want to mitigate their risks. If advisers can show them how to be better fiduciaries, employers will feel more secure.

"As they see the advantage of what I can bring to their business, then they're mine for a long time," says Netoskie.

Revisiting plan designs

The economic climate also has employers reviewing plan designs. More than half (55%) of companies offering a defined contribution plan intend to review their fund operations, including expenses and revenue sharing.

"Evaluating the plan design is still a good idea, so not necessarily cutting back or enriching ... simply evaluating whether the structure of the design is maximizing the value that employees get from the plan," says Borland.

Plan design changes aren't just happening on the DC side. Among those companies offering pension plans, 63% say they are very likely to perform funding and accounting projections, 30% plan to perform an asset liability study, and 29% are very likely to assess the risks that their pension plans are running based on current strategies, says Hewitt.

Netoskie says the recession could be spurring DB plans to make a comeback for some smaller companies.

"I'm actually seeing an uptick in new defined benefit plans for the small- to mid-sized companies," says Netoskie. "You have five to 10 highly-compensated people running the company and then you have 20-30 people in the middle that are making decent money and then you have the people at the bottom who are either part-time or have minimum salaries or something like that."

The stock market is volatile and employers appreciate the predictability of DB plans - they won't be surprised by a downturn in the market or an upturn in salaries. There's significant value to employers when they can, depending on the age and the salary of the person, put up to $180,000 in for an employee with a cash balance defined benefit plan. The requirements are less stringent and as a qualified plan there is a tax advantage for the company, explains Netoskie.

A recent Mercer study found large DB plans are also much stronger these days. Fueled by strong assets and an increase in discount rates, the funding health of DB plans at S&P 500 companies increased for the second straight year in 2007. The median funded status rose from 89% in 2006 to 94% in 2007, and aggregate pension assets exceeded aggregate pension liabilities for the first time since the end of 2001.

Participant Review

Advisers can help employers reduce costs in their retirement plans by cleaning out terminated employees. Employers may not know that 30% of participants on an average plan are terminated employees, says Jim Langenwalter, chief marketing and sales officer of RolloverSystems. Fidelity Investments conducted a similar study and found 30% of participants across all their plans were no longer with the sponsoring companies. Advisers who bring this to a client's attention have the opportunity to produce significant savings. Having terminated employees on a plan increases costs because it increases the total members and decreases the average asset size of the plan. The smaller the average account size, the more expensive the plan.

"Because of auto-enrollment employers are putting more people on the plans, but there's still turnover running between 10% and 20% a year across the nation. This is creating more and more terminated accounts and more people with small balances," says Langenwalter.

His company helps employers manage terminated employees by rolling over their old 401(k) accounts into personal IRA accounts. This way employers can cut costs and still act as responsible fiduciaries by keeping those people invested. The service costs the employer and the adviser nothing because RolloverSystems profits from managing the IRAs that are opened by terminated employees.

"This economy, interestingly enough, has really kind of helped our business," says Langenwalter.

Communications Boost

Although employers are watching their bottom line costs, they are also focused on easing employee nerves about the economy. Hewitt has seen a slight uptick in loans and a slight uptick in withdrawals. Borland says employers aren't making those features less available. Instead, they're focused on communication, making sure employees fully understand the implications of those actions.

"We're not seeing employers focus messages specifically around the economy, but we are seeing them make sure they have appropriate financial modeling tools, [such as] communications that show if you take a withdrawal of $5000, here's what it means to your retirement income," says Borland.

Employers want to be sure employees are going through all of their options. Advisory services are one method of doing this. Forty-three percent of employers currently offer online third-party investment advisory services and another 47% plan to offer them in 2008. Thirty-four percent provide in-person third-party investment advisory services, and another 30% plan to offer the feature in 2008, says Hewitt.