A new study by Spectrem Group reveals that most investors in 401(k) or other defined contribution retirement plans don’t currently use the services of a financial advisor, but that those with an advisor appreciate the advice they get and are satisfied with the performance that comes from the relationship.
The report highlights the paradox of investors approaching retirement and needing help with long-term financial planning and investing, and yet continuing to take a passive approach to their retirement investing. It also identifies what plan participants are looking for in a financial advisor.
Significant findings in the report include:
- Fifty percent of plan participants in the critical age group of 50-64 currently do not have an advisor, despite the fact they are approaching retirement age.
- Among plan participants that do use an advisor, over 40% indicate they rely on and trust their advisor for the vast majority of their financial needs.
- Sixty-seven percent of plan participants are satisfied with their advisor, and 70% like their advisor’s responsiveness to requests.
- More than 40% of plan participants will be seeking advice in the future on planning for long-term care, implementing tax strategies and establishing an estate plan.
“Despite research showing that the majority of Americans are insufficiently prepared for retirement in terms of their savings and investments, the majority of defined contribution plan participants continue to view their 401(k) accounts as a savings plan. Nearly all, however, could benefit from having access to regular financial advice on how to make the most of their portfolio,’’ said Spectrem Group President George H. Walper, Jr. “This report represents a useful tool for advisors seeking to better understand how plan participants view their investments, and what they might want in a relationship.”
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