Participants Want Simplified Investment Education

Fewer than half of investors polled for Capital Group’s “Wisdom of Experience” investor survey series (46%) reported receiving written materials or tools from their employer, whether that was when they were initially enrolled into a sponsored plan or on an ongoing basis after enrollment.

More than one-third (35%) of investors say they use their employer-sponsored retirement plan’s administrator most for advice about how to invest for retirement, and 29% say they use a financial adviser outside of work.

When asked what types of tools and information they wish plan sponsors would provide, both women and Millennials said more personalized advice on what to invest in topped the list (37% and 42%, respectively). Millennials are also interested in simplified plan menus and improved fund descriptions to help them make better investment decisions.

Roughly one-third of Generation Xers (34%) want clearer explanations of the plan’s investment options and regular updates about plan changes (33%) in addition to personalized advice about what investment(s) to choose (33%).

Retirement industry sources say simplifying a defined contribution (DC) plan’s investment menu can encourage more employees to participate in the plan. Some recommend a fund lineup of between 10 and 15 options. Offering white-labeled funds can also simplify choice for participants while adding more diversity. For example, a fund may be called the “large-cap stock fund” but have multiple underlying fund managers within it.

Capital Group’s survey report, “Retire that thinking: Uncovering better strategies for retirement readiness,” can be found here.