Three-quarters of respondents are plan sponsors, while 17% are TPAs/recordkeepers/investment managers and the rest fall in the “other” category. The vast majority of readers who responded (82.9%) reported that their firms do make advice available to participants.
When asked how this advice is made available, nearly all (93.3%) said through the use of online tools and calculators, while two-thirds (66.7%) reported it is available during seminars and group meetings. Sixty percent each indicated their firms made advice available through managed investment accounts and one-on-one meetings. Nearly as many (56.7%) said advice is available via phone conversations, and 46.7% said advice is provided via mailed or e-mailed letters. “Other” responses included: retirement analysis for participants older than 55, provided through our recordkeeper, and integrated video guidance and newsletters.
Nearly half of respondents (47.1%) reported they have used the advice offering(s) made available by their companies. One in three (29.4%) have not, and nearly 6% said they use the advice offering(s) regularly. Nearly 18% of respondents indicated they would use the advice offering(s) if provided by their companies.
Eighty-five percent of responding readers agreed advice should be made available to participants in some form, while 12% said they did not know whether it should and 3% said it should not.
The consensus among those making verbatim comments is advice should be offered and is needed, but most participants don’t use it. Some contend other efforts by plan sponsors are more important to participant outcomes, such as automatic plan features. Editor’s Choice goes to the reader who said: “Advice only goes so far. Auto-enrollment and escalation are much more effective features. After all, you can lead a horse to water but you can’t make him save for retirement.”
A big thank you to everyone who participated in the survey!
It's not really that hard, or that expensive, to provide decent advice: Keep it simple, keep it low cost, and keep doing it.
In general, our participants who use the advice available to them are satisfied and appreciative of having the resource.
I would not like to be held personally responsible for someone's financial future, but as a Trustee of our Plan, I may be vulnerable to that risk.
It is absolutely essential. Our adviser comes quarterly to hold one-on-one meetings for interested participants and is available by phone. For some, their 401k is their only investment vehicle, so it is impractical to expect that they will seek advice from an outside financial advisor.
I do not use the service because I feel like being knowledgeable about investing is part of my job. Also, I care about my personal retirement savings more than anyone else does.
We absolutely need to make this available, and we should make it as easy (and cost-effective) as possible for our participants to access it.
The materials and resources are available but participants have to take the final step in educating themselves.
Our role is to make sure our participants have access to the information, education and advice they need. By choosing a quality recordkeeper, we have done just that.
Participants do need advice since most do not have knowledge and understanding of this topic. However getting this from the Employer opens a can of worms that, no matter how many disclaimers you provide, allows them to complain/grumble that the advice provided by the company is the reason they lost money or didn't earn "enough". Employers are condemned for not helping and then condemned for the any help they do provide.
The problem I find with most on-line tools is that they require so much personal information that many people give up before completing the questionnaire, making the tool very ineffective.
Advice only goes so far. Auto-enrollment and escalation are much more effective features. After all, you can lead a horse to water but you can't make him save for retirement.
It’s a shame, investment advice is a free service that relatively few utilize. I guess participants really think you can't get something for nothing.
It is helpful to some participants who do not have the time or knowledge to make investment decisions on their own.
As a plan sponsor it is our responsibility to educate the employees and offer vehicles for advice. If they choose not to listen that is another story but at least we made every effort and made the information available.
Ignorance might be bliss in many areas (though I cannot imagine that to be true) but it is certainly not when it comes to money. Sponsors often wonder why they do not have better participation in the plan, but they do not provide all the tools necessary to truly convey the benefit of retirement savings. An enrollment booklet with pretty pictures and random generic tidbits of advice doesn't cut it for most people. They would rather hold onto their money then "give it away" to something they do not fully understand or appreciate.
We're considering offering some assistance in this now darned if you do - darned of you don't environment. Our primary concern is not the what, who, when and how much. It's the CYA! Sad but true commentary about the irony of "no good deed goes unpunished."
I tried to answer the above according to the DoL definition of "advice" (as opposed to education) - but when I look at the "how it's offered" options, I wonder if you're really asking about a broader concept, something that includes "education". After all, how are you offering "advice" through online articles, email, etc? Broadly speaking, the decision to offer actual, fiduciary-level advice is a big step for a plan sponsor, both from the perspective of cost and liability. Most participants still don't use it. And despite the occasional industry "sermon" on the need to do so, I've yet to see a plan sponsor sued for NOT offering advice. But hiring someone who offered bad advice? Well, that's another situation altogether...
People are asking for advice and their employer is looked to (for the most part) as a trustworthy source. If we're offering retirement plans, we should offer the tools to help get the largest return on our investment.
The answer to the above question is really "it depends". Depends on the individuals, the employers’ willingness to pay the extra fees and take in the extra responsibility. Considering how few people actually use it, why bother. Way too much potential pain for far too little "gain"...
NOTE: Responses reflect the opinions of individual readers and not necessarily the stance of Asset International or its affiliates.
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