SURVEY SAYS – Where Do You Go for Financial Advice?

March 12, 2009 ( - To say that the past several weeks (months?) have taken a toll on retirement plan portfolios is perhaps the understatement of 2009 (though the year is early yet).

But as I pondered MY 401(k) statement this past weekend, I got to thinking – and that led me to this week’s question;

“Who do you ask for advice on YOUR retirement savings account?”

The responses to this week’s survey are HERE

To say that the past several weeks (months?) have taken a toll on retirement plan portfolios is perhaps the understatement of 2009 (though the year is early yet).  

But as I pondered MY 401(k) statement this past weekend, I got to thinking - and that led me to ask this week's question: Who do you ask for advice on YOUR retirement savings account?

As for the responses, let me start by saying that most of this week's respondents have made no changes to their retirement accounts since the beginning of the year - and that just might have something to do with the commonality of their advice resource.  

Interestingly enough, a plurality - though not a majority - of this week's respondents said they ask "nobody" for advice on their retirement savings account ( 31.5% ), while roughly half that number ( 16.4% ) indicated that they asked "nobody else."   For those of you wondering what the difference is, I saw "nobody" as meaning no advice was sought, while "nobody else" was designed for those who specifically rely on their own investment acumen.   Not that that understanding is necessarily applicable to everyone who responded that way - but suffice it to say that this week's respondents seemed to be pretty self-reliant (including the reader who cited "The firm of Me, Myself & I, LLC" ).

Having said that, just over one-in-five ( 21.9% ) relied on an adviser outside their plan - more than twice as many as the 9.6% who used their plan's adviser(s).   Nearly 18% used some form of education/advice tool, while just over one-in-ten ( 11% ) went to a family member.  

Only about 6.8% said that they didn't need advice because they used an asset allocation fund - with about 1% each going with their boss (including, apparently, the reader who said that "In addition to my outside advisor, I watch to see what the CEO does in his account although, his 401(k) account is such a small part of his wealth" ) or a co-worker.   And yes, more than one choice was permitted.

There were, of course, some interesting comments - but more on those in a minute.

Now, regardless of who you might turn to for advice - and when - you might, of course choose to ignore it.   So, I asked readers if they had made any changes to their defined contribution portfolio since January 1.   

"Stay the course" appears to be a message that most have taken to heart - 43.9% said they had not made any changes (though, as one reader noted, "It's getting harder and harder to continue endorsing "stay the course" and Dollar Cost Averaging. People just aren't believing anymore that share values will ever go back up again" ), and 9.8% said they hadn't made any changes - yet.   So, that means that more than half had left things alone.

As for the remaining 47% that had made changes:

15.9% had only made changes for new contributions

11.0% had just made a "normal" reallocation

7.3% had moved to bonds

2.4% had moved to money market funds

2.4% had moved to stocks

The remaining 7.3% opted for "other" - which, for the most part, split out between shifts to government bond funds or stable value, as well as movement to target-date funds, and several cases where the shifts were simply more "complicated" than my few choices expressed.

I also asked specifically about changes to future contributions since January 1:

60.0% - no change

  3.8% - no change yet

10.0% - moved to money market

  6.3% - moved to stocks

  5.0% - moved to bonds

The remaining 15% opted for "other" - again reflecting shifts to target-date funds, stable value, and index funds.

And - as for changes to deferral amounts (yes, I can be nosey), a full two-thirds (65.9%) said "no", and 8.5% said "not yet" (in total, then - three-quarters have made no increase).

However, nearly one-in-five (19.5%) had increased deferrals, the rest (6.1%) had decreased those amounts (though about half of that number had done so to bring their deferrals down to the maximum match level).

Oh - and as for that advice - I asked readers if the moves they made were in response to some kind of counsel.   Well, as noted above, a plurality ( 41.1% ) didn't get any advice, while nearly a third ( 30.1% ) said their decision was not the result of whatever counsel they may have received.  

However, nearly one-in-five ( 19.2% ) had followed that advice, while 9.6% said their moves were "sort of" based on that direction.

Now, as for those comments:

"Great question can't wait to see the responses though I recall that there are three kinds of learners; those that learn by reading, those by observation, and those that just have to grab the electric fence for themselves. The 'experience' has taught me valuable lessons, mostly that one & two ought to be enough."

"Bernard Madoff - although I'm not sure how he can help me going forward."

"However, I do feel comforted when the media actually asks a sane financial representative their advice, and the answer is to 'stay the course'."

"The HR Director's hobby is watching the markets and currency markets. He said to get out before all this happened. I listened part way, so I haven't been hit as bad as others."

"Maybe I should consult the clairvoyant with the neon lights in her window. You know her, the one with the crystal ball?"

"I'm a do-it-yourselfer. I can shoot myself or throw myself a party - but I won't know which for a lot of years."

"I have sought the advice of my cats, since they seem to have as much of an idea as anyone else as to what the heck is going to happen."

"My adviser outside the plan is a family member. But, in all reality I haven't been asking or listening to him in the last six months anyway. No one knows what to do, and when Warren Buffet is talking about how the economy is in the crapper...I figure my saving grace is time."

"We have access to a financial planner, but I didn't feel very confident after he told me my account was doing much better than his."

"I am offered plenty of unsolicited advice, though."

"I don't trust anyone now. They are either crooks or have no idea what they have been doing.  

Indirectly through our plan's financial adviser. As the facilitator of enrollment and all other 401k-related meetings, I've heard his "schtick" enough that I ought to be able to do it myself!"

"Magic 8 ball (used to be our plan's financial advisor)/"

But this week's Editor's Choice goes to the reader who said " What a great time to "buy low". I just hope some day I can "sell high".

Thanks to everyone who participated in our survey!