Most 401(k) Holders Don’t Seek Help from Plan Advisors (But They Want It) 

The only bad questions are the ones left unasked; that’s especially true in retirement planning.

Anxiety about their lives after giving up full-time professional careers might be the biggest pressure facing Americans; most fear running out of money more than death itself. Much of that anxiety comes from uncertainty: Many workers don’t know what kind of help they need, much less where to get it. 

Yet despite those concerns, most pre-retirees aren’t seeking guidance from the firms already managing their workplace retirement plans. About 71% of 401(k) participants age 50 and older have not sought advice from their plan provider in the past year, according to a recent report from Cerulli Associates. While that figure might paint a bleak picture of Americans’ retirement preparedness, there is an upside: As workers increasingly look for more personalized guidance, advisors have a growing opening to engage new clients approaching retirement.

I Need Somebody, Help!

Participants who do meet with their recordkeeper generally find the experience valuable. The challenge is getting them to engage in the first place. Many employees make little use of their provider’s online planning tools and calculators, which are often viewed as cumbersome, requiring extensive financial inputs while offering limited or unclear guidance.

At the same time, demand for human advice remains strong. Participants overwhelmingly view personal advisors as trustworthy, and roughly two-thirds of survey respondents who do not currently work with an advisor said they expect to hire one soon.

The Cerulli report also found:

• Nearly half of pre-retirees lack a formal written retirement plan. Those who have one report significantly greater confidence in their ability to maintain their standard of living in retirement.
• Participants say the most important qualities in an advisor or plan provider are understanding their personal and family situations, being accessible and providing clear, detailed financial planning guidance.
• Meanwhile, just 9% of those looking to hire an advisor see asset allocation as “absolutely essential.”

The Right Stuff. “The most essential aspect of [plan participants’] advisor relationship is not having their advisor manage their portfolio, but instead client service components including personalization, availability for questions and confirming they are on the right track,” said Elizabeth Chiffer, senior analyst at Cerulli.