Overwhelming Majority of Participants Say They Want an Advisor
Legally Required to Act in Their Best Interests
In the last 20 years, innovations in 401(k) plan design and retirement
help such as online advice, professionally managed accounts and target
date funds have made retirement planning easier for 401(k) participants.
According to a new survey of over 1,000 401(k) participants by Financial
Engines (NASDAQ:FNGN), what employees want next is a person in their
corner. The survey1 shows that a majority of 401(k) investors
not currently working with a financial advisor – 54 percent-- are
interested in working with a financial advisor in the future.
Strong Desire for an Advisor That Meets the Fiduciary Standard
When asked about the desired attributes of a financial advisor, 69
percent of participants said that it was “very important” that their
financial advisor be legally required to act in their best interest.
Another 18 percent said that it was “somewhat important.” Less than two
percent said that their advisor being a fiduciary was “not very” or “not
at all” important.
Groups who stated that an advisor’s fiduciary status was very important
included investors who use target date funds (76 percent), investors not
currently working with an advisor but interested in doing so (73
percent), those with assets between $100,000 and $500,000 (72 percent),
and investors who already work with an advisor (70 percent).
“While technology can broaden the access people have to investment
advice, we’ve found that many people value the ability to talk with a
professional advisor, whether just to ask questions or to develop their
retirement plan,” explained Kelly O’Donnell, a Financial Engines
executive vice president. “Our survey shows that in addition to wanting
more personal guidance, people feel very strongly about wanting an
advisor who is on their side, placing their interests first.”
Despite Desire, Barriers Persist
Despite the desire to work with a financial advisor, the most commonly
cited barriers included affordability (46 percent), believing they
didn’t have enough assets to get an advisor’s attention (36 percent) or
uncertainty how an advisor could help them (26 percent). Twenty-three
percent of investors said that they preferred a do-it-yourself approach
to handling their investments.
The Human Touch
While interest in online advisory services was strong (60 percent), it
was even stronger for services that included access to financial
advisors (68 percent). According to respondents, the top reasons people
use financial advisors included the ability to avoid costly mistakes (44
percent), greater peace of mind or more confidence (28 percent) and the
ability to further personalize financial plans and strategies (25
percent).
The financial topics of most interest to participants went beyond
traditional retirement planning. According to the report, 401(k)
participants are most interested in receiving help with:
-
Determining the appropriate savings rate to reach their retirement
goals
-
Turning their 401(k) and retirement accounts into reliable retirement
income
-
Evaluating their overall financial wellness
-
Assessing individual risk tolerance
-
Optimizing Social Security claiming strategies
“It’s easy to underestimate the power of a simple conversation with
someone who listens to your concerns and can provide valuable insights
and help. However this research validates our own experience about the
important role advisors play in helping investors reach their goals,”
said O’Donnell. “Financial Engines is committed to making our advisors
even more accessible to help retirement investors better save and plan
for a rewarding retirement.”
Copies of the report “The Human Touch: The Role of Financial Advisors in
a Changing Advice Landscape” are available at http://corp.financialengines.com/research/FE-The-Role-of-Financial-Advisors-1015.pdf.
About Financial Engines
Financial Engines is America’s largest independent investment advisor.2
We help people make the most of their retirement assets by providing
professional investment management and advice. Headquartered in
Sunnyvale, CA, Financial Engines was co-founded in 1996 by Nobel
Prize-winning economist Bill Sharpe. Today, we offer retirement help to
more than nine million employees across 600+ companies nationwide
(including 143 of the Fortune 500). Our investment methodology, combined
with powerful online services, dedicated advisor center and personal
attention allow us to help more Americans get on the path to a secure
retirement.
Advisory and sub-advisory services provided by Financial Engines
Advisors L.L.C., a federally registered investment advisor and
wholly-owned subsidiary of Financial Engines, Inc. Financial Engines
does not guarantee future results.
Forward-Looking Statements
This press release contains forward-looking statements, including
statements regarding the use of professional investment and financial
planning help, which involve risks and uncertainties that could cause
actual results to differ materially. These risks and uncertainties are
outlined in our SEC filings. You are cautioned not to unduly rely on
these forward-looking statements, which speak only as of the date of
this press release. Unless required by law, Financial Engines undertakes
no obligation to publicly revise any forward-looking statement to
reflect circumstances or events after the date of this press release or
to report the occurrence of unanticipated events.
1 Financial Engines commissioned survey of >1,000 full-time
employees between ages 18-70 that participate in their employer’s
defined contribution plan. Survey conducted and completed in August 2015.
2 For independence methodology and ranking, see
InvestmentNews Center (http://data.investmentnews.com/ria/).
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