Retirement Savers Delay Getting Financial Advice

Employees think they need a large 401(k) balance to talk to a financial adviser.


Most retirement savers would rather spend an hour of free time at the gym (41 percent) than talking to a financial professional about investing for retirement (26 percent), according to a new survey of 401(k) participants. A meeting with a financial adviser was equally as enjoyed as cleaning the house (25 percent), but was strongly preferred to renewing a driver’s license (3 percent) and going to the dentist (3 percent).

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The majority of 401(k) account holders (55 percent) say they want free investment advice to be provided by their employer, according to a Koski Research online survey of 1,005 401(k) participants commissioned by Charles Schwab. But not all workers take advantage of financial advice when it is offered. While three quarters of Schwab clients make advice available to 401(k) participants at no additional cost, less than 10 percent of retirement savers use the investment advice, according to an analysis of 911 401(k) plans with 755,000 participants serviced by Schwab.

“Even though most people say they would use professional help if it were available, the reality is that, more often than not, procrastination, distraction, or confusion prevents them from doing so,” says Catherine Golladay, vice president of 401(k) education and advice for Charles Schwab. About half of the survey respondents (53 percent) say their retirement benefits are even more confusing than their health care plan.

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Most workers (51 percent) desire one-on-one investment consultations with a financial adviser. “People are more likely to engage in professional help if it is provided in a personalized one-on-one setting,” says Golladay. Online tools that provide investment recommendations were also viewed as helpful by 23 percent of survey respondents. Educational seminars, written brochures, packages of information, and online retirement savings calculators were far less useful to most employees.

Almost two-thirds of retirement savers (62 percent) say they need a specific amount of money saved before it is worth talking to a financial adviser. About half of 401(k) participants with a savings goal say they need to accumulate a minimum of $100,000 before they would feel comfortable getting professional financial help and another 40 percent need at least $10,000. Workers had a variety of other reasons for failing to utilize investment advice including focusing on more immediate financial concerns, not trusting that the advice would be good, and wanting to keep personal finances private from an employer.

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Those approaching retirement age were the most likely to seek financial help. Other factors that workers say would motive them to get investment advice include an additional employer match upon meeting with an adviser (44 percent), proof that the help would improve investment returns (34 percent), and paid time off during work hours to get help (10 percent).