Americans Want More Holistic Advice

As important as retirement plan advice is, these days workers are looking for more than just investment recommendations for their 401(k)s, according to a new survey.

According to the 2017 Retirement Confidence Survey by the non-partisan Employee Benefit Research Institute (EBRI), 9 out of 10 workers either work with or feel it is important to work with an advisor who will provide them with information and advice about how to cover medical and long-term care expenses. Nearly as many say it is important that an advisor:

  • provides advice and information about when to claim Social Security (88%);
  • develops a formal financial plan for retirement (87%); and
  • specializes in converting assets into retirement income (86%).

Use of a financial advisor increases with age and income, but just 23% of workers say that they have spoken with a professional advisor about retirement planning, and only 1 in 10 report they have prepared a formal plan for retirement.

According to the survey, 24% of workers and 39% of retirees report that they have obtained investment advice from a financial advisor who was paid through fees and commissions. However, among workers, an even greater share expects to work with a professional financial advisor as they approach retirement; 49% believe they will do this, while 37% of retirees do so currently.

Sizable majorities of both workers (74%) and retirees (70%) strongly or somewhat agree that the advice they receive from a professional financial advisor is in their best interest.

Workers’ Versus Retirees’ Expectations

As workers seek advice, most feel it is important to choose an advisor who can provide them with information and advice about how they should manage their assets (93% call this very or somewhat important). Notably fewer feel it is important that an advisor will manage their assets for them (72%). Retirees, in contrast, are more likely to say it is very important for an advisor to manage their assets for them (43% vs. 26% of workers). Retirees, however, also prefer a more do-it-with-me relationship with their financial advisor or future advisor, as 89% say it is important to choose an advisor who will provide information and advice on how they should manage their assets.

When workers who are currently contributing to employer retirement savings plan are asked about the likelihood of seeking advice from some of these sources, they say they are very likely or somewhat likely to seek advice from:

  • their retirement plan provider (67%);
  • an independent financial services company or advisor (64%); or
  • a financial services company retained by their employer to provide advice (58%).

A human connection is important: The likelihood of seeking advice from an independent advice provider that provides advice solely online is significantly lower (28%), according to the report.

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