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Deficit of Confidence in Investment Advice

More often than not, employees who obtain investment advice do not follow it. And that’s among those who bother to seek it in the first place. The Employee Benefit Research Institute’s 2014 Retirement Confidence Survey suggests that advisors have some work to do in boosting plan participants’ interest and confidence in professional advice.

Fewer that one in five employees — 19% — told EBRI that they have obtained professional investment advice. Of those, 27% of them followed all of it, 36% followed most of it and 29% followed some of it. EBRI cited five main reasons for this:

1. not trusting the advice: 34% of employees
2. not being able to afford it: 20%
3. having their own ideas: 18%
4. circumstances changed so the advice was no longer applicable: 4%
5. obtaining better advice somewhere else: 4%

EBRI’s Nevin Adams wrote about the same data points in last year’s RCS in his “Inside the Numbers” column in the fall 2013 issue of NAPA Net the Magazine. There are two noteworthy changes year-over-year:

• Item 4 (circumstances changed) dropped from 13% in 2013 to 4% in 2014
• Item 5 (better advice elsewhere) dropped from 6% in 2013 to 4% in 2014

In the summer 2014 issue of the magazine (which mails in mid-June), Adams takes a deeper dive into the numbers from the 2014 RCS.