June 13, 2012
--- Retirement plan participants need investment advice, and from the right place, according to panelists at the 2012 PLANSPONSOR National Conference. ---
Dave Gray, vice president of client experience at Charles Schwab & Co. Inc., said during the panel discussion that it is important for plan participants to receive advice from a source outside of friends and family. “The question is how do we fill that need?” He asked.
“Advice comes in many different flavors,” said Mary Hollingsworth, director of product strategy at Wells Fargo Institutional Retirement and Trust. Because of this, plan sponsors may find it difficult to decide which avenue to take.
Kevin Mahoney, vice president, premier retirement benefits adviser at Merrill Lynch, said it is important to consider the company’s demographics and what type of advice program the employees will actually use. He suggested a multi-tiered advice program with target-date funds (TDF), portfolio rebalancing tools and actual advice. The first step, however, is increasing plan participation rates, he added.
Gray, on the other hand, said he thinks a multi-tiered advice program can give participants too many options. “We put too much choice in front of participants and we wonder why they’re lost,” he said. “When you give too much choice, you create inertia, you create poor choice, you create buyer’s remorse.”