Advisers Play an Important Role in Affluent Employees’ Retirement Planning

The latest Merrill Lynch Affluent Insights Quarterly finds that among those affluent individuals who work with a financial adviser in or outside the workplace, the majority indicate that this person plays an important role in determining how to help them make the most of their 401(k) or other workplace retirement plans.

Among the two-thirds (66%) who turn to their financial adviser for help, 33% cite doing so for such reasons as establishing the right asset allocation strategy within their plans, 26% for adjusting their strategy at different life stages, 18% for assisting with rollover upon leaving an employer, and 20% for developing rollover or distribution strategies when preparing for retirement, according to a Bank of America press release.  

Other than compensation and promotions, retirement benefits are the next greatest factor keeping affluent employees loyal to a company (60%).  

However, respondents believe more could be done by their employer, including providing access to a financial professional who can offer personalized advice and guidance (26%), offering better financial education programs about how to save for retirement (24%), and providing education and advice about issues beyond retirement savings, such as budgeting, college savings plans and debt management (21%). Among affluent employees with access to financial education or advice services offered by their employer –particularly pertaining to their 401(k) or other workplace retirement plans – 77% take advantage of such value-added benefits.   

According to the press release, for the majority of affluent employees, workplace retirement vehicles, such as 401(k) and 403(b) plans, are among the primary tools in which they save and invest for their future. More than half (54%) rely solely or heavily on retirement plans offered by their employers to meet retirement goals.   

However, among them, 60% do not contribute the maximum allotted amount to these accounts, inviting greater potential for retirement funding shortfalls and a need to retire later than they may have hoped. In fact, 45% of affluent individuals expect to retire later than they had originally planned, compared to just 29% in January 2010.   

The survey also found nearly one in five (17%) respondents spend 50% or more of their time managing personal finances while in the workplace, and nearly one in three (29%) spend at least 25% or more of this time while at work.  

Braun Research conducted the Merrill Lynch Affluent Insights Quarterly survey by phone between June 11 and June 29, 2010, on behalf of Merrill Lynch Global Wealth Management among a nationally representative sample of 1,000 affluent Americans with investable assets in excess of $250,000.