A Helping Hand

Only 47% of survey respondents in Schwab Retirement Plan Services’ “2022 401(k) Participant Study” are very likely to achieve their savings goals. This is 6% less than was found by Schwab’s 2021 survey. Almost half indicated they need help with essentials such as how best to invest their 401(k) and how to determine the amount to save for retirement.

This reveals why dispelling misunderstandings about employer advice, at companies that offer it, is key. The Value of a Financial Advisor, a survey from Morgan Stanley at Work, found that, of sponsors currently using a dedicated financial adviser, 85% said most of their eligible employees are on track for retirement, while plans without such advice noted a lack of insight into retirement readiness.

Of sponsors who responded to the 2021 PLANSPONSOR Defined Contribution Survey, 51% offer meetings with an adviser outside of the plan; 27% use a third party independent of their recordkeeper; and 41% use proprietary services offered through their provider’s website or call center. Approximately 16% do not provide this benefit.

Employers that do offer advice products and services know, however, that these are not always utilized to the fullest. The question is sometimes “Why?” when there is such demand, according to surveys.

About one-quarter of the respondents in Schwab’s study have specific reasons for not seeking advice through their employer.

For instance, 23% of all respondents said it is too expensive, and 22% said advice offered would be limited to products available through benefits at work. While that may be true, it also might not be. Perhaps it is worth ensuring that communications are clear—specifically the cost of such options, what is included and what is extra, as well as the support that can be had with the advisory firm to which participants have access.