Those With Financial Plans Tend to Like Them

The key to satisfaction with a formalized financial plan may simply be to write one, a new Spectrem Group research report shows.

For the nearly 60% of defined contribution (DC) plan participants who reported having written a financial plan with their primary adviser, almost all (96%) reported they are at least somewhat satisfied with that plan.

Other findings in the “Advisor Usage Among DC Plan Participants” report indicate that 52% of DC plan participants who had developed a financial plan are “very satisfied” with that plan. Almost a quarter (24%) said they are “satisfied.”

Despite those results, just 24% of 401(k) participants have received advice on creating a financial plan from their primary adviser. Thirty-five percent said they will seek such advice in the future, while 32% claimed they do not need financial planning advice at this time.

The report shows younger investors are less likely to have a financial plan in place than older investors, but 48% of DC plan participants under the age of 35 said they will seek advice from an adviser on a financial plan in the future.

Even among investors with more than $100,000 in assets, only about a quarter (27%) have created and enacted a financial plan with their adviser. Thirty-five percent, in turn, said they will seek out that information, and 28% said they do not need that type of advice.

When it comes to reviewing and updating financial plans, less than half (46%) of DC participants with a financial plan review it at least semiannually. Thirty-four percent reported conducting annual reviews, while 16% review it less frequently than once a year.

The older the investor, the more frequently he or she reviews a plan. Seventy-two percent of plan participants 65 years of age and older review semiannually, while only 38% of participants 35 years or younger look into their plan twice a year.

More highlights from the report available here.