Working With Financial Professionals Better Engages K-12 403(b) Participants

K-12 educators who work with financial professionals have better 403(b) plan outcomes and are more confident, according to a survey by AXA Equitable Life.

The K-12 403(b) market differs from other retirement plan markets in that participants often have their own investments through which they have a relationship with a financial professional, rather than all participants working with one plan adviser. The study finds there are emotional benefits to working with a financial professional, and the longer the relationship with the financial professional, the greater the benefits.

The median account balance for K-12 educators surveyed who work with a financial professional is $40,000 versus $21,000 for those who do not work with a financial professional. In addition, 88% of those who work with a financial professional are confident in having a plan for retirement in place, 64% are confident they will meet their retirement goals, and 57% are confident in the quality of their investment choices. These percentages are 82%, 56% and 42%, respectively, for those who do not work with a financial professional.

According to the survey, educators who work with a financial professional exhibit more effective financial behaviors over time. They have higher mean annual contributions ($5,016 versus $3,372 for those who do not work with a financial professional) and increase their contributions more frequently (2.6 times since starting in their retirement plan versus 2.1 times). Also, 68% of those who work with a financial professional monitor their account performance, versus 56% who do not.

As for emotional benefits, 83% of those who work with a financial professional feel the professional has important expertise about 403(b) plans, 80% feel a financial professional helps make investment decisions that are best for them and 81% feel the professional understands how the 403(b) fits into their overall plan for retirement.

Nearly two-thirds (63%) of those who do not work with a financial professional say they are somewhat or very likely to work with one in the future. The top three reasons cited are that they are getting closer to retirement (49%), to find how their 403(b) fits into their plan for retirement (46%) and they need advice about how to invest (33%).

The study was fielded in April among 1,007 respondents. More information is at  https://us.axa.com/news/403b-advisor-value/.